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![Page 1: The Japanese Economic System under the Global Crisis: Change and Continuity September 2009 Vietnam Satoshi Mizobata KIER, Kyoto University.](https://reader036.fdocuments.in/reader036/viewer/2022062322/56649e045503460f94af0aff/html5/thumbnails/1.jpg)
The Japanese Economic System under the Global Crisis: Change and Continuity
September 2009
Vietnam
Satoshi Mizobata
KIER, Kyoto University
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Introduction
The Global crisis hit Japan. Economic recession in economy Change and continuity of the economic
system : LME vs. CME Political change Lessons of the Japanese experiences
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Controversy on Japanese Heterogeneous Economy
Traditional controversy (1930s)
Backwardness vs capitalist stage Modern controversy
Japan as NO.1 vs Backwardness
Is your country heterogeneous or the normal European country?
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The catch-up (flying geese) model in East Asia
Authoritarian Regime for development
Japan
China
ASEAN
NIEs
Vietnam
Laos, Cambodia Myanmar
Graduation
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General Election in August 2009: from the Liberal-democratic party to the Democratic party
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General election in August 2009
seats Small electoral district
proportional
Previous election
Democratic party 308 221 87 115
Liberal democratic party 119 64 55 300
Komei (central) 21 0 21 31
Communist party 9 0 9 9
Socio-democratic party 7 3 4 7
others 16 12 4 16
total 480 300 180 478
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【 position of party 】
Liberal marketstabilisation liberalisation privatisation
Nationalism
State interventionregulation
GlobalisationWesternisation
Communist partLiberal democratic party
Komei (central)
Democratic party of JapanSocio-democratic
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The Democratic Party won in August 2009. This is the first time of “transition”.
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1. Japanese economy after the ‘Lost 10 years’
Initial conditions (negative inheritance of the bubble economy) of the contemporary
Japanese economy
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Changes of the economic policies in the post-war period
Economic growth 40 years in Japan
High economic growth in 1960-1973 (Average Economic Growth: 9.7%) Income doubling policy - An increase of production - an increase of wages
- an increase of consumption ---- virtuous circle 1958-1962 (42 months) boom 1 called "Iwato Keiki" 1965-1971 (57 months) boom 2 called "Izanagi Keiki" 1973 Oct.: the first oil shock Stable economic growth in 1973-1985 (Average Economic Growth: 3.3%) 1979 Jan.: the second oil shock Bubble economy in 1985-1991 (Average Economic Growth: 4.9%) the highest stock price in 1999 Dec. Lost ten years in 1991-2001 and now (Average Economic Growth: 1.1%)
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GDP in JapanAnnual GDP
growth(%)
Annual growth of
total labour
hours (%)
Annual growth of capital stocks(%
)
Annual growth of
total factor
productivity (%)
Annual growth of labour forces (%)
1955-1973
9.08 1.02 11.15 5.02 1.34
1974-1990
3.85 0.65 7.2 1.24 1.07
1991-2003
1.30 -0.8 4.28 0.58 0.33
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Bubble economy, what?Bubble economy after 1985G5 Plaza accord (strong Yen and financial relaxation) and a decline of
petroleum price (positive current balance) changed the economic environment and lead Japan Bubble economy.
1) liberalization 2) An increase of assets value 3) Anticipation of high assets prices 4) Financial flows support the assets price increase. Oversupply of domestic money → investment in estate markets
(advantageous tax also stimulated) → increase of land price → increase of stock price → expansion of banks’ financing ability → increase of land buying by the banks’ credit → increase of land price →…
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Bubble economy
High land price High stock price High leverage
ratio Economic boom-
bubble economy
stock price
05000
1000015000200002500030000350004000045000
1980.1 1986.1 1989.1 1992.8 2003.4
stock price
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Collapse of the bubble economy-lost ten years
Economic policy in the period of the post-bubble economy: 1990s
overkill of restrictive policy 1990s is called "lost ten years" in Japan, because during
this decade the long-term recession has hit Japan. This drop down is a product of the so-called Bubble economy on the one hand. On the other hand, the traditional Japanese economic system is regarded as a negative factor, because it has revealed its inefficiency and opaqueness.
Budget deficitBad loan
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Change in bubble economy
Change between 1985 and end of 1989
Change between 1990 and 2004
Market value of stock
Y 657 trill. -Y 485 trill.
