At a time when the global COVID‑19 pandemic has profoundly altered the type and content of jobs, investing in skills is more important than ever to build resilient and inclusive labour markets. Ongoing policy efforts to make the Japanese labour market more inclusive were disrupted by the pandemic as the government’s focus quickly shifted to dealing with the state of emergency and countering the negative consequences of a global lockdown. The policy responses have been largely successful, with the Japanese labour market experiencing limited increases in unemployment compared to other OECD countries. Yet, the pandemic has altered the labour market in ways that are only starting to become evident and that will provide new challenges for policy makers in the years to come. Now, more than ever, Japan’s policy makers must strengthen the adult learning system to make individuals and enterprises more responsive to change and foster stronger growth and well-being.
Initial policy responses to the pandemic-induced disruptions were swift and efficient. Existing employment support measures were expanded and new ones introduced, which avoided mass dismissals. Unemployment rose only slightly to 3.1% (seasonally adjusted) in October 2020, and has since decreased, though by June 2022 it had not yet returned to its pre‑pandemic level of 2.2% in December 2019. However, employees were affected in other ways, such as by a reduction in earnings and working hours. The adoption of teleworking practices and the digitalisation of key services such as employment support, career guidance and training also helped keep unemployment low. While Japan still lags behind other OECD countries in implementing these practices, the pandemic provided a momentum that should be leveraged to foster more flexible adult learning provision and address many of the barriers that adults face when upskilling and reskilling, such as time constraints and lack of easy access to information.
Women, non-regular workers and low-skilled workers, whose labour market outcomes were already below average, bore the brunt of the pandemic negative effects, experiencing more unemployment and inactivity than other socio‑economic groups. Further, those who worked in companies focusing more on hours worked over delivery of final outputs were less likely to teleworking.
In addition to its impact on employment and unemployment, the pandemic has changed the demand for skills in Japan. An innovative analysis using individual-level data shows that social and analytical skills have become more prominent in the Japanese labour market in the initial post-pandemic period, compared with previous years. Further, the pre‑pandemic increase in the importance of manual skills seems to be inverting, suggesting that social-distancing and digitalisation may be raising the demand for interpersonal and problem-solving skills while reducing manual handling. The analysis, which also features an overview of skill composition in Japan, shows that women are less likely than men to be employed in positions that require leadership or technical skills, while non-regular employees are more concentrated in occupations making lower use of most skills than regular workers. The new data underlying the analysis has the potential to provide valuable evidence for policy makers to develop effective upskilling and reskilling programmes and make the labour market more resilient.