The Japanese government has introduced public accesses of their own evaluations for selected policiesfrom 2001. According to Government Policy Evaluations Act, both the central and the local governmentshould report every aspect of policies'. The methodology of policy evaluations is still tentative, but atleast, some information on evaluation of the policy effectiveness can be available, otherwise only limitedor no information had been opened.The Japanese economic performance was notorious, as it is often called "the lost decade(s)". WhenI was committed in forecasting the Japanese labor market conducted by the then Ministry of Labour in1992, the assigned GDP growth rate pa for the following decade was 3 per cent. This was the mostauthoritative figure by the Economic Council of the Economic Planning Agency. As a result, theunemployment rate in 2002 by our forecast was 2.2 per cent.2 This figure was obtained by artificiallyintroduced extremely high rate of technical progress, if not, the market would be in severe labor shortage.Actually, the three per cent GDP growth achieved only in a single year 1996, and the unemployment ratewas 5.37 per cent in 2002. This suggests that even two years after the corruption of the stock prices andthe land prices the authority had an optimistic view on the future Japanese economy. The authority'sview was that sometime in future everything would return as in the late 1980s, and the recession was inshort run.In fact, the recovery has not happened for a decade, and now ordinary Japanese people think that itwill never be occurred. Still some of us are dreaming that the assets prices will increase up againwithout any severe restructuring; then heavy non-performing loan shall become huge assets. At the sametime, the Japanese labor market will experience significant labor shortages because of aging, as someexperts often say. But I must add, labor shortages are due to our previous forecast, which has not yetbeen updated. At the moment, youth labor market is not short, judging from higher unemployment ratethan before and from zero or negative growth of wage rate for fresh persons with no experience3.This review attempts to survey recent researches on economic impacts of the Japanese governmentemployment policy under deflationary period. It will contain four parts: (1) a brief description of therecent performance of the Japanese labor market, (2) explanation of legal reforms during the period, (3)case study for employment performances, (4) discussion of the impacts of the policy interventions tolabor markets and production market.The other issues such as "Employment at Will and Prohibition of the Abuse of Dismissal" arediscussed in Sugeno [2002], but not discussed here. Recently, revision of the labor standard lawintroduced the clear statement for prohibition of employer's dismissal right to abuse. Sugeno [2002]points out that employers tends to be more cautious to employ full-time workers because the authorityclearly requires for strict conditions of employer's dismissal for full-time workers. This may cause thelabor market to inflexible, and decrease employment opportunity for younger applicants.
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