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Back to Work: Japan

Improving the Re-employment Prospects of Displaced Workers

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Job displacement (involuntary job loss due to firm closure or downsizing) affects many workers over the course of their working lives. Displaced workers may face long periods of unemployment and, even when they find new jobs, tend to be paid less and have fewer benefits than in the jobs they held prior to displacement. Helping displaced workers get back into good jobs quickly should be a key goal of labour market policy. This report is the second in a series of reports looking at how this challenge is being tackled in a number of OECD countries. It shows that Japanese employers and the government go to considerable lengths to avoid the displacement of regular workers while also providing considerable income and re-employment support to many of the workers whose jobs cannot be preserved. Challenges for labour market programmes include expanding labour market mobility between regular jobs, improving co-ordination between private and public re-employment assistance for displaced workers, and avoiding that job displacement pushes older workers to the margins of the labour market.

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Income support for displaced workers in Japan

A well-designed system of income support can minimise the hardship resulting from displacement without unduly dulling the incentive for job losers to move quickly back into jobs. This chapter examines the availability and the adequacy of income support for the displaced workers in Japan. The main source of public income support for displaced workers in Japan is Employment Insurance (EI) and this chapter assesses EI coverage and adequacy for different groups of displaced workers in detail. Other potential sources of public income support for displaced workers are shown to be relatively unimportant for this group. By contrast, private sources of income support are shown to play an important role in Japan for some displaced workers, particularly long-tenure employees in large firms who enrol involuntary early retirement plans.

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