Labour market — Japan · Synthesis

One of the world's lowest unemployment rates. The unemployment rate stands at around 2.5% in 2024 (Statistics Bureau), one of the lowest among developed countries. Japan is close to full employment: the dominant constraint is the labour shortage, accentuated by ageing.

An acute shortage driven by ageing. The decline in the working-age population (see Economy category) creates shortages in many sectors (care, construction, services, logistics). The authorities are responding through greater participation of older workers and women, automation, and increasing labour immigration (see Immigration category).

A dual labour market. The Japanese market is characterised by a duality between 'regular' jobs (stable, seniority-based, 'salaryman') and 'non-regular' jobs (part-time, short-term contracts, less protected), which account for a significant share of employment and affect mainly women and young people — a source of inequality (see Social Cohesion category).

Long-stagnant wages, rising recently. During deflation, nominal wages stagnated for a long time. The annual wage negotiations ('shuntō') of 2023–2024 produced the strongest increases in three decades, a key element of the exit from deflation (see Prices category).

Participation of women and older workers. Women's participation has increased strongly ('womenomics' policy), even though access to leadership positions remains limited. Employment of older workers is very high, supported by the de facto rise in the retirement age and the labour shortage.

Offsetting demographic decline. The central challenge is to sustain the working-age population against ageing, through productivity gains (automation, robotics, digital), greater participation, and labour immigration.

Reducing duality. Narrowing the gap between regular and non-regular employment, and improving conditions for precarious workers (often women), is a matter of equity and purchasing power.

Sustaining wage increases. Anchoring durable real wage growth, after decades of stagnation, is essential for consumption and the exit from deflation (see Prices and Economy categories).

Gender equality. Closing the pay gap and improving women's access to leadership — among the worst in the OECD — is an economic and social challenge.

The open questions. Three issues will shape the period ahead: (1) offsetting the decline of the working-age population; (2) reducing market duality; (3) sustaining real wage increases.

In its international context, Japan presents a labour market at near-full employment but constrained by demography, with marked duality and a recent wage catch-up.

Three lessons. (1) Unemployment: the lowest in the panel. At ≈ 2.5%, Japanese unemployment is lower than Germany (≈ 3.4%), the United States (≈ 4.1%), France (≈ 7.3%) and the EU average.

(2) An early demographic constraint. Japan, along with South Korea, is the country furthest advanced in the decline of the working-age population — a preview of the challenges awaiting Europe.

(3) Wages: a belated catch-up. Unlike Western countries where real wages fell during inflation, Japan is experiencing a wage catch-up after decades of stagnation — an inverse dynamic.