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March 1984, Vol. 107, No. 3

Japan's low unemployment:
an in-depth analysis

Constance Sorrentino

Japan's unemployment rates have long been among the lowest in the world. From 1960 through 1974, joblessness in Japan averaged 1.3 percent and never exceeded 1.7 percent, according to the Japanese labor force survey. Among the major industrial countries, only Germany had a better labor market performance. Japan's employment situation worsened after the 1973 world oil crisis and, since 1975, Japanese unemployment has been more than 2 percent, currently 2.6 percent. By contrast, unemployment rates in most Western industrial nations are now 3 to 5 times as high.

These relatively low Japanese unemployment rates, even in times of recession, suggest that the rates may be understated as compared with Western countries because of definitional or conceptual differences. Some recent articles or studies have come to this conclusion.

For example, a thoughtful article by Koji Taira in the July 1983 Review presented a timely analysis of Japan's low unemployment rate. Using data from Japan's special March labor force surveys and U.S. definitions of unemployment, Taira adjusted official Japanese rates to approximate U.S. concepts. He concluded that the Japanese jobless rate would be "nearly double the official unemployment rate" if U.S. concepts were used.¹

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1 Koji Taira, "Japan low unemployment: economic miracle or statistical artifact?" Monthly Labor Review, July 1983, pp. 3-10, See also Henry Scott Stokes, "Jobless Rate Reaches a High for Japan," New York Times, March 9, 1983, p. D-9; Jon Woronoff, "There is Unemployment in Japan," The Oriental Economist, November 1981, pp. 40-43. See also Woronoff's book Japan's Wasted Workers (Totowa, N.J., Allenheld, Osmun and Co., 1983).

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