Change of Ratio to nominal GDP
+1.6 times -0.97 times
Market value of housing
Y 1198 trill. -Y 976 trill.
Change of Ratio to nominal GDP
+2.8 times -2.0 times
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Negative legacy in lost ten years 1) Public finance: deficits
A decrease of tax revenue An increase of expenditure Accumulated deficits worst No1 in G7
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Negative legacy in lost ten years 2) Bad loans
Opposite phenomenon of the bubble economy
Bankruptcy of banks and nationalisation The long way of settlement of bad loans
year 1991-1997
1998 1999 2000 2001 2002-2005
Number of bankrupt banks
36 30 44 14 56 1
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Bad loans debate: 1) Disposal of bad loans brings about the new bad loans. 2) Without disposal of bad loan, the economy cannot grow.
New bad loans after 1997/98
Additional bad loans
Bad loans under bubble economy
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Liabilities of Non-financial company in Japan (stocks, 2000, Y trillion,%)
Total liabilities 1403 (100)Loans from banking sector 544 (38.7)
Stocks 445 (31.7)
Transaction credits 195 (13.9)
Loan bonds 66 (4.7)
Government bonds 44 (3.1)
Loans from private banks 361 (25.7, 6.4%)
loans from public banks 123 (8.8, 22.6%)
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Economic indicators
2000 2001 2002 2003
GDP, nominal 1.1% -2.5% -0.7% 0.8%
GDP, real 3.2% -1.2% 1.6% 2.3%
Fixed capital investment
8.6% -6.2% -18.5% 6.3%
Unemployment rate
4.7% 5.2% 5.4% 5.1%
Wholesale price
-0.6% -2.4% -1.6% -0.4%
Consumer price
-0.4% -0.8% -0.8% -0.1%
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Economic indicators2005 2006 2007 2008estimate
GDP growth nominal
0.9% 1.5% 1.0% -2.7%
GDP, real 2.3% 2.3% 1.9% -1.8%
Fixed capital investment
2.5% 1.8% -1.5% -0.8%
Unemployment rate
4.3% 4.1% 3.8% 4.0%
Wholesale price 1.7% 2.0% 2.3% 6.8%
Consumer price 0.1% 0.1% 0.3% 2.3%
Compensation of employees
2.2% 1.9% 0.5% -0.2%
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Anti-deflation economic policy
Public investment (Y. 27.4 trill. during 1992-1994, Y. 22.6 trill. during 1998-1999): The real expenditure was less than its plan, and the contribution to the economic growth is small or negative (1999).A multiplier effect of public investment was decreasing.
The Japan bank changed its financial policy form tight to relaxation in 1991. However, the bank could not stop deflation. In 1999 February, the bank adopted zero-interest rate policy. Moreover, the bank adopted quantitative relaxation policy and increased current account for interbank transaction. However, the practical money supply was restricted, the government failed to go out deflation spiral. In addition, the stop-and –go policy of the central bank weakened the effectiveness of zero-interest rate policy.
Nominal short-term interest rate
Consumer price change (annually)
Real short-term interest rate
2000 0.11 -0.7 0.81
2001 0.06 -1.2 1.30
2002 0.002 -0.89 0.89
2003 0.001 -0.30 0.30
2004 0.001 -0.10 0.10
2005 0.001 -0.10 0.10
2006 0.125 0.01 0.03
2007 0.47 0 0.47
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Economic recovery:2002-2006
The longest and weak growth The corporate profits lead the growth. Japanese economy changed its structure:
heavy export-oriented economy Growth concentration in 5 main branches:
automobile, electric machine and others Sensitivity to the global economy
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Izanagi boom Bubble boom Largest boom Nov.65-July 70 Dec. 86-Feb. 91 Feb. 2002-Oct. 07Length of boom 57months 51months 69monthsReal economic annual growth 11.5% 5.4% 2.1%Nominal annual rate 18.4% 7.3% 0.8%Growth rate in the growing period 122.8% 34.7% 4.2%An increase of wage 114.8% 31.8% -1.6%An increase of consumer price 27.4%(5.1) 8.5%(2.0) 0.7%(0.1)An increase of Nikkei stock price 71.7% 44.1% 67.9%Change of working population +3510 thousand +4130 thousand -650 thousand
Comparison of booms in Japan
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Export dependence of Japan (%) Export/nominal GDP
0
5
10
15
20
1955 1960 1970 1980 1990 2000 2005 2008
export dependence
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Main export goods (\ trillion)
0
5
10
15
20
1995 2000 2005 2007 2008
automobile
auto parts
semiconductor
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Main export direction (\ trillion)
0
5
10
15
20
25
30
35
40
1995 2000 2005 2007 2008
Asia
USA
China
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2. The global crisis in Japan
The cheap money caused the serious crisis in the world. The global crisis hit Japan. It
is difficult for Japan to escape from the vicious circle (deflation).
