The Okinawan Economy and Its Employment Issues: 沖縄地域学リポジトリ

Author(s)

Fujisawa, Nobuhiro

Citation

沖縄大学法経学部紀要 = Okinawa University JOURNAL

_{OF LAW & ECONOMICS(17): 53-74}

Issue Date

2012-03-23

URL

http://hdl.handle.net/20.500.12001/9615

[Article]

Abstract

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The Okinawan Economy and Its Employment Issues

Nobuhiro Fujisawa *

Department of Law and Economics, Okinawa University 555 Kokuba, Naha City, Okinawa, Japan 902-8521

This is a revised lecture given by me at a seminar for participants who had come to Okinawa from various Oceanic countries to participate in Japan Overseas Cooperative Association's training programs. The group of participants comprised of people from Fiji, Tonga, Papua New Guinea, Tuvalu, and Samoa. Most of them work for a public sector agency or a job support institution in their respective countries. My lecture was scheduled at the beginning of the two-week program. Therefore, the lecture was supposed to focus on an overview of the Okinawan economy, especially its history and employment issues. I was given an hour for my talk, and afterwards there was time for a question-and-answer session.

JEL Classifications: J01, RIO, Y20

I. Introduction: Basic characteristics of Okinawa and other island economies

Hello everyone and thank you all for coming today. Welcome to Okinawa, one of the richest islands in the world. What makes Okinawa so rich, you might ask? It is because Okinawa is a part of Japan, and Japan is the third largest economy in the world. However, there are some gaps between Japan and Okinawa. So, I would like to touch on some of these disparities before focusing on the Okinawan economy. Slide 1 shows some basic economic indicators of Japan and Okinawa. For example, income per capita, that is, income per person in Okinawa, is the lowest in Japan. Also, Okinawa's unemployment rate, which is one of our main concerns in.this lecture, is the highest in Japan. I would like to focus on this number later, but let me briefly comment on this disparity before moving on. Simply speaking, the reasons why the unemployment rate is so high in Okinawa are:

1. The population is relatively large, especially the numbers making up the younger generation.

2. Secondary industries, especially the manufacturing industry, are relatively small. As of 2009, the number of births per 1,000 persons in Okinawa has been the highest in Japan. This leads to many young people looking for jobs. However, it is difficult for them to find jobs since Okinawa does not have large secondary industries that can absorb a large

Basic Economic Indicators

of Japan and Okinawa

Unit

Japan

Okinawa Rank*

Income per Capita

(2008)

1,000

JPY

2,754

2,039

47

Unemployment Rate

(2010) % 5.1 7.6 1

Number of Births per

1,000 Persons (2009)

8.5 12.2 1

Ratio of Secondary

Industries (2008)

% 26.4 12.0 47

Ratio of Manufacturing

Industries (2008)

% 20.4 4.2 47

*out of Japan's 47 Prefectures Prefectural Accounts, Vital Statistics, Labour Force Survey Slide 1: Basic Economic Indicators of Japan and Okinawa

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labor force. Japan has developed by selling manufactured products such as cars, ships, and machineries. Okinawa, on the other hand, has no such industries. The ratio of manufacturing industries in Okinawa in 2008 was just 4.2%, compared to 20.4% for all of Japan, Okinawa

included.

Okinawa shares many of these economic features with your countries, as is evident in the

next slide. This slide outlines the industrial structures of our islands' economies. I think that

there are similarities between Okinawa and your islands. We all have small primary industries (agriculture, fisheries and forestry) and no large secondary industries (mining, construction, and manufacturing). Except for Papua New Guinea (PNG), tertiary industries (all other sectors, mainly services) make up a large part of our GDPs. As for PNG, the ratio of secondary industry is high because they have a large mining industry in their country. The key point is that, for the most part, our islands earn money from the tertiary sector, which for us is primarily tourism. Perhaps in order to excel economically, we should follow Hawaii's example and expand the sector that has the most impact for us, namely tourism. Although Hawaii has a tiny primary industry and a very small secondary industry, they attract many tourists from abroad instead. In fact, 97.4% of its GDP is earned from tertiary industries.

