March 2023 5th issue: Employment adjustment subsidies hinder the mobility of human resources
Employment adjustment subsidies are subsidies paid to business owners. Business owners who have been forced to reduce their business activities are subsidized partly for susppention allowances, etc., when implementing employment adjustments such as susppention under certain conditions in order to maintain the employment of employees.
The purpose of the Employment Adjustment Subsidy is to maintain employment and prevent worker unemployment. We will pay subsidies to business owners so that they can choose "employment adjustment such as suspension" instead of "dismissal" of workers when business is downsized. By doing so, the Employment Adjustment Subsidy system tries to keep the unemployment rate low in Japan.
During the suspension period, the worker does not work and receives suspension allowance. Suspension pay is often lower than regular wages. Therefore, if the application of employment adjustment subsidies increases during a recession, the income of workers will decrease. Although workers are not unemployed, their jobs are decreasing and their income is decreasing, so their willingness to work tends to decline.
Employment adjustment subsidies are said to be one of the reasons why Japanese wages are kept low.
Growing companies tend to see higher wages. Wages do not rise easily in companies that are not growing or in decline.
If workers continue to be hired by companies that are not growing, the number of job seekers will not increase in the labor market. If the number of job seekers does not increase, it will be difficult to attract workers even if a growing company puts out a job offer.
Wages will not rise unless growth companies are revitalized, but workers continue to be employed by companies that are not growing due to the employment adjustment subsidy, preventing growth companies from attracting workers, thus hindering revitalization.
In an era of rapid change, it is necessary to create an environment in which workers are willing to change jobs and the labor market is activated. Perhaps the idea that "it's right to cling to the company for the rest of your life" would make Japan decline.
In an era when the mobility of human resources is necessary, employment maintenance policies based on employment adjustment subsidies may be causing the Japanese economy to stagnate or decline, making workers unhappy.
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