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21st century crisis
failure of market and failure of government 21st century financial crisis: 1) private short term
fund (Hedge Fund), 2) a decrease of IMF function, 3) fragile financial system and drastic de-regulation, 4) firm’s dependence on indirect financing and foreign capital
traditional cyclical crisis
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The spread path of the crisis
Credit expansion type
Export lead type Emerging market type
US, UK, Spain Ireland Japan, Germany, Korea, Singapore
Central Eastern Europe (Latvia, Estonia, Hungary…)
An increase of housing price: 12.6% in US and Spain, 11.6% in UK and 11.8% in Ireland
Heavy export dependence: 230.9% in Singapore, 46.7% in Germany, 46.4% in Korea, 17.6% in Japan
Debts to external banks/GDP: 68.8% in Estonia, 57.6% in Latvia, Hungary in 50.2% , 32.5% in Romania
A collapse of housing bubble and disturbance of financial system-A decline of domestic consumption
A decline of demand in developed countries (US and others)-A decline of export
Heavy recession in West European financing countries-A decline of foreign money inflow
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Crisis hit Japan
A decline of stock price Economic panic: decline of GDP and
export, decline of balance (Heavy dependence of export)
Decline of employment and income -decline of consumption (demand) and export -decline of production : vicious circle and deflation spiral
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GDP (growth rate, annually : %)
-4
-2
0
2
4
6
8
%
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-20
-15
-10
-5
0
5
10
15
20
25Japan, Total
Japan, Big Enterprises
Japan, SMEs
%
Investment (growth rate, annually : %)
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Indexes of Business Conditions
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Consumer price index
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Trade balance of Japan (\ billion)
-3000-2000-1000
0100020003000400050006000700080009000100001100012000
1955 1960 1970 1980 1990 2000 2004 2007 2008
trade balance
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Foreign trade shock of crisis (balance: \ billion)
-1200-1000-800-600-400-200
02004006008001000120014001600
Sep.2008 Dec. Mar. J un.
current balance
trade/service balance
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Decline in employment
Cut of irregular employees: 216 thousand laid off
A decline of regular employees Increase of unemployment rate Instable safety-nets
→political complain and transition (DPJ won in the general election of 2009 August)
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Total employment index
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Unemployment rate
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0
1
2
3
4
5
6
%
Unemployment (%)
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3. Is the recent recovery real?
The recent economic recovery showed a recovery of export industry. However, the
perspective of the recovery is opaque.
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Recovery of developed economy, Japan
An increase of stock price An increase of automobile sales Export increases Improved consumer confidence
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Economy recovered?January-March 2009 April-June 2009
Real GDP growth -3.8 0.8Annual rate -14.2 3.4Compared with previous
period-8.8 -7.0
Personal consumption -1.1 0.8Housing investment -5.5 -9.2Equipment investment -8.9 -5.8Public investment 0.1 9.8export -26 9.1import -15 -2.6Domestic demand contribution rate
-2.3 -0.5
External demand contribution rate
-1.4 1.3
Nominal GDP growth -2.7 0.0
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Perception of business conditions (big enterprises, good-bad %)
-60
-50
-40
-30
-20
-10
0
10
20
30
2007Q3 2008Q1 Q3 2009Q1 Q3manufacturing
nonmanufacturing
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Recovery is not real.
Severe labour market Economic gaps in recovery Survival of vicious circle: cost cut-income
and investment decline-demand decreases-production decreases-employment decreases…..