Industrial Structure of Selected

Island Economies

Population

(1,000)

Primary

(%ofGDP)

Secondary

(%ofGDP)

Tertiary

(%ofGDP) 1993 2009 1993 ₂₀₀₉ 1993 ₂₀₀₉ 1993 ₂₀₀₉

Fiji

741 834 #18.8 13.4 *22.8 19.8 *58.3 66.8 Hawaii 1,108 1,295 1.2 tl.O 2.8 tl.6 96.0 t97.4 Okinawa "1,249 1,338 2.5 _"1.7 21.4 _"11.6 76.2 !86.7 PNG 3,900 6,300 28.0 35.6 39.5 46.1 32.5 _18.3 Samoa **164 183 22.9 11.7 28.7 25.7 48.4 62.7

Tonga

97 103 39.3 19.3 11.6 18.3 49.2 62.4 Tuvalu 9 11 23.6 23.2 15.8 !9.3 60.6 !67.6 2

*Dataofl990 **Data of1994 #Dataofl995 tDataof2007 !Data of2008

ADB's Statistical Database, State of Hawaii Data Book, Okinawa Statistical Yearbook, Prcfectural Accctints

Slide 2: Industrial Structures of Selected Island Economies

Kakazu. This figure shows the main characteristics of small island societies. He groups the main characteristics into three categories: oceanic, smallness, and remoteness. He also points out the merits and demerits associated with each category.

For example, the vast marine resources are one of the merits of oceanic islands, while

border disputes caused by such abundant resources are a demerit. Note that in Japanese, high metabolism actually refers to obesity. Although Okinawa is noted for the longevity of its people, Okinawa has a higher rate of overweight young and middle-aged people compared to mainland Japan.

As for smallness, demerits like diseconomies of scale and scope, limited division of labor, and high cost economies make it difficult for small islands to boost their economies through manufacturing. Remoteness brings the demerits of the high costs of transportation and communication which greatly influence the ability of an economy to grow.

Please take a look at Other Characteristics. Let us take a look at number 9 (over-grown public sector) and number 10 (high dependency on external aid and tourism). As we will see later, those two characteristics are observed in Okinawa, as well. For example, the external aid to Okinawa comes in the form of military-related receipts from outside of Okinawa. More will be said about these later in the presentation.

/

Oceanic )

/ Smallness )

[Merits] [Merits]

•Crossroads of marine transportation •Easy consensus building •Gateway to cross cultural com. •Importance of being unimportant •Vast marine resources •Community bondage (mutual help)

[Demerits] •Small is beautiful

•Border disputes •Building a zero emission society

•Natural hazards [Demerits]

•High metabolism •Fragile environments

^r 'Diseconomies of scale and scope

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•Limited division oflabor (monoculture)

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•Segmented market

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'High costeconomy

I A . \ji \ •traditional values systems

INSULARITY

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\ (Inward-looking, land tenure)

\ / 'Ethnic issues

3

Main Characteristics of

Small Island Societies

Kakazu (2011)

Slide 3: Main Characteristics of Small Island Societies: Upper Side

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•Traditional values systems

(Inward-looking, land tenure)

•Ethnic issues

^^7

(Other Characteristics)

2. Mixed (ehampuru) culture 3. High outmigration 4. Biological diversity

5. Conflicts between indigenous and

imported culture

6. Primitive affluence (disappearing)

7. Coexistence of subsistence and modern sectors

8. Periphery and Frontier 9. Over-grown public sector 10. High dependency on external aid

and tourism 11. Others?

[ Remoteness )—f

[Merits] •Non-routine •Aversion to risk [Demerits] •Tyranny of distance •High infrastructure cost

(transportation & communication) •Digital divide?

