There are, however, signs that Abenomics’ third arrow is beginning to work. Women’s labor-force participation has been steadily rising—the World Bank estimates the women’s labor-force participation increased to 51% in 2017 from 48% in 2012. More impressive is the rise of the prime age labor force participation rate, which focuses on those aged 24 to 54. In 2000, Japan’s prime age women’s labor force participation was estimated at 67%, far below the 77% in the U.S. By 2016, however, it had risen to 76%, overtaking the U.S. (which slipped to 74%), according to the Brookings Institution.
This recent trend of rising women’s labor force participation is fueling household income and economic growth while offsetting the declining male labor force.There has also been progress in raising wages. In 2018, Japan’s parliament passed new legislation capping overtime work and to ensure that contract workers are paid the same as full-time employees for similar work. The new legislation allows companies the flexibility to hire and fire contract workers while enabling contract workers to earn the same wage as regular workers for the same work.
Should the legislation be implemented effectively, it would simultaneously improve labor market flexibility and raise wages. There are signs it is working. One of Japan’s largest employers, the logistics group Nippon Express, recently announced that it would raise pay for tens of thousands of contract workers to match that of its regular staff.
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