Policies for displacement in Japan

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1 Policies for displacement in Japan Masakuni HIRASHIMA Planning Director for Employment Policy Ministry of Health, Labour and Welfare of Japan Conference for launch of the OECD Analytical Report on Displaced Workers May 2013, Paris, France

2 Overview of Employment Situation (times) (%) Highest in past 368 million people Aug in 2002 Latest peak of jobs-to-applicants ratio:1.08 July 2006 Latest peak of 完全失業率 unemployment Highest in 過去最高 past rate5.5% 5.5% June, 14 Aug. 年 6 月 2002, 8 月 April 15 年 月 July 年 7 月 Jobs-to-applicants ratio in March. 2013, Unemployment rates (right scale) Jobs-to-applicants ratio (left scale) Latest valley of unemployment rate July in % Unemployment rate in March 2013, 4.1% 2.67 million people Jobs-to-applicants ratio Lowest in the past 0.42 Aug in Up May 97 Down Jan 99 Up Nov 00 Down Jan 02 Up Feb 08 Down Mar Source: Labour Force Survey (Ministry of Internal Affairs and Communications) Shaded areas show recession periods Employment Security Service Statistics (Ministry of Health, Labour and Welfare) 2.5 1

3 Employment Measures after the Economic Crisis Protect Employment Relaxation of requirements for Employment AdjustmentSubsidy Program The Program provides employers with subsidies that finance a portion of their wage expenses. This will apply when employers suspend business operations. Expand the qualifying condition / Increase the amount and period of subsidies Connect Employment Reinforce Public Vocational Training Establish Jobseekers Support System Provide vocational training for unemployed who are not eligible to unemployment insurance. Reinforce Employment Insurance System Create Employment Execute Employment Creation Fund Projects Subsidy Project to Boost Employment in Rural Areas Emergency Job Creation Program(Create temporary employment ) Schemes for Generation of Employment in Priorities (Employment Creation in Priorities such as the growing promising priority fields, nursing care, medical care, etc. ) 2

4 Reinforcement of Employment Adjustment Subsidy Program after Economic Crisis Relaxation of requirements production volume requirement Production volume in latest six months decreases by 10% or more compared to previous year. employment periods requirement Workers whose employment periods are less than 6 months are not covered. Expand the scope for employers to receive support immediately. Production volume decreases in latest three months by 5% or more compared to previous year or another three months. (Nov 2008) In order to cover new graduates and temporary workers All workers are covered, regardless of the duration of employment periods. (Nov 2008) Increase subsidy rates / Prolong subsidy period subsidy rates for expenses Large firms 1/2 SMEs 2/3 subsidy rates for expenses Large firms 2/3 (Jun 2009) SMEs 4/5 (Nov 2008) subsidy amounts for training 1,200 JPY ( = 12USD )/day Maximum subsidy days 100days per a year and 150days in 3 years subsidy amounts for education and training Large firms 4,000JPY ( = 40USD) /day (Jun 2009) SMEs 6,000JPY (=60USD)/day (Nov 2008) Maximum subsidy days 300days in 3 years (Jun 2009) 3

5 Outcome and Effect of Employment Adjustment Subsidy Program The number of firmsand workers under Employment Adjustment Subsidy Programs soared after the Economic Crisis, but are decreasing gradually since FY peak The number of firms using the subsidy:96,400(october 2009) The number of approved people:2,527,754 p (July 2009) The number of firms using the subsidy The number of approved people FY , FY ,168 1,774,871 FY , ,195 FY , ,675 FY 2012(prompt) 27, ,973 (averageof eachmonth) The Employment Adjustment Subsidy Program has contributed to protect employment. A trial calculation l The program contributed to decrease unemployment rates by 0.5 to 1.0 percent, according to a trial calculation by Cabinet Office, Government of Japan. Evaluation of this subsidy program (2011 survey) Closed firms rate after 1 year since firms began to use this program : 0.71% Protected workers rate after 6 months since workers were covered by this program : 93.8% 4

6 Training for displaced workers GOJ started training for job seekers who were not covered by unemployment insurance in July 2009 in addition to traditional ones mainly for unemployment insurance beneficiaries. The new system was legislated later. target people Jobseekers who are not covered by employment insurance, such as non-regular workers and people with no work experience, are able to use free training. Training period : 3 to 6 months. Implementing bodies Private training institutions MHLW certifies implementing bodies for each training course. Benefits Support Training Benefits are distributed to job seekers who meet requirements. 100,000 JPY ( = 1,000USD) per month traveling costs to attend the training institution 50,000 JPY (= 500USD) loan for applicants ( 100,000 JPY ( = 1,000USD) loan if individuals have spouse. ) 1USD = 100JPY 5

