Impact Of Globalization On Recent Changes To Employment Patterns And Structure In Japan Or Industry Of Japan
The economies global integration under the neoliberal policy regimes has resulted to an elemental impact on employment patterns globally, although in distinct ways in various countries. This will explore the intersections between the present globalization trajectories, changes to structure of employment as well as the relationship to policies meant to guard decent opportunities of work. In doing this, the paper will examine global factors that have affected labor supply and demand and. Particularly, the paper states that current trends in the global economy have resulted to limiting of labor demand comparative to labor supply. This has created pressure that have resulted to employment structural changes that compromises the welfare of working people and affects the future economic development trajectory.
The main thesis for the paper is that some universal factors resulting from globalization neoliberal era have had effect in various countries. However, particular labor market outcomes depend on local institution as well as structural realities. Within this wide perspective the paper will look into the changing patterns of employment in Japan. Among the features of current globalization is the evident financing of the state economies as well as the sporadic incidences of crises of devastation in the economy. Japan has experienced asset price bubbles as well as consequent collapse in economy.
The employment structure
In this paper, employment structure is used for describing the relative importance of various arrangements of employment. The paper focuses on three dimensions namely: degree of formality, status in employment, and sector activity. With the growth and development of an economy, there is bound to have changes in production structure which have direct connotations for the quantity and quality of opportunities of employment.
The conventional state of development of economy is a swing away from agricultural production towards manufacturing (Kaldor, 1967; Kuznets, 1971). These changes in the structure of production are linked to the employment structure transformation. Nonetheless, transformation in the employment sector shares will not precisely imply the changes in the production sector, unless in extraordinary situations. Past studies on the employment structure changes showed that industrial employment would go up with per capita income (Kuznets, 1971). Productivity of labor increases more swiftly in industrial activities, because of technological advance as well as economies of scale. As a result, the reallocation of agricultural labor to industry has allowed a faster growth of aggregate income. These structural changes in employment have had significant impacts on the average living standards of the working class. This is specifically because any surplus in labor in agricultural sector has been absorbed by growth in industrial labor demand. Growth in income has provided a foundation for domestic markets growth that not only supports industrial development, but has also encouraged service sector growth.
The employment structure will clearly transform in the course of economic development. Nonetheless, the causation direction runs in all directions. The employment structure also affects the economic performance. Labor concentration in activities of low productivity with limited opportunities with limited opportunities for increasing movement will negatively affect the standards of living and economic growth (Hyman,1986)
The second employment structure dimension considered is employment status. Employment can be classified using two main criteria: firstly the degree and form of economic risk and degree and form of autonomy/authority which workers have in specific employment conditions. Employment status categories include: employers, employee, contributing family workers, members of producers’ cooperatives and own-account workers. Most of the employment forms can be categorized within these major groups (Heintz, 2005). Nonetheless, the lines between these categories of employment status may be unclear for other types of non-regular employment types. When doing analysis of the overall employment structure, categories of employment status ought to be defined in order to travel the changes with time.
The last aspect of employment structure is the relationship between the system of economic governance and prevailing arrangements of employment. The informal employment concept is meant for capturing relationships of employment that are not governed by formal economic regulations or basic social protections. Since these employments fall partially or entirely outside the formal sphere of regulation. It has a tendency of been more unstable with higher poverty risk and lower earnings than the employments that enjoy protections of formal regulations (Chen et al., 2005). As a result, the formality level signifies an essential aspect of the employment structure.
The aforementioned dimensions make up the employment structure in employment for this paper. The paper argues that global economy changes as well as the dominant policy framework have changed the employment structure in a manner that lessened social protections. They have also redistributed risk to workers with less independence and also raised the number of individuals who are employed in low productivity and low paid sectors.
The conceptual framework of employment can be applied to Japan. In Japan, the employment structure has dramatically evolved over years. Japan experienced what can be referred to as Kaldorian industrialization path. This means that there was labor movement out of agriculture towards the manufacturing with the rise in the living standards. With the expansion of income, the demand for services and service employment also increased.
The employment structure continued to grow in Japan in 1980s onwards. The employment status changed with the rise in the non-regular employment. Considering past data from the Japan Bureau of Statistics, non regular employment shot up from about 15% of the overall employment in 1984 to more than 35% of the overall employment in 2009. The women constituted a large share of the workers in the stated employment opportunities. This summary indicates the way employment structure has evolved and in Japan.
Bubbles, crises and employment structure: Reflections on Japan
Bubble economies and financialization in Japan
The labor demand and supply trends showed above are associated with the current period of neoliberal globalization. The imbalances between global supply and demand of labor have posed specific challenges for high income states like Japan. In Japan, the employment structure was shaped by a conventional Kaldorian path of development. This trajectory was interrupted suddenly in the 1970s by global shock in prices of oil as well as the consequent response in neoliberal policies. Employment in manufacturing industries as a share of total employment was at the peak in Japan and growth in employment has increasingly taken place in service sector. In the sector of manufacturing, growth in worldwide integration has increased pressures of competition with the expansion of manufacturing production in countries that are newly industrializing.
