# Employment creation effects of the manufacturing industry and source of competitiveness

The manufacturing industry has a major effect on employment; in order to strengthen the competitiveness in the midst of global competition, it is necessary to establish the systems to elevate the capability of developing new products and services, and to cultivate abilities and qualities of human resources as well as diversification of human resources.

(Employment creation effects through export)

Source: Prepared by the Office of Counselor for Labour Policy, MHLW, based on the “Year 1995-2000-2005 Input-Output Table” Statistics Bureau, Ministry of Internal Affairs and Communications

(Source of competitiveness according to companies’ views)

Source: The “Survey on the Corporate Management and Human Resources in the Midst of Structural Changes” (February 2013) Japan Institute for Labour Policy and Training

## (From the viewpoint of employment, our challenge is to strengthen the competitiveness of the manufacturing industry)

☐ The manufacturing industry provides quality work opportunities for high school graduates, supports regional employment and creates employment for all industries through export, thus plays an important role in the Japanese economy.

☐ Due to the change of manufacturing technologies, the value-added through "fine-tuning" which is the strength of the Japanese manufacturing industry has been reduced, and modularized assembly processes are now being transferred to overseas. On the other hand, companies in Europe and in the United States are yielding profits by effectively managing intellectual property.

○ Although there is a movement of establishing R&D centers in foreign countries, an increasing number of companies are considering to make new business investment domestically, in order to prevent leakage of technology, etc.

○ Domestic plants can play a role as “mother plants” (the base plants having the functions to develop and accumulate the technologies and skills for overseas markets), and cultivation of core human resources, who will be dispatched to overseas bases, is required. While Japan has its expertise and strength in production goods (including parts), maintenance of base technologies is essential for innovation. It is also important to protect the manufacturing companies, which are producing final consumer goods, through domestic demand stimulation. In addition, it is important to create value added through such means as entry into new industrial fields, and to secure competitiveness, backed by systems to cultivate abilities and qualities of human resources as well as diversification of human resources.

☐ In terms of all industries, the power of expanding employment is weak in the high-income sectors (such as finance and insurance industries), and is strong in sectors with relatively lower income (such as the welfare industry); this is one reason for the decline of income level. Increased labour productivity contributes to the increase of wages; it is important for us to increase labour productivity, by creating industries with high value-added, by allocating labour to such industries through labour mobility without unemployment, and by effectively using technological advancement. Furthermore, we should also improve terms of trade by promoting R&D investment, business investment, business restructuring, etc. and ensuring export prices, and reflect the increased productivity to wages.