•Barriers to market access

A

Kakazu (2011) Slide 4: Main Characteristics of Small Island Societies: Lower Side

II. An overview of Okinawa's economy

Next, I would like to briefly talk about the history of Okinawa's economy. Japan was defeated in the Second World War in 1945. Okinawa was the only soil within Japan that ground battles between the U.S. and Japan occurred. After Japan's defeat, Okinawa was put under the control of the U.S. government, which lasted for twenty seven years. The reversion of Okinawa to Japan took place in 1972.

In the 1960s, Japan experienced rapid growth, often referred to as the Asian Miracle. In the meantime, Okinawa was under the control of the U.S. government. This is a key point. Although Japan was experiencing rapid economic success, Okinawa was not. As a result, Okinawa stagnated during this period and that is why Okinawa's economic growth was slower in the 1960s compared to Japan's rapid growth.

After being returned to Japan, Okinawa started to move forward. In the early 1970s, Okinawa grew at a high rate. However, the rapid growth did not continue. In 1975, the International Ocean Expo was held in Okinawa and people from more than 30 countries came. This event was expected to be a watershed for Okinawa's economy, so a lot of hotels, restaurants, and roads were built. But, as it turned out, the expected number of visitors to Okinawa after the expo event never materialized. After the expo, a number of hotels,

Real GDP of Okinawa

Billion JPY 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 Rapid Growth in Japan 1960's International Ocean Expo 1975 Asian Financial Crisis 1997 9.11 Terrorist Attacks 2001 Bubble Economy Collapse 1991 Reversion to Japan 1972 i / - i i / - i i n ^ ^ o ^ D M O ^ r ~ - r - - r - ~ r - - r ~ - o o c o o o c o o o c ^ G N G > a s G \ i—Io COo VIo o o o M M M

Murakami and Fujisawa (2009)

Slide 5: Real GDP of Okinawa

restaurants and other facilities could not run their businesses. Because of this, Okinawa's

economy stagnated again in the late 1970s.

In the 1980s, tourism blossomed. Many people from the mainland started to visit Okinawa to enjoy marine sports. After that, in spite of some crises such as the collapse of the bubble economy in 1991, the Asian financial crisis in 1997, and the 9/11 terrorist attacks in 2001, Okinawa's economy grew steadily.

Let us take a look at annual growth rates of Okinawa and Japan. As you can see on slide 6, before the reversion to Japan in 1972, there is no correlation between Okinawa's growth rate and Japan's growth rate. For example, the shaded areas represent recession periods in Japan, so Japan's growth rate goes down during these periods.

However, while under the control of the United States, the growth rate of" Okinawa goes up in some of these recession periods. This indicates that Okinawa's economy had been disconnected from Japan's economy until the reversion. After the reversion to Japan, however, the growth rates of Okinawa and Japan generally mirrored each other. This indicates that these two economies started to collaborate in similar ways.

The key point here is that in the 1960's, Japan had experienced rapid growth, but Okinawa had not. So at the time of Okinawa's reversion to Japan, Okinawa was at a lower economic level than Japan. Moreover, since the reversion to Japan, Okinawa has been growing at a similar

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Annual Growth Rate (%)

25 20 SO O (N ^ MO 00 O -•-Okinawa Recession -"-• Japan I > - O O C O C O C O O O O > C ^ G n C ^ C 7 \ 0 0 0 0 O O C ^ G N C T N O a N O O C ^ C T N O O O O O

Murakami and Fujisawa (2009). National Accounts. Indexes of Business Conditions

Slide 6: Annual Growth Rates of Okinawa and Japan

rate as Japan, meaning that Okinawa has had no chance of catching up with Japan's economy.

According to some economic theories, developing economies are able to catch up with

developed economies by the catch-up effect.1 The catch-up effect suggests that developing

economies tend to grow at a faster rate than developed economies because diminishing returns

are not as great in developing countries as they are in developed economies. Furthermore, developing economies can replicate production methods, technologies and institutions currently used in developed economies. This effect, however, was not present in Okinawa.