These transformations had been a threat to the social accord that took place in Japan until the 1980s. Industrial capital was anticipated to sustain employment generating and productive investment that would ensure a steady supply of good jobs. In return, profitability was assured by sustenance of collective demand as the labor productivity rose. During this swift growth of the employment in industries in Japan, collective demand got support from high quantity of exports. Public investments in education and infrastructure offered essential complementary inputs in production that advanced private capital productivity. At the hub of the social concurrence in Japan there was a life time employment idea.
Deindustrialization and restructuring of global production destabilized the previous social bargain. In Japan, the global production expansion to various countries strengthened competitive pressures and made it very hard to rely of exports as a main source of collective demand. In addition, the rate of growth of manufacturing employment slowed considerably in the 1970s. This signified that the period of sustained industrial expansion in Japan was nearing its closure. This increased the likelihood of future deindustrialization and considerable structural transformation, with far reaching repercussions for the quality and quality of opportunities of employment.
Considering the developments, Japan was faced with a political test to maintain a core set of good jobs in the face of these pressures. The verity that the societal segmentation contained limited power, for instance marginalized populations and women, made people to be employed disproportionately in poor quality and non regular jobs. This disparity caused reduction in the likelihood that distributive conflicts were to become a crucial test for the ingrained economic interests. Nonetheless, the previous social harmony based on an extension of industrial employment could not be sustained, considering the global dynamics and deindustrialization patterns.
The Kaldorian framework does not offer plenty of insights into the development course in economies for whom the share of labor allocated to industrial production has started declining. This brings up crucial questions. Like whether precarious employment and low productivity continue growing in the absence of prevailing manufacturing development. There is also a question on whether resources allocation to other non-industrial sectors can help in sustainable enhancements in the employment quality. This is in consideration to the way in which productive resources allocation to manufacturing production did at the time of industrialization. This last situation necessitates that the novel driver of post industrial development contribute to accumulation of capital, collective demand and improvements in long run productivity. Among the probable participant is the sector of finance. This is ascribed to the deepening and the innovation in the financial sector becoming the fresh driving forces for development of economy. Either way, majority of post-industrial economies have faced a swift increase in the financial sector size in the recent years. Another lingering question is on whether industrialization can be replaced by financialization as a basis for offering quality employment in the time to come.
In Japan, swift financial sector extension, via financial services growth, appreciation of financial asset prices and new financial innovations led to reduction structure of employment pressure. For restricted time, it seemed as if resource reallocation to the sector of finance supported the outcomes of employment, domestic demand in the non-financial division of economy and investments. This financialization in Japan was linked to the bubble economy in started in 1980s and which ran up to 1990.
In this situation it shows that loose policy in finances and high liquidity levels were main contributors to inflation in asset price which was supporting the domestic economy. In Japan, yen appreciation after the 1985’s Plaza agreement, maintained the price of consumers at levels that were low, with the fall in the cost of imports. As a rejoinder, the Bank of Japan reduces the rates of interests and increased liquidity (Itoh, 2000). High foreign reserve levels made it possible for the Bank of Japan to at the same time sustain strong yen and keep the rates of interests low without leading to acceleration of inflation of consumer prices.
The increase in the prices of assets was supporting domestic demand and domestic fixed capital investment during the years of bubble. The 1970s economic shocks reduced growth of investment from the high rates which were prevailing in the 1960s. Fixed growth in investment stayed at low levels until the second half of 1980s’ bubble economy. Following 1990, fixed investment growth fell to low levels, due to the bubble economy collapse. Schaller and Chirinko (2001) showed more thoroughly that increase in the Japan, stock market constituted a bubble and the bubble directed affected investment in fixed capital.
The inflation in the asset price of Japan kept unemployment at low levels and assisted in preservation of employment structure. It helped in maintaining comparatively permanent and quality jobs. Although very low, the rates of unemployment in Japan were showing a steady rise until mid 1980s. At the time of asset price bubble, this tendency overturned itself and the rate of unemployment in Japan reduced. Strikingly, the bubble economy seemed to briefly reverse the deindustrialization process. From data from the Japan Bureau of Statistics, employment in manufacturing industries in real sense rose during the period of bubble economy. Nonetheless, after the collapse, unemployment in Japan rose to record high levels and the deindustrialization process, that was concealed by the financial bubble because trivial. The manufacturing employed dropped following the bubble up thrust.
The financialization patterns in Japan were susceptible to economic volatility according to Minsky (1986). He theorized that there wan endogenous expansion in the financial sector. This expansion took place in a manner that could not be sustained and those which were prone to financial bubble. Nonetheless, bubbles invariably burst resulting to economic crisis. As a result, any resolve to global pressures on the employment structure based on speculative asset price inflation can only be temporary. This is shown by the experiences in Japan. Considering the fact that this paper focuses on outcomes of employment, it is crucial to examine the effect of economic crises on the employment structure.