Unclear global recovery and protectionist measures
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A Job offers-to-seekers ratio (January of each year)
0
1
2
1991 1994 1999 2002 2007 2008 2009 7.201ratio
ratio
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A Job offers-to-seekers ratio by prefecture (ratio, difference)
prefecture September 2008 July 2009 difference
Aomori 0.40 0.27 -0.13
Okinawa 0.34 0.27 -0.07
Tokyo 1.14 0.58 -0.56
Kagawa 1.12 0.64 -0.48
Aichi 1.50 0.46 -1.04
Gunma 1.52 0.45 -1.07
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Unemployment rate by age (%)
0123456789101112
maletotal35-44
15-24
25-34
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4. Dramatic changes in the Japanese economic system
The Japanese economic system also changed after the bubble economy and lost
ten years. Can the Japanese economic system survive in the global crisis?
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What is the Japanese economic system?
Corporate system: industrial relations, vocational training system and education, corporate governance, inter-firm relations, coordination with employees
Corporate governance, labour systems, managerial turnover
Coordinated market economy
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Production architecture
region Organizational function Advantageous and compatible architecture
Japan Integral power in production spot
Integral with operation
Europe Expression to customers Integral with designs and brand
USA Design of system Knowledge intensive open modular
Korea Concentration of finance and decision making
Capital intensive open modular
China Mobilization of domestic migrant workers
Labour intensive open modular
ASEAN ? Labour intensive integral
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Why cross-shareholding? From stock democratization to mutual
shareholding 1949 individuals owned 69.1%. 1947 Anti-monopoly law 1949 permission of corporation’s shareholding Change in 1990s collapse of the bubble economy criticism to Japanese management system globalization and legal relaxation
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Change of ownership
Introduction of US model: revision of corporate laws after 1997
A decline of financial institutions: a decline of main bank system
An increase of institutional shareholders An increase of foreigners, foreign owned
enterprises
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Shareholders'
General MeetingBoard of Directors
Executive Committee( Johmu-kai )
President(Representative
officer)Internal Auditors
appointment
Main Administrative Organizationsof Company in Japan
audit & control
appointmentappointment & control audit &
control
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Type of Shareholder
0
10
20
30
40
50
60
70
1949 1956 1963 1973 1981 1989 1998 2008
%FinancialInstitutions
SecuritiesCompanies
BusinessCorporations
Foreigners
Individuals
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Shareholders Composition
0
5
10
15
20
25
1987 1991 1995 1999 2003 2006
%
Cross-shareholding
Insiders
InstitutionalShareholders
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Stable Shareholding in Japan (%, in value)
0
10
20
30
40
50
1987 1991 1995 1999 2003
%
Stableshareholding
Cross-shareholding
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Financing in JapanOwn fund External
fundShort term loan
Long term loan
Corporate bond
1965-69 30.6 66.1 15.7 15.1 4.3
1970-74 29.2 68.5 18.3 16.0 4.2
1975-79 38.8 54.4 14.4 8.2 9.0
1980-84 50.5 40.0 9.0 5.9 7.8
1985-89 45.9 38.0 5.3 1.2 17.7
1990-94 87.6 7.8 -2.8 7.7 11.2
1995 84.0 14.8 -10.1 -3.4 3.6
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Impact of the recovery and crisis
An increase of cross-shareholding with criticism to it
An decrease of foreign owners An increase of long-term borrowing
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5. Fluctuations in the labour system
The Japanese management has specificities. At the same time, the labour system drastically changed in lost ten years and after. Can the
corporation keep life time employment?
