Understanding Japan's unemployment

There is growing awareness in Japan of the need to make structural changes to the labour market. This trend, along with the changing nature of the Japanese labour force in relation to the country's aging population, means that unemployment will probably not become as severe as in some European countries. Growth of the labour supply has slowed down in the 1990s as a result of the aging of the population, and the supply is forecast to fall from 2005. The aging of the population has also led to an increased proportion of older people in the labour force itself. It is becoming clear that Japan will now have to make more efficient use of the labour market mechanism.