Ministry of Health, Labour and Welfare July 8, 2005

1. Presentation to the OECD Forum on Reassessment of the OECD Jobs Strategy--Asian-Pacific Perspectives THE JAPANESE EXPERIENCE Ministry of Health, Labour and Welfare July 8, 2005

2. Changes in the Total Population Total population in 2003 was 127.62 million. From the 2003 level, it is expected to decrease by 140,000 in 2010, by 1.35 million in 2015, by 3.51 million in 2020, by 6.48 million in 2025, and by 10.04 million in 2030. (10,000 people) Actual Prospect 65 years old and over 15～64 years old 14,000 14 years old and under 12,692 12,762 12,771 12,748 12,627 12,557 12,411 12,114 11,758 12,000 1,826 2,227 2,431 2,539 2,874 3,277 3,456 3,473 3,477 10,000 8,000 8,717 8,600 8,540 8,459 6,000 8,167 7,730 7,445 7,233 6,958 4,000 2,000 2,001 1,845 1,790 1,773 1,707 1,620 1,510 1,409 1,323 0 (Year） 1995 2000 2003 2005 2010 2015 2020 2025 2030 Percentage of population 65 and over to population 15-64（％） （20.9%） （25.9%） （28.5%） （30.0%） （35.2%） （42.4%） （46.4%） （48.0%） （50.0%） Source: Figures of 1995 and 2000 from Statistics Bureau, the Ministry of Internal Affairs and Communications, “National Population Census ”. Figures of 2003 from Statistics Bureau, the Ministry of Internal Affairs and Communications, “Population Estimates;” and figures of 2005 and after from the National Institute of Population and Social Security Research, “ProjectedPopulation of Japan (estimated in January 2002)Medium variant ” . 1

3. Prospect Actual 60～64years (10,000 people) 30～59years 10,000 15～29years 9,000 748 787 830 847 8,000 992 835 726 7,000 754 816 6,000 5,245 5,282 5,314 5,000 5,347 5,139 5,011 4,909 4,731 4,000 4,479 3,000 2,000 2,724 2,531 2,397 2,264 2,036 1,000 1,884 1,811 1,748 1,662 0 (Year） 1995 2000 2003 2005 2010 2015 2020 2025 2030 Source: Figures of 1995 and 2000 from Statistics Bureau, the Ministry of Internal Affairs and Communications, “National Population Census ”. Figures of 2003 from Statistics Bureau, the Ministry of Internal Affairs and Communications, “Population Estimates;” and figures of 2005 and after from the National Institute of Population and Social Security Research, “ProjectedPopulation of Japan (estimated in January 2002)Medium variant ” . Changes in the Working-Age Population The working-age population in 2003 was 85.4 million. From the 2003 level, it is expected to decline by 810,000 in 2005, by 3.73 million in 2010, by 8.1 million in 2015, by 10.94 million in 2020, by 13.07 million in 2025, and by 14.93 million in 2030. A significant decrease is expected particularly after 2010. 8,717 8,600 8,540 8,459 8,167 7,730 7,446 7,233 6,957 2

4. Recent Employment Situation The employment situation continues to improve, though some severe aspect remain. Trends in Unemployment Rate, and Ratio of Active Job Openings to Applicants (times) (％) Record-high number of unemployed: 3.85 million (April. 2003 ) 1.00 6.0 Record-high unemployment rate 5.5% (June and August 2002 and January 2003) Ratio of Active job Openings to Applicants: 0.94 times (May. 2005) 0.95 Over 5% for the first time (5.0%, July 2001) 0.90 5.5 0.85 Over 4% for the first time (4.0% April 1998) • Unemployment rate • (right scale) Unemployment Rate: 4.4% Number of Unemployed: 3.07 million (May. 2005) 0.80 5.0 0.75 • Ratio of active job openings • to applicants (left scale) • Ratio of Active Job Openings to Applicants 0.70 4.5 0.65 Under 0.5times for The first time (0.49 times, September 1998) 0.60 4.0 Recent peak of 0.65 times (from November 2000 to January 2001) • Unemployment Rate 0.55 0.50 Recent bottom of 0.51 times (from December 2001 to February 2002) 3.5 Record-low ratio of 0.46 times (May and June 1999 0.45 0.40 3.0 (month) 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 1998 1999 2000 2001 2002 2003 2004 2005 Source: The Ministry of Health, Labour and Welfare,“Report on Employment Service” and Statistics Bureau, the Ministry of Internal Affairs and Communications, “Labour Force Survey” Note: The shaded areas indicate the periods of economic recession. 3

