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An Overview of the Impact of Employment Quota System in Japan



Abstract


The 'Physically Disabled Persons Employment Promotion Law' enacted in Japan in 1960 was introduced to promote the employment of persons with physical disabilities, through the establishment of an employment quota system, an on-the-job adjustment scheme and a financial assistance system, in addition to offering vocational guidance and placement services through approximately 600 Public Employment Security Offices (PESO) and their branches. PESOs play a central role in vocational guidance, employment, referral and placement services for persons with disabilities as well as non-disabled job seekers. The PESOs guide employers on achieving employment quotas for disabled persons, provide guidance, instruction and allowances to disabled job seekers, and also function as a contact point for various types of financial assistance to employers of disabled persons. The author describes the working of this system of assistance that helps persons with disabilities to access employment opportunities in Japan.

Legal Framework of Employment of Persons with Disabilities

The first major employment law for persons with disabilities in Japan was the `Physically Disabled Persons Employment Promotion Law` enacted in 1960. This law was introduced to promote the employment of persons with physical disabilities through the establishment of an employment quota system in Japan, an on-the -job adjustment scheme, and a financial assistance system in addition to offering vocational guidance and placement services through approximately 600 Public Employment Security Offices (PESO) and their branch offices. The PESOs were established in accordance with the provision of the Employment Security Law, and they play a central role in providing vocational guidance, employment referral and placement services for persons with disabilities as well as non- disabled job seekers. Each PESO maintains special staff for these services, and offers a broad range of related services from intake and vocational guidance to placement, and guidance to employers on achieving employment quotas for disabled persons. These officers also provide guidance, instruction and allowances to those disabled job seekers who wish to receive vocational training, and function as a contact point to provide various types of financial assistance to employers of disabled persons.

The employment quota under the Law of 1960 was merely a moral obligation imposed on employers without much enforcement power. The law was drastically revised in 1976 to make the quota a legal requirement. Under the revised law employers are requested to report to the local PESO the number of workers with physical disabilities they employ annually. The PESO may then request employers who fail to employ sufficient numbers of physically disabled workers, to draw up a plan for their employment. In such cases where employers are apparently not willing to fulfil their obligation, their names may be disclosed to the public, in order that the adverse publicity may bring about changes in their attitudes towards the employment of people with disabilities.

The employment quota system is complemented by a `levy and grant system', the purpose of which is to redress the financial inequality of employers who provide job opportunities for physically disabled people. A certain amount of levy, which is at present 50,000 yen per person per month, is collected from those employing over 300 full - time employees and who do not reach the mandated quota percentage, and this amount is redistributed in the form of various grants, for the provision of job adaptation for persons with severe disabilities, for the provision of facilities for workers with post - employment disabilities, and to employers who hire persons with physical disabilities. The operation of the levy and grant system is entrusted to Japan Association for Employment of the Disabled, which is a semi-governmental organisation under the Ministry of Labour. Besides collecting levies and awarding grants, the Association organises educational programmes to raise public awareness of the employment of people with disabilities, and conducts training courses for employers to improve their understanding of disabled persons` needs and to acquire the technology necessary for creating jobs for disabled people. It also operates a nation wide network of Vocational Centres for Disabled People, including the National Institute of Vocational Rehabilitation (NIVR).

The Physically Disabled Persons Employment Promotion Law was revised again in 1987, and renamed the `Law for the Employment Promotion' of Disabled persons. As a result of this revision, the quota and levy system can be applied for assisting persons with mental retardation without making their employment a legal obligation. The law now includes persons with all types of disabilities. It is responsible for the employment security of disabled persons in addition to their employment promotion; and for the first time vocational rehabilitation has been defined systematically.

Present Quota System

The employment quota is determined according to a formula that is developed to provide physically disabled people with an opportunity for employment corresponding to the state of full - time employment and unemployment in the open labour market (Figure-1). In keeping with the concept that all employers share the obligation of employing persons with physical disabilities equally, the number of physically disabled persons whom a given employer covered by the quota system needs to employ is calculated by multiplying the total number of persons employed by that employer, with the employment quota.

Figure-1: Formula to determine employment quota.
Number of full - time physically disabled persons + Number of unemployed physically disabled persons
Number of full - time workers + Number of unemployed - Number of Exempted workers


However, there are also certain types of jobs the nature which make them difficult for a person with a physical disability to perform. In such cases it would be inappropriate to apply this employment quota. Hence , an exemption rate is determined for businesses with a large number of operations where it is difficult to employ persons with physical disabilities. This number, according to the rate of exemption is subtracted from the total number of non - disabled employees, when calculating the number of persons with physical disabilities who must be employed in accordance with the Law for Employment Promotion of the Disabled. This quota is reviewed at least every five years giving due consideration to the changes that have occurred during this period. The present employment quota determined according to this formula is as follows(Table 1).