That is one reason why the ratio of income per capita in Okinawa never converged to that of Japan. As you can see from the line graph on slide 7, the ratio has been around 70% for almost forty years. Although it is apparent that the Okinawan economy has been getting healthier since the reversion, the gap with Japan has not diminished at all. That is a source of frustration for people in Okinawa.

One reason why the catch-up effect has not taken root for Okinawa's economy is that there is no large secondary industry in Okinawa. The catch-up effect is considered to happen in the process of industrialization. As you can see from slide 8, the ratio of manufacturing employment in Okinawa is small compared to the ratio in Japan. Japan attained its rapid growth by selling manufactured products such as cars, ships, and machineries. Moreover, manufacturing industries absorbed a lot of the workforce in Japan so that workers could

1,000 JPY 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0

Income Gap

Japan=100 90 SO 70 60 50 40 30 20 10

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v*-^ " ^ i—Uapan n " _{nnririt-innnrir} i—lUkinawa -~rJ~L n - ~ - -j-_--^]~r—i^i [-i i i1 i i i i i i i i i i i i i i 1 1 1 1 1 1 1 1 1 1 1 1 1

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National Accounts, Prefectural Accounts

Slide 7: Income Gap between Okinawa and Japan

earn money. On the other hand, Okinawa lacked such manufacturing industries, which caused unemployment issues to surface in Okinawa. Note that Okinawa's ratio of the construction industry is larger than Japan's ratio. As we will see later, this is caused by public investments,

one of the main sources of income in Okinawa.

So, what are the major sources of income in Okinawa? Slide 9 indicates that there are three major sources. I imagine that the situation is similar to your countries, as I mentioned before. In 1972, income from the military was the biggest source of income in Okinawa. This income source has been fairly steady. Even today, about 10% of all the land in Okinawa Prefecture is used for U.S. military bases. Therefore, a percentage of the population in Okinawa receives salaries for work relating to the bases. Another percentage of the population receives money as compensation for the use of their land for the bases.

The biggest source of income in most periods, however, was public investment. Japan's government expanded and built up a lot of Okinawa's infrastructure such as airports, seaports, highways, roads, hospitals, schools, and so on. Even now, some people believe that public investments are necessary to keep Okinawa's economy from collapsing, even though the social infrastructure is now sufficient in Okinawa. Some economists also believe that stimulating an economy is one role of public investments, and therefore Okinawa requires more public projects to spur its economy. However, because of Japan's huge budget deficit, the amount of money

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Employment by

Major Industries

DAgriculture and forestry

• Construction

• Manufacturing

• Information and communications, transport and postal notivitie

• Wholesale imd retail trade

• Scientific research, professional and technical services • Accommodations, eating and drinking services

•Living-related and personal services and amusement services

• Medical, health care and welfare, education, learning support • Services, compound services

• Government, except elsewhere classified

Okinawa 5.3 10.5 5.0 7.6 16.4 8.7 4:3 18.2 10.1 5.6 5.3

Japan 3.7 8.7 16,9 5.2 6.2 3.8 15.0 6.9

0% 10%, 20% 30% 40%, 50% 60% 70% 80% 90% 100%

Labour Force Survey

Slide 8: Employment by Major Industries

Major Sources of Income

600Billion JPY -♦-TourismReceipts

-"-Military-related Receipts Public Investment 500 400 300 200 100

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used for public investments has been decreasing. Now the biggest source of income in Okinawa is from tourism. Therefore, we have to rely more on tourism, at least for now. That is why

tourism needs to be sustainable.