7 Increase of Public Vocational Training for Jobseekers after Economic Crisis (Output of Public Vocational Training for Jobseekers) FY 2008 FY 2009 FY 2010 FY 2011 FY 2012(as of end of February 2013) The number of trainees Employment rates The number of trainees Employmen t rates The number of trainees Employmen t rates The number of trainees Employmen t rates The number of trainees Employment rates Public Vocational Training (Training mainly for unemployment insurance beneficiaries) 131, ~ , ~ , ~ , ~ ,178 - Support training (Training for jobseekers not covered by the unemployment insurance) - 48, % 292, % 265, ~ 77.5% 98,555 - Total 131, , , , ,733 (Note 1) Employment rates on public vocational training refer to employment rates at 3 months after training ended. (Note 2) Output of support training in fiscal year from 2008 to 2011 includes the number of support training programs before the law was in force. 6

8 Expansion of Scope of Non regular Workers for Unemployment Insurance Before 2008 Fixed working hours/wk: 20 hours or more Employment term (expectation): 1 year or longer After 2009 Fixed working hours/wk: 20 hours or more Employment term (expectation): Six months or longer * Scope was expanded due to the economic crisis After 2010 Fixed working hours/wk: 20 hours or more Employment term (expectation): 31 days or longer * Scope was expanded further to protect non regular workers 7

9 Extension of the Unemployment Benefits Outline For the unemployed who leave their jobs because of bankruptcy, dismissal, or non renewal of labor contracts and who have difficulty becoming re employed in light of their age, area, etc., the basic allowance is extended for 60 days. (A temporary measure valid for those who leave their jobs before March 31, 2014). An additional 60 days of benefits will be provided as an entitlement to those who left jobs because of the earthquake and tsunami of Beneficiary (A job seeker who satisfies any of the following conditions) (1) A person who is younger than 45 (2) A person who lives in an area where the following conditions have existed during the last month: 1 The ratio of Job seekers to labor force population is equal to or higher than the national average. 2 The jobs to applicants ratio in the area is less than The rate of basic unemployment insurance recipient is equal to or higher than the national average. (3) A person who has been recognized by the head of the Public Employment Service Office as needing systematic support for re employment, while hl taking into account the knowledge, skills, kll and work experience of the beneficiary. Outcome (2009) 553,000 people (Approximately a quarter of total beneficiaries) 8

10 Output of the projects Budget Employment Creation Fund Projects Expenditure FY 2008 Created Jobs ( number of people p who got jobs ) FY 2009 FY 2010 FY USD = 100JPY FY 2012 Total Subsidy Project billion to Boost Employment in Rural Areas billion JPY ( = 2.5 JPY ( = ,429 31,692 32, ,242 Emergency Job Creation Program 450 billion JPY ( = billion JPY ( = 4.2 4, , , , ,534 Schemes for Generation of Employment in Priorities 881 billion JPY ( = billion JPY ( = , , , ,582 Note: *Subsidy Project to Boost Employment in Rural Areas Support emerging small businesses and create continual jobs. * Emergency Job Creation Program Create temporary jobs such as cleaning up parks. *Schemes for Generation of Employment in Priorities Support businesses in growing fields such as medical services, caring and environment, aiming at sustainable employment recovery. 9

11 Policy Shifts from Over Protection to Labour Mobility Enforce subsidy for supporting labour mobility bl Subsidy is distributed to employers who entrust reemployment support for displaced workers to private human resource bodies. Enforce the support of Industrial Employment Stabilization i Center Enforce the manpower of the Center and strengthen its mediation function for reemployment. Matured industries Enforcement 1: eligible firms Only SMEs SMEs and Large firms Private human resource bodies Enforcement2: vocational training1 (in order to get new jobs) Create subsidy for creative and flexible training by private bodies Enforcement 3: timing of subsidy Only one time after achieving re-employment Two times(when entrusting+after achieving) i J Enforcement 4: Vocational training 2 (after finding jobs) Create subsidy for training (Off-JT OJT) conducted by accepting firms Industrial Employment Stabilization Center Enforcement for helping job seekers find jobs Career Consulting Create support measures in accordance with personal challenges Conduct training by private training bodies Growing industries 10

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