Instituiton
JAPAN’S LABOR MARKET
Martin in a 2015 article reported the lack of workers was hobbling Japan’s growth. He noted that the aging workforce and education gaps coupled with immigration curbs stunted the economic development of the country. Although many nations may envy Japan’s 3.4% unemployment rate, it has caused the state problems, and it could have already led to a recession. The GDP has been shrinking over the years, and no remedies have helped the country regain economic growth. Loosening rules for the skilled workers to come to the country have not had any significant effects. Even low-skilled workers are not available to take jobs in the industries such as security guards, care providers, and restaurant attendants. Despite the shortage, wages have not increased significantly forcing the people to cut down on expenditure leading to slow economic growth. Permanent jobs have reduced as firms try to employ workers on short-term contracts to cut on cost. The government plans to outsource sixty thousand IT workers to curb the extreme shortage in the IT sector.
Although the author attributes the shrinking workforce to aging population and education gap, I believe it is the low population growth rate that should take the blame. Since 2010, the country’s population shrunk by one million (The Associated Press, 2016). There are few young people to take up jobs that the elderly leave upon retirement.
Adopted from economics online
A shortage of workers in the labor market leads to the wage increase. As a result, the companies would have to cut down on the number of employees to maintain the profit margins. In the above curve, at w2 (£1200) the employees would be Q2 (5). More wages lead to lower demand for workers. The productivity of the firms is affected adversely because of the high cost of salaries that decreases growth. The situation may happen in Japan as the number labor supply dwindles.
Works cited
"Economics Online." Competitive Labour Markets. Web. 02 May 2016. <http://www.economicsonline.co.uk/Business_economics/Competitive_labour_markets.h tml>.
Martin, Alexander. Lack of workers hobbles Japan’s growth. The Wall Street Journals Nov. 15, 2015.
The Associated. "Japan's Population Shrinks by Nearly 1M since 2010." CBCnews. CBC/Radio Canada, 2016. Web. 02 May 2016. <http://www.cbc.ca/news/world/japan-shrinks- population-1.3467565>.