DI. Employment issues in Okinawa

Let us move on to the employment issues in Okinawa. First of all, 1 would like to show you the unemployment rates of Japan and Okinawa. As is indicated on slide 10, before 1972, the unemployment rate in Okinawa was lower than Japan's rate. But after 1972, the unemployment rate in Okinawa increased and remained high all the way into present times. Roughly speaking, the unemployment rate in Okinawa is twice as high as that in Japan. Moreover, Okinawa's economy in now strongly connected to Japan's economy, so the two rates move similarly.

Unemployment Rate (%)

O C ^ t — H c n r n r ^ G > ^ - < r ^ i r n t - ^ C A r — < r r i t n c - - a > i — i f n ^ t ^ C \ - m i n r i n i n v O v o \ o ^ v D ! ^ i - ~ r ~ t - - - r ^ « ) c o c o c o c c c ^ C h C h C ^ c ^ o o o o o a C i a ^ O f f , ^ ^ & ^ C C h ^ f f l a i O \ & & C n O \ c > & 0 0 0 0 0

r~I rH i—I t—I i—I r—I i— ^ ^ ^- — ^ ^ h ^ - ^ ~ ^ h , — ^ ^ ^ r - r - r a f O f s ) M N

Labour Force Survey

Slide 10: Unemployment Rates of Okinawa and Japan

Why is the unemployment rate in Okinawa so high? While there might be many reasons, 1 will focus on four specific factors shown on slide 11 because time is limited. Those factors are:

1. Though the number of employees has been increasing, the unemployment has outpaced new jobs.

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Why High Unemployment

Rate in Okinawa?

• Unemployment outpacing new jobs

(though overall increase in number of

employees).

• High employee separation rate within

younger generation.

• Mismatches in labor market.

• Irregular workers (temporary, seasonal)

Slide 11: Why High Unemployment Rate in Okinawa?

The Number of Employed and

Unemployed

1,000 Persons 10% 1,200 4U _420_427 i l it!. 566 561 565 579 8.4 8,3

457 457 463 474 481 478 465 467

^41 !<> 51 m. 12 •

Population of 15-year olds or older | || I I II II II I I I I

577 573 582 595 598 597 592 600 617 622

1 INnt in Labor Force eZnnincinjiloyecl Persons I 'Employed Pawns •^^Unemployment Rate -2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LabourForce Survey

2. Employee separation rates within the younger generation are high.

3. There are mismatches in the labor market.

4. The ratio of irregular workers is high.

Firstly, slide 12 shows the number of employed and unemplo3'ed in Okinawa. Let us take,

for example, 2008. The bottom bar is the number of employed. The middle bar is the number of

unemployed. The sum of those two bars is the labor force; e.g., 648 in 2008. The unemployment rate is calculated by dividing the number of unemployed into the labor force (48/648), which comes to 7.4%. This number appears in the line graph at the top. The top bar represents those people not in the labor force, such as homemakers, students, and retirees. The total height of the bars represents the population of people 15-year olds and older.

Please look at the bottom bars. As you can see, the number of employed has been increasing. The problem is that there is an overall increase in the number of unemployed. This is because the population of 15-year olds and older has been increasing. The main point is that there are many potential workers who are not in the labor force and who quit looking for a job. As a result, when the economy is healthy, they enter into the job market and start searching for a job. During their search for a job, they are counted as unemployed. What I am trying to say is that there is a huge redundant labor supply in Okinawa, but they are waiting for a job while being in the "not in labor force" category.

Secondly, slide 13 and 14 show the separation rates of new college graduates both in Japan and Okinawa. I would like to concentrate on the younger generation for this issue. This is because the primary concern about separation rates causing unemployment now is about them. Let us look, for example, at the year 2002. The bottom bar shows the percentage of new college graduates who quit their jobs within a year. The middle bar shows the percentage of the people who quit their jobs in their second year of working, and the top bar is the percentage of the people who quit their jobs in their third year of working. So in total, 34.7% of new college graduates in Japan in 2002 quit their jobs within three years. Averaging the years of complete data, roughly speaking, one-third of new college graduates quit their jobs within three years in Japan.

