Akio Okawara

Executive Director
Sumitomo Shoji Research Institute, Inc.

Once again this year the sakura cherry trees were in full bloom in Tokyo as Japan started its new business year on April 1. On the global scene, the economic picture as a whole seems brighter and more spring-like than it was a year ago. But here in Japan we are still in the grip of winter when it comes to employment. The start of the new business year is supposed to be a time for young people fresh out of school to start their first jobs full of hope. But this year as many as one new grad in five has yet to land a job.

Employment difficulties are of course not limited to Japan; jobs have become a major political issue around the world. Today, as the waves of globalization send people, goods, money, and information flowing freely across borders, domestic labor markets can no longer operate in isolation. Creating and maintaining jobs has long been a race to stay a step ahead of the competition, but the pace of this race has become increasingly more frenetic with the progress of globalization.

The underlying basis of economic activity is the work that people do in order to make a living. Following the Industrial Revolution, as the center of industry shifted from farming (primary industry) to manufacturing (secondary) and then to services (tertiary), the structure of employment also changed. China is said to have several million unemployed university graduates, but it has substantial growth for employment in the tertiary sector, which still accounts for only about 40% of the economy. It is a different story in the mature economies of Japan and the West, however, where services already account for more than two-thirds of the economy. In countries like these there is relatively little labor-intensive industry, and it is difficult to create a steady stream of high-paying new jobs in large numbers.

In many European countries unemployment rates have historically been running at chronically high levels around 10%, and now the United States also has a jobless rate of almost 10%. The Obama administration is desperately trying to improve the situation with its Green New Deal policies and its drive to create 2 million jobs by doubling exports over the next five years. We should be grateful that technological progress has freed human beings from the sort of machine-like labor portrayed by Charlie Chaplin in his film Modern Times. But the downside is that major increases in productivity resulting from technological advances also mean fewer jobs.

Employment is a political issue in every country around the world, and the quest for short-term fixes tends to push countries toward protectionist measures to save domestic jobs. But there is no true quick cure for employment ills. Symptomatic treatments cannot be sustained; the real need is for patient measures that will work slowly and steadily over the long term.

The question is how to increase added value and improve our competitive edge internationally. And the answer ultimately comes down to the development of human resources—in other words, education. In this context I find it very sad to see many of Japan's university students having to devote so much of their time during their precious school years to job-hunting activities. Over the long run I fear this will make it harder for Japan to keep up with its rivals in the international race.