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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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Japan's measures to prevent job displacement and other forms of early intervention

This chapter analyses the most important policy measures that take effect before workers are dismissed, both measures to prevent excessive job displacements and early interventions that provide workers who will be displaced with an early start at finding a suitable new job. Compared with their OECD peers, Japanese employers take an unusually active role in both types of proactive measures. As a consequence, a large part of the government’s role during the pre-dismissal phase consists of encouraging and supporting employers’ efforts to avoid displacements, when possible, and to foster rapid outplacement when it is not. Government also has an important role to play in supporting the private provision of adjustment assistance for displaced workers and filling gaps in that assistance. Currently a particular policy challenge is to effectively implement the welcome policy shift from a heavy emphasis on preserving existing jobs, which came to the fore during the recent recession, to placing more emphasis on helping workers to move smoothly from declining firms and sectors to growing parts of the economy.

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