As a side note, about 50% of new high school graduates quit their jobs within three years, while about 70% of new middle school graduates quit their jobs. Now you can see why this is considered a big problem in Japan. This separation problem is called the "7-5-3

problem." Culturally, 7-5-3 refers to a celebration ceremony for children, wishing them health

and happiness. Three- and seven-year-old girls are celebrated, while five-year-old boys are. Therefore, it is rather ironic that a day of celebration is also used to refer to the separation problem of junior high school graduates (70%), high school graduates (50%), and college graduates (30%).

Returning to comparing the separation problem between Japan and Okinawa, the situation is worse in Okinawa. Averaging the years of complete data, a total of about 50% of new college

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Separation Rate of New College

Graduates in Japan

•Third Year mj Second Year • First Year -♦-Sum 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year Graduated Sources: Ministry ofHealth, Labour and Welfare

Slide 13: Separation Rate of New College Graduates in Japan

Separation Rate of New College

Graduates in Okinawa

iThird Year • Second Year • First Year -Sum 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Year Graduated Sources: Ministry of Health, Labour and Welfare

Changing Jobs Ratio: How

Okinawa Stacks up (%)

(2007)

Japan

Okinawa *Rank

All ages

_5.6

_7.5

₁

Ages 15-34

_9.5

_14.4

₁

*out of Japan's 47 Prefectures

Employment Status Survey

Slide 15: Changing Jobs Ratio: How Okinawa Stacks Up

graduates in Okinawa quit their jobs within three years. The numbers of high school graduates and middle school graduates quitting their jobs are much higher than the numbers for the

mainland.

Before moving on, note that not all workers who quit their jobs become designated as unemployed. Some of them quit their jobs because they find another job. As slide 15 shows, the changing-jobs ratio in Okinawa is higher than that in Japan. The ratio for the younger generation is especially much higher in Okinawa. Okinawan people change jobs more often than their counterparts in Japan. Do you think that this is because they found better jobs? Actually, it has to do more with the lack of the right skills to match the job market.

Thirdly, slide 16 indicates that the mismatches in Okinawa's labor market are serious. The first column is the classification of occupations. The list is random and merely used for comparison purposes. The second column is the number of jobs that were available in 2009. The third column is the number of workers who were looking for a job in that year. The last column is the ratio of the two numbers, that is, new job openings-to-applications ratio.

If this ratio is 1, each job seeker gets a job and each opening is filled - perfect harmony. If this ratio is 2, each job seeker has a choice between two jobs - a job seekers' market. If this ratio is 0.5, only one out of two job seekers is able to get a job - an employers' market. This ratio in Okinawa in total is just 0.43. This number means that only forty-three out of a hundred job

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Mismatches in Okinawa's

Labor Market

2009 (fiscal year)

Classification New job openings

New applications

New job

openings-to-applicants ratio

Sales clerks 3,184 2,103 1.51

Medical technicians 681 497 1.37

Public health nurses, midwives, nurses 3,006 2,225 1.35

Service workers 6,519 11,216 0.58

Total 44,010 102,887 0.43

Production process and related workers 6,885 19,623 0.35

Merchandise sales workers 3,349 12,086 0.28

General clerical workers 5,343 26,494 0.20

16 _{Employment Security Administration}

Slide 16: Mismatches in Okinawa's Labor Market

seekers are able to find work. The remaining fifty-seven job seekers remain unemployed and have to wait for new openings. In such a labor market, it is often the case that salaries will be depressed, which can lead to economic stagnation and brain drain - skilled workers leaving Okinawa to find better job opportunities elsewhere. This situation may also lead to a high rate of job separation, as we see in Okinawa.

So the situation is pretty severe for workers in Okinawa. For some jobs such as sales clerks, medical technicians, public health nurses, midwives and other nurses, the ratios are more than 1. Therefore, the labor market favors workers in those job markets. As for some other jobs - production processing and related work, merchandise sales, and general clerical work - the ratios are quite low.