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Lifetime employment and skill formation
Lifetime employment Seniority system Company unions Institutional complementarities
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France Germany Netherlands UK USA Japan
Inconvenience of layoff procedure
2.8 3.5 5.0 1.0 0.0 2.0
Advance announcement term and allowance of layoff
1.5 1.3 1.0 1.1 0.0 1.8
Difficulty of layoff 2.8 3.5 3.3 0.3 0.5 4.3
Total strength of job-guarantee
2.3 2.8 3.1 0.8 0.2 2.7
Strength of job-guarantee, A comparison of OECD countries: liberal vs coordinated
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Employment Level by Age in Japan
0
25
50
75
100
125
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-
%
199019972006Male
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Employment Level by Age in Japan
0
25
50
75
100
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-
%
199019972006Female
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Employment Level by Age in Russia
0
25
50
75
100
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-
%
199219982006Male
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Employment Level by Age in Russia
0
25
50
75
100
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-
%
199219982006Female
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Figure 3 Labour share
50
55
60
65
70
75
80
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007
%
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Change of Labour Market: diversity of employment
An increase of irregular workers: one third Reasons of changes: competitiveness (Japan
is a member of ILO, but it is different form ILO standard), change of labour values, revision of labour law
Results of change: economic gaps, technology transfer
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Nikkeiren lobbying in 1995 “Japanese Management in a New Epoch” as a turning point
Long-term ability accumulation type (lifetime employment type)
High-degree specialisation type
Flexible employment type
Regular employees Irregular and terminable
Irregular: Part-time and free, flexi bile, and temporary
Seniority system, monthly wage, retirement allowance
Annual salary and performance-based, no retirement allowance
Payment by the hour and no retirement allowance
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Revision of labour laws
Relaxation of irregular employment: revision of “The Worker Dispatching Law” (1985)
1996: enlargement of sphere
1999: from positive list to negative list
2003: permission in production spots An increase of irregular employees: 33% of
employment
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1982 1987 1992 1997 2002
male 8.3 9.1 9.9 11.2 16.5
female 31.8 37.1 39.1 44.0 53.0
Table 8 Irregular workers in Japan (%)
Table 9 Changes in employment (thousand, %)
1985 1995 2005
Employment, total 39990 47800 49230
Regular employment 33430 (83.6)
37790 (79.1)
33330 (67.1)
Irregular employment 6550 (16.4)
10010 (20.9)
15910 (32.3)
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Total employees Regular employees Irregular employees
1985 39990 (100) 34430 (83.6) 6550 (16.4)
1995 47800 (100) 37790 (79.1) 10010 (20.9)
2005 49230 (100) 33330 (67.7) 15910 (32.3)
2006 50880 (100) 34110 (67.0) 16770 (33.0)
2002 2003 2004 2005 2006
total 1451 1504 1564 1633 1677
Part-time 1053 1089 1096 1120 1125
Dispatching workers
43 50 85 106 128
Contract workers 230 236 255 278 283
others 125 129 128 129 141
Irregular employment in Japan
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Rrate of non-regular staff
10.0
12.0
14.0
16.0
18.0
20.0
2003 2004 2005 2006
%
Male
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Rates of non-regular staff
44.0
46.0
48.0
50.0
52.0
54.0
2003 2004 2005 2006
%
Female
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Rates of non-regular staff to "Employee, excludingexecutive of company or corporation"
0
10
20
30
40
50
60
70
80
15 to 24years old
25 to 34years old
35 to 44years old
45 to 54years old
55 to 64years old
65 yearsold ormore
%
Male
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Rates of non-regular staff to "Employee, excludingexecutive of company or corporation"
0
10
20
30
40
50
60
70
80
15 to 24years old
25 to 34years old
35 to 44years old
45 to 54years old
55 to 64years old
65 yearsold ormore
%
Female
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Difference between Toyota and Nissan in irregular employment
Temporary employees in Toyota
Dispatching employees in Nissan
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The length of service Japan Germany France UK USA
Less than one year 9.8 12.8 15.7 18.6 28.8
1-5 years 27.6 28.2 26.3 36.3 32.9
5-10 years 19.7 17.8 16.2 16.1 11.7
10-20 years 23.6 24.5 25.6 19.3 17.8
More than 20 years 19.3 16.7 15.8 9.6 8.8
Average length 12.5 12.1 10.6 9.2 7.5
Median of length 10.1 9.5 7.9 5.3 3.5
Length of Service (1993)
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Less than one year
1-5 years 5-10 years 10 -20 years
More than 20 years
male 7.5 22.6 17.5 25.9 26.5
female 12.1 33.0 21.3 22.2 11.4
total 8.9 25.8 18.7 24.8 21.8
Length of Service in Japan (2006, %)
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1997 June 2003 June 2006 June
Industries total 11.8 12.2 12.0
male 13.3 13.5 13.5
female 8.4 9.0 8.8
Manufacturing total 13.6 14.6 14.5
male 15.0 15.6 15.5
female 9.8 11.3 11.2
1000 employees total 17.0 18.4 17.5
and over male 18.2 19.2 18.2
female 11.2 13.7 13.2
Average length of service
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Wage decreaseProfit of company
Overwork time
wage
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Full time workers are not advantageous.
