#### Chapter 2. Change of Japanese economy and employment structure Section 1. Economic growth, growth factors and productivity

In line with the slowdown of the economic growth rate, labour demand has been stagnant. The main reason for the slowdown of the economic growth rate after 1990s was the downturn of capital amount and total factor productivity (TFP); on the other hand, improved quality of labour supported growth. Export is important, as the contribution of external demand to growth is roughly half that of internal demand and is never small.

## (Economic growth supported by the quality of labour)

The real growth rate was at the mid 4% range in 1970s and 1980s, and was slowed down to about 1% in the 1990s; in 2000s, the rate was about 0.3%, showing a decrease of about 4%. Through the analysis of the factors which caused the slowdown by using growth accounting, we can see that the slowdown was largely due to capital reduction and the slowed TFP increase rate. The improved labour quality supported the growth rate by 0.6% in 1980s and 0.5% in and after 1990s, keeping approximately the same level of contribution to the growth rate (Figure 13).

## (Considerable contribution of external demand to growth)

Looking at the contribution of internal and external demands to the real growth rates in and after 1995, the contribution of external demand was roughly the half that of the internal demand; during the period when the domestic economy was sluggish, such as in 2002 and 2008, the export increased and the positive contribution of external demand supported economic growth (Figure 14).

## (The productivity of export industry slightly exceeds the average of all industries)

Looking at labour productivity (gross domestic product / number of the employed) by economic activity in each industrial sector in 2011, the sector with high productivity is the industries in which relatively large capital (building and equipment) is handled, such as the industry of real estate, and the sector with low productivity is the labour-intensive industries which have a relatively large number of small-sized business establishments, such as the industries of agriculture, forestry and fishery and service. In the manufacturing industry, the labour productivity level in the fields of transportation machinery, electric machinery and general machinery, which hold a leading position in the Japanese export industry, slightly exceeds the industrial average.

### Section 2. Transition of industrial and occupational structures

While the employment structure is showing the trend toward the service economy, the number of the employed increased in the industries of social insurance, social welfare and care services, and decreased in the industries of construction, manufacturing, wholesale trade, etc.

By occupation, the workers engaging in the professional and engineering occupations, etc. are increasing.

Reduction in public capital formation had a profound effect on the decrease of the number of the employed in the regional blocks including Hokkaido, Tohoku and Shikoku.

## (Employment increased in social insurance, social welfare and care services, and decreased in construction, manufacturing and wholesale)

From a long-term view, the tertiary industrialization of employment structure is further advancing (Figure 15). During 5 years since 2005, the medium industrial category in which the number of the employed increased the most was the industry of "social insurance, social welfare, and care services" (such as welfare and care services for the elderly people), followed by "industries unable to classify," "medical and other health services," "postal activities," "manufacture of general-purpose machinery" and "food take out and delivery services." The number of the employed decreased the most in "construction" followed by "employment and worker dispatching services," "agriculture," "wholesale trade," "postal services" and "manufacture of textile mill products."