For example, the number of job openings for general clerical work was 5,343 in 2009. On the other hand, the number of applicants for those openings was 26,494. As a result, the ratio is 0.20, which means that a mere twenty applicants out of one hundred are able to find work in that field. The other eighty applicants have to remain unemployed. Also, those workers are categorized as unskilled labor.

Those numbers indicate that workers in Okinawa are suffering from mismatches in the labor market and, as mentioned above, these workers tend to quit or change their jobs often. The wages for unskilled labor are low, their working hours are long, and their working

environment does not support them enough. Eventually those workers tend to quit their jobs, and their behavior causes a high unemployment rate and a high separation rate in Okinawa.

It is vital for the local government, administrations, and/or schools to do better in opening the door to more opportunities for unskilled workers to learn some skills. In theory, this will lead to filling the gaps in the skilled-labor market and bringing the economy closer to a state of harmony, which would benefit everyone on Okinawa. Unfortunately, many college graduates today in Okinawa have not developed the necessary skills for today's high-skills job market. As a result, they have to work, for example, as merchandise sales clerks, such as salespersons at souvenir shops.

17

Ratio of Irregular Employees:

How Okinawa Stacks Up (%)

(2007)

Japan

Okinawa *Rank

All ages

_35.5

_40.7

1

Agesl5-34

_33.6

_46.6

₁

*out of Japan's 47 Prefectures

Employment Status Survey

Slide 17: Ratio of Irregular Employees: How Okinawa Stacks Up

Fourthly, let us see the ratio of irregular workers in Okinawa. As you can see on slide 17, the ratio in Okinawa is the highest in Japan. Especially, the ratio for the younger generation is much higher in Okinawa than in Japan. I have to confess that this number even surprised me. Nearly 50% of the younger generation works as irregular workers in Okinawa.

In general, irregular workers are unstable. Many of them do not have social insurance, and they do not earn enough money to support a family, to buy a house, to buy a car, or to visit your country as tourists. Why are there so many unstable, irregular wokers in Okinawa? Perhaps not being able to find a regular job right away might make these job seekers chose

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irregular work.

IV. Change in type of employment of younger generation by occupation in Japan

Before going to the conclusion, I would like to discuss further what is happening between regular workers and irregular workers in Japan. Note that these are not data of Okinawa, but data of Japan because there are no such data for Okinawa.

Four points become apparent from the following two slides. The first point is that the numbers of regular workers who earn high salaries are decreasing. The three jobs listed on slide 18 are considered high salaried jobs. Such jobs are partly supplemented by irregular workers. The second point is that the numbers of regular workers who earn less money are increasing. The two jobs listed on slide 19 are considered low salaried jobs. The third point is that the number of irregular workers are increasing, as well.

The fourth point is that the total number of regular workers who work for big companies

has been decreasing rapidly over the last ten years. To make up for the decreasing number of

regular workers, irregular workers who work for small or middle sized companies fill in those blanks with lower incomes. In total numbers, as you can see in the last column, the number of

Change in Type of Employment of

Younger Generation (twenty-somethings)

by Occupation in Japan

Changes in number (10,000) and percentages (1992-2002)

Type of employment

Size of company (# of employees)

Specialist and

technical workers Clerical workers Sales workers

Regular

Under 1,000 8 (10%) 2 (3%) 7 (14%) Over 1,000 -10

(-27%)

-30

(-45%)

-10

(-27%)

Irregular

Under 1,000 7

(99%)

16

(172%)

13

(422%)

Over 1,000 1

(91%)

8

(220%)

5

(572%)

Ohta (2010a)

Change in Type of Employment of

Younger Generation (twenty-somethings)

by Occupation in Japan

Changes in number (10,000) and percentages (1992-2002)

Type of employment

Size of company

(# of employees) Service workers

Production process and related workers Total of all occupations

Regular

Under 1,000 17

(186%)

18

(51%)

55 (21%) Over 1,000 l (50%) -2 (-11%) -49 (-31%)

Irregular

Under 1,000 11

(312%)

9

(164%)

58 (198%) Over 1,000 "3 3

(734%)

2

(248%)

21 (276%) Ohta (2010a)

Slide 19: Change in Type of Employment of Younger Generation by Occupation in Japan: Part 2

Younger generation tends to

choose to be unemployed...

