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Shortage of Labor Force Varies Between Industries.

Byline: Nobuo Iizuka

What Is the Active Job Openings-to-Applicants Ratio in Japan?

The previous article of this series introduced the unemployment rate, and like this index, the active job openings-to-applicants ratio is an index that indicates the demand and supply relationship in the labor market. It is a key index of the "Employment Referrals for General Workers" compiled by the Public Employment Security Office on the state of job openings, applicants, and employment.

The active job openings-to-applicants ratio is defined as monthly active job openings subtracted by monthly active job applicants. Monthly active job openings is the sum of job openings carried over from the previous month because they remain open, plus new job openings. Monthly active job applicants is the sum of undecided job applicants carried over from the previous month and new job applicants for that month. The balance in demand and supply of labor is determined by whether the active job openings-to-applicants ratio exceeds 1 or not.

In addition, the new job openings-to-applicants ratio, which is new job openings divided by new job applicants, tends to fluctuate preceding movements in the active job openings-to-applicants ratio. New job openings is adopted for the leading index of business conditions, and the active job openings-to-applicants ratio is adopted for the coincidence index (Chart 1).

Ratio Exceeds 1 for All Prefectures

The latest active job openings-to-applicants ratio, at the time when this article was written, was 1.43 times for February 2017. This is similar to the level during the peak of the economic bubble at 1.46 times (July 1990). The rise in the active job openings-to-applicants ratio in recent years is the result of a combination of decreases in monthly active job applications and increases in monthly active job openings. Monthly active job applicants most recently peaked in 2009 at an average of 2.76 million people, and has since continued to drop to an average of 1.86 million people in 2016. On the other hand, monthly active job openings bottomed at an average of 1.31 million people in 2009, and continued to rise to an average of 2.53 million people in 2016.

In July 2016, the active job openings-to-applicants ratio (by the application acceptance locations) all exceeded 1 times in every prefecture. Prefectures with high active job openings-to-applicants ratios for February 2017 were Tokyo (2.04 times), Fukui (1.89 times) and Ishikawa (1.80 times), and those with low ratios were Kagoshima (1.10 times), Kanagawa (1.07 times), Okinawa (1.02 times) and the difference by prefectures are quite significant.

The active job openings-to-applicants ratio for fulltime workers remains below 1 times (0.92 times as of February 2017). The high demand in part-time labor is the driving force for the high active job openings-to-applicants ratio.

Job openings by industry also vary. New job openings for February 2017 showed a 4.9% increase for all industries, but while the manufacturing industry (10.7% increase) and construction industry (7.60% increase) were above average, industries like information and communications showed a decrease (Chart 2). Such variance in demand for job openings may also be tied to the difference in the active job openings-to-applicants ratio by prefectures.

Variance Is Large for Active Job Openings-to-Applicants Ratio by Occupation

The difference in the active job openings-to-applicants ratio is more apparent in the ratio by occupation. Occupations with large active job openings-to-applicants ratios are security (6.96 times as of February 2017), construction and mining (3.70 times), nursing care (3.33 times), and services (3.14 times). Automobile driving, which newspapers and magazines have been covering for its "distribution crisis", is at 2.69 times. On the other hand, administrative occupation is at 0.48 times, which means job openings are less than half the number of job applicants.

Although the rise in the active job openings-to-applicants ratio is the result of an increase in job openings on the back of an economic expansion and a decrease in job applicants, the effect of these mismatches by industry or by occupation is also significant. There is a need for policy support to prevent a shortage of workers from becoming the bottleneck of the Japanese economy.
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Publication:Japan Economic Foundation (Tokyo, Japan)
Geographic Code:9JAPA
Date:Jun 30, 2017
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