5. (%) Ratio of active job openings to applicants (left scale) 1.80 12.0 1.60 10.0 9.1 1.40 Unemployment rate (right scale) 1.20 8.0 1.00 5.7 6.0 4.4 0.80 3.9 3.8 0.60 4.0 3.1 4.4 0.40 2.0 0.20 0.94 1.25 0.79 1.04 0.69 0.39 0.39 0.00 0.0 Total of age 15～24 25～34 35～44 45～54 55～59 60～64 Employment situation by age group For young people, ratio of active job openings to applicants is high, but the unemployment rate is high level. For middle-aged and old people, ratio of active job openings to applicants is low, and the unemployment rate is high level. (times) (age) Note: Figures as of May 2005. Unemployment rate and ratio of active job openings to applicants of “total of age” are seasonally adjusted. Figures for each age group are not adjusted. Source: Statistics Bureau, the Ministry of Internal Affairs and Communications, “Labour Force Survey” and the Ministry of Health, Labour and Welfare, “Report on Employment service” 4

6. Employment situation by region The unemployment rate declines in all regions. The decline was relatively large in Hokkaido and Chugoku regions. Ratio of active job openings to applicants is higher than 1 for 19 months in Tokai region, 12 months in Kita-Kanto and Koshin regions, 7 months in Minami-Kanto and Chugoku regions, and 5 months in Hokuriku region. On the other hand, amount of increase in ratio of active job openings to applicants is relatively small in Hokkaido, Tohoku, Shikoku, and Kyushu regions. 5

7. Employment Measures in Japan (1) Vigorous Promotion of Support for Early Re-employment Support by Public Employment Security Offices: “Hello Work” ○ Employment through Public Employment Security Offices is following an upward trend. In fiscal 2004, approximately 2.13 million people, a 1.2% decrease since the previous year,obtained new jobs. The rate of obtaining a job in FY 2004 was 30.7 %, a 1.9% increase since the previous year.→ The target for FY 2005 is approximately 32 %. (10,000 people) Number of people obtaining a job (left scale) The rate of obtaining a job (right scale) 1999 2000 2001 2002 2003 2004 (FY) ○ Public Employment Security Offices are open during evening on weekdays and on Saturdays. Mainly for people who cannot visit Public Employment Security Offices during the daytime on weekdays, such as job-seekers who are working, some offices are open during evening on weekdays and on Saturdays, providing consultation and reference services. As of June 30, 2005: 92 offices 6

8. Individual consultation and assistance ○ Re-employment support programs are provided by specialists in early re-employment. Targeting job seekers who are strongly in need of quick re-employment, 700 specialists (employment support navigators (private sector experts, and experienced workers)) have been assigned to Public Employment Security Offices, to provide individuals with detailed support in their re-employment efforts. ○ Re-employment planners provide support. The targets of re-employment support are involuntary displaced job-seekers (aged 35 or older), or who have given up their own businesses , who need to contribute to their household finances. Re-employment realization plans are formulated for individual job-seekers, based on which comprehensive consultations and support are provided. ○ Career consultation for job-seekers Promotion of service for worker-seeking companies ○ Promotion of Finding job vacancies ○ Strengthening of service for worker-seeking companies A variety of job information utilizing the internet is provided ○ Job information on the public and private sectors is provided through ‘Shigoto Joho (job information) Net’. ○ Job information covered by all Public Employment Security Offices nationwide is provided by ‘Hello Work Internet Service’ . ○ Information is provided on a variety of common unemployment issues. 7

9. (2) Promotion of Measures for the Employment of Young People ○ Job supporters for young people aid prospective graduates in finding jobs. About 700 job supporters for young people have been assigned to Public Employment Security Offices, to offer prospective graduates services ranging from understanding jobs to settling down at companies. They visit schools to provide guidance and consultation to individuals and groups of prospective graduates and accompany them to companies. ○ We promote a smooth transfer from trial employment to regular employment for young people. To facilitate a smooth shift to regular employment, we give a subsidy of \50,000 per person to companies that hire people under the age of 35 (including unemployed graduates) for a short-term trial period (three months in principle). ○ We promote measures for the employment of young people in cooperation with local parties concerned by establishing one-stop service centers for young people (known as “Job Cafés”). In cooperation with companies and schools, prefectures have established “Job Cafés” which provide one-stop services, including 　　　　・ Access to information on work, 　　　　・ Opportunities for work experience, and 　　　　・ Various support services for employment. The central government supports the management of Job Cafés. ○ To train young people, we have introduced a new human resources development system of real-work related vocational education (Japanese version of Dual System). ○ Schools for the Independence of young people are established, to improve young people’s motivation to work. 8