Burden is heavier. Mental disease Monthly labour
hours by
generation.
1995 2000 change
20s 185 187 +2
30s 183 186 +3
40s 182 182 0
50s 184 180 -4
60s 181 175 -6
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Gini coefficient in Japan
Initial income Redistributed income
1979 0.35 0.305
1990 0.44 0.35
1998 0.4723
2002 0.4983 0.3812
2005 0.5263 0.3873
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total 1000 employees and over
Housing allowance 48.4 66.0
Company housing 35.0 82.0
House ownership support 8.9 32.1
Physical examination 71.8 80.7
Childcare leave 40.5 56.7
Celebratory/condolence payment 94.5 99.2
Leisure facilities 28.6 70.9
Support for cultural and athletic 34.6 63.2
Support for acquirement of official qualifications 47.3 77.6
Employees’ savings 57.3 88.5
Company savings or stock holder’s association 25.5 76.7
Employees’ cafeteria or meal allowance 38.0 60.0
Corporate welfare in Japan
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Share of Japanese management companies The most fundamental element of a J firm, “quasi-
community firm” has been consciously kept by welfare provisions. In 2000, 46.2% of the firms had education and training programs for all regular white-collar workers, and 80.8% of the firms trained workers primarily through on-the-job training (OJT). The proportion of firms that plan to provide training primarily through OJT in the future drops to 72.3%, and the proportion of the firms that plan to primarily use off-the-job training (OffJT) is expected to increase to 22.5%. Japanese firms may be regarded as a hybrid or segmented.
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Managers’ turnover in Japan Turnover by insiders is a
typical case. Insiders promote not only specialized managers but also core managers like CEO. In short, internal managers market has effectively functioned in J firms.
Decrease of service length of managers: from 8 years to 5 years by hypertrophied management organizations
1954 29.4
1974 60.8
1991 61.4
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Change in management
Specialized committees and stock options for managers: 11.8% stock options, 10.2% outsider managers in 2000.
The dual cases have coexisted since the collapse of the bubble economy: firms with effective governance under the competitive environment, and firms with seniority system.
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Employment structureTotal employment
Regular employment
Irregular employment
Of which: part-time job
Of which: dispatched employees
Of which: contract employment
2003 49.48 34.44(-1.0) 15.04(1.0) 10.89(0.7) 0.5(0.1) 2.36(0.1)
2004 49.75 34.10(-1.0) 15.64(1.0) 10.96(0.0) 0.85(0.7) 2.55(0.3)
2005 50.07 33.74(-1.2) 16.33(1.2) 11.20(0.4) 1.06(0.4) 2.78(0.5)
2006 50.88 34.11(0.4) 16.77(0.4) 11.25(0.3) 1.28(0.4) 2.83(0.0)
2007 51.74 34.41(0.5) 17.32(0.5) 11.64(0.4) 1.33(0.1) 2.98(0.2)
2008 51.59 33.99(-0.6) 17.60(0.6) 11.52(-0.2) 1.40(0.1) 3.20(0.4)
2009 Q1 50.86 33.86(0.6) 16.99(-0.6) 11.32(-0.1) 1.16(-0.5) 3.18(-0.1)
2009 Q2 51.05 34.20(0.4) 16.85(-0.4) 11.28(-0.2) 1.05(-0.4) 3.18(0.0)
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6. Between change and continuity
Perspective of hybridisation
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A comparison of J-US model (1)
Outsider board
Insider board
Related finance
Inverse hybrid
J model
Market finance
US model Hybrid
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A comparison of J-US model (2)
Market employment
Relational employment (long-term)
Related finance
Inverse hybrid
J model
Market finance
US model Hybrid
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A comparison of R-US model (1)
Outsider board, market employment
Insider board, lifetime employment
Related finance
Inverse hybrid(34)
J model(42)
Market finance
US model Hybrid(24)
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A comparison of R-US model (1)
Outsider board, market employment
Insider board, lifetime employment
Related finance
Inverse hybrid(34)
J model(42)
Market finance
US model Hybrid(24)
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Contemporary J model
58%: quasi-US model 2/3 have kept J employment and
management. JapAnglo-Saxon capitalism
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The trend in the crisis (1)
Criticism to US type by the president of the DPJ, Yukuio Hatoyama in the New York Times
Japan Management Association in July 2009
the interest employees
long-term gains
support of lifetime employment
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From shareholders to employees
0
10
20
30
40
50
2005 2006 2007 2008 2009
Shareholders
Employees
Customers
%
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The trend in the crisis (2)
Japan Productivity Centre in July 2009: Managers highly value customers and employees (stakeholder capitalism), from shareholders to employees
Tokyo Shoko Research in 2009: highly value on the Japanese traditional management and enterprises
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The trend in the crisis (3)
Japan’s Ministry of Health, Labour and Welfare (questionnaire research)
criticism of the contemporary adjustment of the companies
positive attitude from irregular employment to regular employment
skill formation on condition of long-term employment
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Adjustment of employment in Japan
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Conclusions
Perspective of the Japanese economy and the Japanese economic system,
lessons for the Vietnamese economy
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Perspective of the Japanese economy (1)
Difficult way for the growth from the global crisis
high dependence on the global markets (US and China, East Asia)
weak domestic demand
fragile labour market
fragile harmonisation and hybridisation
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Perspective of the Japanese economy (2)
Transformation is not over.