Economic crises and employment structure
At the moments of crisis, changes to t demand and supply of labor are very severe, which leads to rapid changes in the employment structure. Typically, firms respond to downturns in economy by cutting down their workforce, since the decisions of hiring have a tendency to be repealed than investments done in fixed equipment and plant. Additionally, revenues from government are placed under pressure with fall in tax receipts, which lead to losses of employment in the public sector. The pressure of cost cutting increases at the times of crisis with firms trying to safeguard profit margins. With the increase in unemployment, economic crises as well strengthen the power of bargaining to the management in relation to that of labor. These times are auspicious for employer to restructures jobs and relationships of employment. Plans for eroding protections related to jobs may be executed during a crisis since it is an appropriate moment for doing this. This is because there will be the least chances to get resistance by workers who are facing high job loss costs.
Despite the fact that non-regular and temporary workers may be the first in losing their jobs at the time of economic crisis, these types of employment may as well grow very swiftly at the initial time of recovery and stabilization. When faced with prospects of economy, employers have high chances to increase job opportunities for part time and temporary workers instead of recruiting on employees on permanent basis. Employment patterns that come up as a result of process of recovery will become engrained they show their high profit margins. Therefore, an employment practice that comprises generation of sizeable numbers non-regular jobs can end up been systematized at times of crisis which will then expand further the period of recovery.
This shows that downturns in economy brought about by the bubble economy collapse mostly have a permanent impact on the employment structure. The economic downturns linked to these crises often created cyclic occurrence. The crisis is anticipated to be followed by recovery, with the economy ultimately coming back to its pre-crisis state. Nonetheless, in terms of employment, this may be different. There may be long term consequences to short term crises for the employment structure. The continued rise in non-regular employment as a share of overall Japan employment, so as to now represent a third of the total employment opportunities, shows a permanent structural change.
Decent work employment policies
Neoliberal policies give a solution to problems of employment in the labor market. This implies that widespread informality and unemployment are to blame for extremely rigid regulations in the labor market or the deformations brought in by collective action on the part of workers. The argument this paper present indicate that the resolve to problems of employment in most cases are to be found outside the labor market. Structural changes at the global market can lead to unemployment and also encourage precarious employment forms. Bubbles in asset price have implications on the outcomes of labor market; also the consequent collapse in macro economy can eternally change the employment structure. Neoliberal policies limit demand of labor by affecting the capital accumulation rate as well as the collective demand. Individual firms which act at the situations of pressures from competition follow uncoordinated strategies which emphasize productivity enhancements in the supply side. However they fail in adequately supporting market development. This ultimately led to decline of growth of decent opportunities of employment and the increase in less formal employment forms.
For the countries that have high levels of labor productivity like Japan, an increased focus on improving productivity of labor may end up been counterproductive in a global setting where there is abundant supply of labor. Rather, economics ought to stress on raising productivity of relatively scarce production factors. Possibly, the single most essential service activities to maintain the long run economy integrity are services which contribute to human beings development. They comprise of education and health services, in addition to non-market care services that are offered via uncompensated household labor, which is mostly offered by women. With the contribution of women in labor force increasing, the conventional arrangement in which these services are offered is currently under pressure (ILO, 2008). A fresh approach to policy of employment would require suggesting efficient and sustainable institutional arrangements in ways that will rightly value the contribution of these actions to the economical development. Obviously these areas of policy intervention are very wide and the list is not complete. Nonetheless, to enhance decent opportunities of work worldwide, there ought to be a reorientation of policies far from the neoliberal approaches that have been dominant in the economic setting for some time now. There ought to be a focus on employment as the main means for improving human development, reducing poverty and creating egalitarian outcomes foundation.
Chen, M., et al., (2005) Progress of the World’s Women 2005: Women, Work, and Poverty, New York: UNIFEM.
Chirinko, R.S. & Schaller, H. (2001). ‘Business fixed investment and ‘bubbles’: the Japanese case’ American Economic Review Vol. 91 Is. 3 p.663-80
Heintz, J. (2008) Employment, informality and poverty: an Empirical overview of six countries with a focus on gender and race. Background paper prepared for UNRISD Flagship Report on Poverty. Geneva.
Hyman M. (1986) Stabilizing an Unstable Economy. New Haven, CT: Yale University Press
ILO (2008) Global Employment Trends for Women, March 2008. Geneva: International Labor Office.
Itoh, M. (2000) The Japanese Economy Reconsidered. New York: Palgrave.
James, H. & Pollin, R. (2005). ‘Informalization, economic growth, and the challenge of creating viable labor standards in developing countries’
Kaldor, Nicholas (1967) Strategic Factors in Economic Development Ithaca, New York: Cornell University.
Keizer, A. B. (2008) Non-regular employment in Japan: Work, Employment, and Society Vol. 22 Is. 3 p.407-25
Kuznets, S. (1971) Economic Growth of Nations. Cambridge, MA: Harvard University Press