A review of Active Labor Market Policies in Japan

Japan has characterized as a company-centered society (Osawa 1993), where "welfare through work" was the main source of welfare provision (Miura 2002), and it was also supported by family welfare which based on the gendered division of labor. To be sure, Japan has had unemployment insurance scheme which was introduced in 1947 and amended in 1974 (Employment Insurance). The Employment Insurance scheme has also contained some elements of active labor market policies (ALMPs) such as subsidy for employment adjustment and benefits for continuing employment of older workers. These are, however, based on lifelong employment model, preventing rather than promoting labor mobility among companies. Other training programs and benefits are exclusively for those who are eligible for the Employment Insurance, which means first job seekers and long-term unemployed are not covered.

Following the collapse of bubble economy in 1991, Japan has experienced a long period of stagnation which is now called "the lost two decades". Since then, the traditional Japanese model has been seriously challenged. Young people could no longer easily get a stable job, because companies reduce the ratio of regular workers. Moreover, the number of involuntary unemployment jumped up after the Asian economic crisis in 1997, and rose again in recent years. Since 2003, some measures for youth unemployed were introduced. In 2008, in addition to the training program under the Employment Insurance scheme, government introduced Emergency Human Resource Development Program. Unemployed persons who cannot receive benefits from the Employment Insurance can take training program with 100,000-120,000 yen payment per month (there were 194,042 participants in 2010).

This paper examines the characteristics of ALMPs in Japan, and then evaluates the magnitude of its recent change by comparing it with OECD countries and other East Asian economies.