10. (3) Creation of Employment Opportunities by Local Initiative Promotion of the Regional Employment Creation Programs ○ In the Regional Employment Creation Backup Program, we support municipalities to draw up plans for employment creation within their administrative regions by providing them with expert advice, information about successful employment creation cases, etc. 120 regions covered by the program ○ In the Regional Program for Employment Creation Proposal (Package Program), we select, in a contest format, proposals for projects that are effective in creating jobs and commission municipalities that made the proposals to proceed theprojects. 65 regions covered by the program (35 additional regions will be selected each year) ○ To those individuals who are setting up business in service industries that contribute to the regional community or in targeted industries set by the regional community, we subsidize their preliminary expenses and employment expenses. Subsidies: One thirds of preliminary expenses (ceiling \5 million) plus \300,000 for each employee 32 regional communities have officially set their targeted industries (as of April 1, 2005). 67 business plans have been submitted for the subsidy (as of April 2005). 9

11. (4) Promotion of Employment Measures for Old Persons Efforts toward securing opportunities to enable people to work until age 65 ○ The Law concerning Stabilization of Employment of Old Persons was revised, aiming to secure employment until age 65, to include raise of the mandatory retirement age to 65, and introduction of a continued employment system. It was made obligatory for the employers to give reasons when they set an upper age limit for recruitment and employment of workers (already enforced in FY 2004). Raising the retirement age to age 65 is planned to be enforced on April 1, 2006. [Rate of job offers at Public Employment Security Offices without age restriction] 13.1% in May 2003 → 19.2% in May 2004 → 38.6% in May 2005 [Rate of companies where employees can work at least until 65] 68.3% in 2002 → 67.1% in 2003 → 69.2% in 2004 10

12. Japan’s Employment Strategy for the Next 10 years <Changes in labor force> (Total population: 127.69 million) 2004 2015 (Total population: 126.27 million) If no measures were taken: If various measures were implemented: 62.67 million workers An increase of 3.3 million workers 66.42 million workers 66 million workers Down 420,000 Down 3.75 million 9.6 million 60 and over 12.8 million Society in which workers can continue to work until 65 11.07 million → up 1.7 million 42.92 million Assistance for balancing work and family responsibilities 41.7 million → up 1 million (of which 800,000 are women) 40.72 million 30 to 59 Preparation of an environment in which young people can play an active role 13.89 million 11.5 million 15 to 29 10.89 million → up600,000 Source: Figures of 2004 from the Ministry of Internal Affairs and Communication, “Labour Force Survey”. Figures of “if no measures were taken” were estimated by the Ministry of Health, Labour and Welfare, based on “Labour Force Survey”. Figures of “If various measures were implemented” were estimated by the Ministry of Health, Labour and Welfare. 11

13. 260 240 220 200 180 160 140 120 100 50 51 52 53 54 55 56 57 Aging of Baby-Boomer Generation The baby-boomer Generation (born 1947-1949) will reach 60 in 2007 and 65 in 2012. (10,000 people) The baby-boomer generation (born 1947-1979) The baby-boomer generation (born 1947-1979) 6.92 million 6.69 million 6.46 million Year 2007 Year 2012 Year 2000 (age) 58 59 60 61 62 63 64 65 66 67 68 69 70 Source: The National Institute of Population and Social Security Research, “Projected Population of Japan (estimated in January 2002)” 12

14. Labor Force Participation Rate by Age and Sex Looking at the labor force participation rate by age and sex, the graph showing the male participation rate forms a trapezoid, while that of the female participation rate is M-shaped. But the potential female participation rate, which includes women who are not employed but are willing to work, forms a virtual trapezoid. Potential female participation rate (2004) Female participation rate (2004) Male participation rate (2004) (%) 96.8 96.6 97.2 100.0 94.0 97.0 95.7 83.7 93.2 80.7 79.6 79.9 76.6 80.0 73.0 68.9 75.8 73.6 74.0 61.4 62.4 70.7 70.4 68.5 65.0 68.4 60.0 59.6 44.2 40.0 39.7 28.4 29.2 20.0 16.3 14.0 16.3 12.9 0.0 (age) 65　～ 15　～　 19 20　～　24 25　～　29 30　～　34 35　～　39 40　～　44 45　～　49 50　～　54 55　～　59 60　～　64 Source: Statistics Bureau, the Ministry of Internal Affairs and Communications, “Labour Force Survey” and “Labour Force Survey Detailed Tabulation”. 13