### Section 2. Japanese employment system and future challenges

The prolonged low growth, aging of workers and increase of non-regular employees contribute to a drastic change of economic and social structures. In the future as well, we need to promote a system of wages and treatment of employees which will motivate workers and fulfill their potential and thereby vitalize companies.

## (Ability to execute duties is a major factor to determine wages)

The wage system has been reviewed since the past times; as a result, the percentage of the companies which choose the age and tenure as the factors to determine the basic wage (for the employees other than those in managerial positions) has been showing the declining tendency since the late 1990s; also, the percentage of the companies which choose business performance has been declining as well, due to the difficulty in operating the performance evaluation system, etc., although the percentage temporarily increased from the late 1990s to the 2000s. Instead, the companies, especially major companies, are increasingly placing emphasis on the work content such as duties and job type; the percentage of the companies choosing the ability to execute duties is still high, although it has somewhat declined.

## (Future direction)

Many companies believe that a "Human resource development system to enhance abilities and qualities" and a "Personnel system and personnel treatment which generate motivation of employees" should be strengthened in order to further improve their competitiveness; as for the matters related to employment management, they believe that "Promotion or wage increase which matches with the evaluation of abilities, performance, etc." and "Establishment of stable employment environment (where employees can have a sense of security without anxiety in jobs)" are important for maximizing the employees' abilities.

### Section 3. Structural changes and non-regular employment

During the 25 years from 1985 to 2010, regular employment has not been decreasing, but non-regular employment increased. Non-regular workers have drastically increased in many industries including services, wholesale, retail, and restaurants, and the ratio of non-regular workers has been elevated; however, the percentage of companies planning to increase the ratio of regular employees in the future exceeds the percentage of companies planning to increase the ratio of non-regular employees.

Most of the non-regular employees are fixed-term contract employees, and it is expected that more employees will move from fixed-term employment to permanent (or non-fixed term) employment. From the viewpoint of active participation of human resources at companies, and from the viewpoint of securing more stable employment for non-regular workers, we should focus on the "diversified ways of working."

It is considered that, if the labour and management of each company achieves an appropriate combination of employees and employment forms from the medium and long term perspective, it will lead to growth-based expansion of employment and income.

## (Regular employment remained at the same level, and the ratio of non-regular workers has been elevated due to the increase of non-regular employment)

According to Figure 27, during the period of the 25 years from 1985 to 2010, regular employment increased by 0.12 million persons (from 33.43 million persons to 33.55 million persons), and non-regular employment increased by 11.01 million persons (from 6.55 million persons to 17.56 million persons). For this reason, the ratio of non-regular workers increased from 16.4% in 1985 to 34.4% in 2010. Looking at the situation of non-regular employment in the non-agricultural industry during the same period, the elderly non-regular workers aged 55 or older increased by 4.16 million persons (from 1.22 million to 5.38 million) with the policy to promote their employment, the non-regular workers aged 15 to 24 increased by 1.36 million persons (from 0.89 million to 2.25 million), and the non-regular workers aged 25 to 34 increased by 1.99 million persons (from 0.99 million to 2.98 million).

## (Non-regular employment has drastically increased in the industries of services, wholesale, retail, and restaurants)

Looking at the trends of regular employment and non-regular employment by industry according to Figure 28, regular employment did not drastically decrease in general terms, while the employment structure showed the trend toward the service economy during the period of 20 years from 1987 to 2007. On the other hand, during the same period, non-regular employees increased to 10.44 million persons (males increased by 3.51 million persons, and females increased by 6.93 million persons).