• ...when they can't find a "good" job at

time of graduation.

• ...when they think that they aren't suited

for the job.

To be unemployed could be

an investment to finding a better job.

Ohta (2010b)

Slide 20: Younger Generation's Tendency toward Employment

i<m±¥&m^3t& mim

regular workers has increased by just 60,000. However, the number of irregular workers has increased by about 800,000. Something must be done to reverse this situation.

Fortunately, there is a rather optimistic opinion about this situation raised by Professor Ohta. Perhaps this may lead to reversing the trend we have been seeing over the last decade. According to Professor Ohta's research, if a young worker or a new graduate cannot find a

"good" job, he might be able to wait a while for a better job to come along. The reason being:

compared to more aged job seekers, he should be able to find a job more easily. However, if the young job seeker takes the first job offer that is presented to him, he takes himself out of the hunt for that "better" job. If he finds a better job, his lifetime wages would be much improved. Therefore, to be unemployed for a short time could be seen as an investment to finding a better job.

V. Conclusion

As a brief conclusion to this lecture, I would like to suggest a possible outline for future employment policies. Note that I will not go into specifics about these policies, nor will I

evaluate them here in this lecture.

1. Strategy for economic growth: Companies need to earn enough profits so that they can hire a lot of workers. Therefore, growth strategy planned by the government is crucially important.

2. Job training: There are mismatches in the labor market, and new skills are always

required. Therefore, government policies that promote getting workers new skills are

important.

3 . Support for new graduates: In Japan, if you fail to find a job as a regular worker at the time of graduation, finding that job the following year becomes much more difficult because companies seem interested in only hiring fresh graduates. The problem is that job markets are affected by economic conditions. For example, if you are unlucky and the economy is bad at the time you graduate, you may not find a job, which may lead to you never finding a "good" job. This is not fair. The job market system has to be changed so that companies become more flexible in their hiring practices.

4. Resolve regular-irregular polarization: In Japan, regular workers are strongly protected by laws. Companies can not fire regular workers without clearing strict conditions. As a result, companies have become hesitant with hiring regular workers and have started to hire irregular workers. Again, irregular workers are unstable. Therefore, the relaxation of regulations covering regular workers would make job markets more flexible so many more job seekers would have the chance finding regular jobs.

Okinawa, and maybe in your countries, as well. I have heard that Okinawa Prefecture is sometimes called a "p-prefecture." This p- is an abbreviation for planning, and this means that Okinawa Prefecture is only good at planning, not producing results. Frankly speaking, governments are always good at planning and sometimes good at implementing policies. But they are not good at evaluating how the plans succeeded or how they failed. The policies must be checked every year after they have been implemented. Using cost-benefit analysis and checking Plan-Do-Check-Act cycles are helpful.

Design for Employment Policy

• Strategy for economic growth

• Job training

• Support for new graduates

• Resolve regular-irregular polarization

• Cost-benefit analysis for employment

policies

Slide 21: Design for Employment Policy

I hope you enjoy your time here in Okinawa. Thank you for having me here today and thank you for your time.

Acknowledgements

I appreciate that Japan Overseas Cooperative Association gave me this opportunity to

give a talk about the Okinawan economy and its employment issues to the people from other

Oceanic countries. I also appreciate Mr. Kenneth T. Howells for the helpful comments and

tm*i¥&mmffi®m mim

editing of this paper.

Notes

See Jones (2001) in detail.

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