Japan Job offers to applicant's ratio

Job offers to applicant ratio rose to 1.51 in June, the highest since 1974.

Published monthly by the Ministry of Health, Labour and Welfare. Updated to the month of June 2017 (published on July 28th, 2017).

Recent data trend:

The labor market continues to tighten in Japan. The unemployment rate fell back to 2.8% in June from 3.1% in May. The rate were 2.8% between February to April this year, and the rise to 3.1% in May was probably a statistical noise. As the Japanese economy continues to grow, expect the rate to head downward in the coming months.

Japan’s job offers to applicant ratio rose to 1.51 in June from 1.49 in May. The ratio is the highest in the last 43 years since 1974. While job offers continue to rise, along with the expansion in the economy, job applicants are falling. With the shrinking population, Japan simply does not have a recourse to meet the demand for labor. 

The new job offers to applicant ratio did fall in June to 2.25 from 2.31 in May, but it is still very near the historical high since 1973. 

The tightness in the Japanese labor market is caused as much by the shrinkage in the Japanese working population as the rise in demands for labor. The working age population in Japan, defined as the population of the age between 15 and 64, has been shrinking rapidly. In 2016, the work age population in Japan, defined as people between the age of 15 to 64, fell by 0.7 million people. Accordingly, job applicants have been declining by 5% per year in the last few years. The working population is projected to shrink further by 0.8 million in 2017. 

It is puzzling that the wage inflation in Japan remains low despite the labor shortage situation in Japan. Workers' preference for job stability and corporate managers' pessimism for longer term economic outlook are often cited as the reasons. In our view, however, it is just a matter of time that employers start to resort to higher wages to man the shops they are forced to close because of the labor shortage. The big question is when. While it is difficult to pinpoint when, but we do believe that the turning point is very near and the wage inflation statistics should be examine closely to spot the beginning of a wage inflation in Japan.

 
Brief overview of “Job offers to applicant ratio”

This statistics is one of the best indicators to monitor the demand/supply balance in the Japanese labor market. The data comes from Public Employment Security Office. Job referral has been highly regulated in Japan and the Office still plays a dominant role in job referral. For example, job seekers are required to register at the Office to be eligible for unemployment benefits. Aside from the main indicator, job offers to applicant ratio, the growth rate of new job offers is also considered as an important leading indicator for the labor market in Japan. Historically, we can observe an upward wage pressure to arise when the job offers to applicant ratio exceeds one. The job offers to applicant ratio has been consistently below 1 since 1993 except for a brief period between 2006-2007. 

For more information, visit the official government page

Full-time vs Part-time workers

Levels of new job offers and new job applicants                                             

YoY% change in job offers                                                                      

Source: MHLW, JMA.

The Next Release Date: August 29th, 2017.

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