Why Has the Fraction of Nonstandard Workers Increased? A Case Study of Japan
| DOI | http://doi.org/10.1111/sjpe.12015 |
| Author | Takahiro Ito,Daiji Kawaguchi,Hirokatsu Asano |
| Date | 01 September 2013 |
| Published date | 01 September 2013 |
WHY HAS THE FRACTION OF
NONSTANDARD WORKERS
INCREASED? A CASE STUDY OF JAPAN
Hirokatsu Asano*, Takahiro Ito** and Daiji Kawaguchi***
ABSTRACT
This paper explains the secular increase of nonstandard workers in Japan, whose
share of employment increased from 17 to 34% between 1986 and 2008.
Changes in labor force and industrial compositions account for one quarter of
the increase of nonstandard workers. Product-demand fluctuation and the intro-
duction of information and communication technologies increased firms’ usage of
nonstandard workers, but its quantitative effects are limited. The increase of
nonstandard workers was concentrated among new entrants to the labor market,
male workers of younger cohorts, and female workers of all cohorts, suggesting
that the declining importance of the long-term employment relationship is a
major cause for the increase of nonstandard workers.
II
NTRODUCTION
The fraction of nonstandard workers in Japan’s total employment steadily
increased from 17% in 1986 to 34% in 2008 (Figure 1). This secular increase
of nonstandard employment in Japan is perceived as a sign of declining job
stability. Indeed, in the aftermath of the financial crisis in 2008, about 250,000
nonstandard workers had lost their jobs by the end of year 2009 (Ministry of
Health Labor and Welfare (2010)). In addition to having less job stability,
nonstandard workers tend to receive a lower hourly wage and fewer job train-
ings (Esteban-Pretel et al., 2011). Thus, an increase of nonstandard workers is
considered to raise the tension between regular and nonstandard workers.
After a heated policy debate, the government revised the Worker Dispatching
Act (Rodosha Haken Ho) to prohibit short-term dispatches that last 30 or
fewer days. In the debate, opponents argued that the heavy regulation of tem-
porary staffing agencies would reduce disadvantaged workers’ employment
opportunities, based on a presumption that an increase of nonstandard work-
ers reflects changing labor-market conditions over the last 20 years. To assess
*Asia University
**Hiroshima University
***Hitotsubashi University, Research Institute of Economy, Trade and Industry, and Tokyo
Center of Economic Research and IZA
Scottish Journal of Political Economy, Vol. 60, No. 4, September 2013
©2013 Scottish Economic Society.
360
this policy debate objectively, we need a good understanding of the forces
behind the increase of nonstandard workers.
Despite heightened attention to the increasing number of nonstandard
workers, we have only limited knowledge of the reasons for the increase. Glo-
bal factors may have contributed to this increase, because the upsurge in the
fraction of nonstandard workers in Japan coincides with the experience of
many other developed countries, such as the US, the UK, continental Euro-
pean countries, and South Korea (Organisation for Economic Co-operation
and Development (2002)). On the labor-demand side, factors such as the need
for a workforce that can be spontaneously adjusted to the fluctuations of
product demand is identified as an important factor (Houseman (2001),
Houseman and Osawa (2003), Cappelli and Neumark (2004), Ono and Sulli-
van (2006), Morikawa (2010), Vidal and Tigges (2009)). On the supply side,
the increase of female labor force participation and the consequent demand
for flexible work-schedule arrangements are pointed out (Houseman and Osa-
wa (1995), Nagase (2003), Gaston and Kishi (2007)).
In addition to these global factors, Japan-specific factors may be important.
Japan used to be and still is characterized by a strong attachment between
firms and workers, as evidenced by longer average job tenure and a steeper
tenure-earnings profile than those of many other developed countries (Hart
and Kawasaki (1999)). This strong attachment has helped to foster an
Figure 1. Fraction of nonstandard employment measured by person.
Source: Monthly Labor Force Survey, 1986–2008.
NONSTANDARD WORKERS IN JAPAN 361
Scottish Journal of Political Economy
©2013 Scottish Economic Society
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