How to build the advantageous architecture of the economic system, and how to keep the traditional advantages (organizational integral power) are not clear and the reform is under the way.
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Changes and Continuity of Corporate Model
Firm-Specific Skill
Labor Systems
US model
Modified J
J model
General Skill
Inflexible Flexible
Shareholder-Oriented
ExternalGovernance
InternalGovernance
Stakeholder-Oriented
R model
Modified R
C G Reform
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Constraints of the long-term growth
Labour force and aging society: high costs and low competitiveness
Skill formation
firm-specific
general
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Population in Japan (million)
1940 71.9 1975 111.9
1945 72.2 1980 117.1
1950 83.2 1985 121.1
1955 89.3 1990 123.6
1960 93.4 1995 122.6
1965 98.3 2000 126.9
1970 103.7 2006 127.6
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Population Growth in Japan
population(1,000) Dependency ratio Aging index Labour Force unemployment of aged population (1,000, % of population) rate(%) 1985 121049 15.1 47.9 59630 (49.3) 2.6 1990 123611 17.3 66.2 63840 (51.6) 2.1 1999 126686 24.4 113.0 67790 (53.3) 4.7 2000 126926 25.5 119.1 67660 (53.3) 4.7 2001 127291 26.5 125.1 67520 (53.0) 5.2 2005 127760 30.3 140.3 66500 (52.1) 4.4 Note: Dependency ratio of aged population = 65 and more years population/ 15-64 aged population x 100
Aging index = 65 and more years population/ 0-14 aged population x 100
Source: Statistics Bureau, Management and Coordination Agency, Government of Japan, Japan Statistical Yearbook 2001, Chapter 2.
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2007 problem in Japan: employment by age (%, 2002)
20-24 25-29 30-34
35-39 40-44 50-54
55-59 60-64
65-69
total 8.1 11.5 10.9 9.9 9.8 13.0 9.8 6.5 4.2
Textile 3.8 5.1 7.2 8.5 8.5 17.3 14.2 10.5 5.9
metallurgy
6.7 11.9 11.8 8.1 8.6 19.2 12.6 4.5 1.6
machine 6.6 12.3 12.8 10.6 9.0 15.4 11.6 5.9 2.6
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Transformation in Vietnam
0
-
+
lo w
S ta te ro le
h ig h
Globalization
Domestic factors
Integration, Asian model
Vietnam
G lo b al e con o m ic ru le s
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Perspective of JBIC research in 2008: Promising market
rank country
Tasks for each country
1. China An increase of labour costs (64), Unclear law enforcement (58), Insufficient intellectual property right (50)
2. India Insufficient infrastructure (52), Unclear law enforcement (27), Severe competition (25)
3. Vietnam Insufficient infrastructure (43), Lack of managers (32), An increase of labour costs (24)
4. Russia Unclear law enforcement (40), Lack of information (33), Instable safety and social condition (27)
5. Thailand An increase of labour costs (37), Severe competition (34), Insufficient technical staffs (27)
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Fin.