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  5. How Has Japan’s Employment Situation Changed since the Lehman Shock?

2010 Vol.2
How Has Japan’s Employment Situation Changed since the Lehman Shock?


The drastic deterioration of the economy that occurred immediately after the Lehman shock in September 2008 seriously impacted Japan’s employment situation. As the economy started to recover in the spring of 2009, the employment situation passed the worst period, but still continues to be severe as seen in, for example, the unemployment rate which remains high.
The Lehman shock affected the employment situation differently from the past economic downturns. One difference is the speed of the deterioration of the employment situation, which is an indirect consequence of an increase in the number of non-regular employees. Another difference is a low level of economic activities that followed their sudden drop. The rapid economic deterioration caused excess employment at firms. Because of the size of the drop in economic activities, it can take a considerable time to eliminate the excess employment.
The Lehman shock also revealed afresh the grave state of the structural problems of the labor market which had been exacerbated. Such problems include (1) the possibility of greater degradation of the employment and income environment in a further economic downturn due to an increased tendency of firms to reduce their payroll, (2) the concern that the so-called”hiring ice age”and a jump in the number of part-time jobbers will recur following economic cycles because young workers are most likely to suffer from a deterioration of the employment environment, and (3) little progress being made in eliminating a mismatch between job seekers and job offerings despite the severe employment situation.
If these structural problems remain unsolved, they become worse when the economy slows again, and there is a risk that the employment situation will drastically deteriorate in a relatively short period of time. Changes in the employment environment have been generally considered to lag behind changes in the economic condition, but are deemed to have an increased tendency to coincide with them in the future.