Table 1:Current employment quota for different types of organisations
Type of organisations
%
National and local governmental agencies
-
-Clerical operations 2.0%
-Non-clerical operations 1.9%
Semi-governmental organisations(Special corporations) 1.9%
Private business enterprises with 63 full-time employees or more 1.6%

Since employment of persons with severe disabilities is much more difficult than of those with slight or moderate disabilities, special provisions are provided to promote their employment.

In the double count system, when business enterprises employ a physically disabled person whose disability is more severe than the criteria set by the law, they can count an employee as two disabled persons for purposes of computing the employment rate for disabled persons. The same provision is applied to persons with severe mental retardation also. In Japan massage and acupuncture have long been considered occupations specially suited to persons with visual impairment. Even today, these occupations play substantial role among the blind and partially blind persons. Given this background, those business establishments, such as hospitals, that employ traditional style and modern masseurs/masseuses and acupuncture specialists are required to ensure that 70% of these job are filled by persons with severe visual impairment. For persons with severe disabilities who are unable to carry out jobs during regular working hours, the 1992 revision of the Law for Employment Promotion, has introduced the category of short - time workers with severe disabilities, who work between 20 and 30 hours per week to fulfil an employer's legal quota. At present the employment quota system is not applied to persons with psychiatric disabilities. However, on-the-job adjustment training and subsidies are applied to them .

Employment Situation of Disabled Persons

According to the surveys conducted by the Ministry of Health and Welfare the rate of employment of physically disabled persons increased by 0.5 points from 32.3% in 1980 to 32.8% in 1991, which is around half the rate of the employment of non-disabled workers (62.0% in 1991 ).

Employed physically disabled persons in 1991 consisted of those who were self employed or employed in the family (38.5%), those who were full-time employees (27.5%), those who were part-time and/or temporary employees (8.5%), etc. In comparison, the rate of full-time non-disabled employees was 74.6% in 1991. As for persons with mental retardation, only 22.1% of those who were working (around 100,000 in 1990) were regular employees while 43.2% were working in sheltered or community workshops for disabled people. This implies that the employment of persons with mental retardation is more difficult than of those with physical disabilities in Japan. There is lack of reliable statistics on the employment of persons with psychiatric disabilities. In a survey conducted by the Ministry of Health and Welfare in 1983, out of 14,048 outpatients, 37.1% who responded, said they were "mainly engaged in work". The number of people with disabilities employed by targeted private business enterprises (54,537 enterprises with a total of 16,982,514 full - time employees as of June 1995) under the employment quota system (that is those who employed 67 full-time employees or more until March 1988, and those with 63 full-time employees or more since April 1988 ) increased from 128,429 in 1977 to 247,077 in 1995. The actual employment rate increased by 0.36 points from 1.09% to 1.45% during the same period. While the employment rate of disabled persons in private enterprises has increased, the tempo of progress has been rather slow, and still falls short of the present legal quota of 1.6% by 0.15 points as of June 1995 ( Figures 1 & 2 )(Figures 2&3).

As illustrated in the figures, the employment quota is constantly exceeded only by those enterprises with 63-99 full - time employees, and the actual employment rate tends to become lower as the size of the enterprises becomes larger. However, the largest increase in the employment rate has been observed in enterprises with 1,000 full-time employees or more where the rate increased by 0.61 points from 0.80% in 1977 to 1.41% in 1995.

The greatest effect of the inclusion of persons with mental retardation in the employment quota since 1988 is evident in small sized enterprises. The actual employment rate increased by 0.24 points in enterprises with 63-99 full-time employees, while it increased only by 0.02 points in those with 1,000 full - time employees or more in 1988. This indicates that people with mental retardation are mainly employed by smaller enterprises in Japan. Until recently the private business enterprises under the employment quota system increased their total workforce yearly by recruiting new employees. However, due to a prolonged recession which started in May 1991 many of these enterprises have been taking measures to decrease their workforce, which adversely affected the employment of disabled people. The actual employment rate of enterprises with 63-99 full - time employees decreased by 0.12 points from 2.11% in 1993 to 1.99% in 1995. So far regardless of the economic situation, larger enterprises have been trying to increase the number of disabled employees while at the same time reducing their total workforce. In case of enterprises with 1,000 full - time employees or more the number of disabled employees increased by 5,721 from 103,636 in 1993 to 109,357 in 1995, while the total number of full - time employees decreased by 180,407 from its peak of 7,947,151 in 1993 to 7,766,744 in 1995.

In private enterprises, the industries in which the employment quota for disabled persons was exceeded were mining (1.73% as of June 1995) and manufacturing (1.71% as of June 1995). The employment rate in other industries, especially, the tertiary industries remains much lower than the legal quota(1.28% as of June 1995). However, the largest increase in employment is observed in the finance and insurance enterprises. The rate here increased by 0.78 points from 0.48% in 1977 to 1.26% in 1995. The manufacturing enterprises were most affected by employing persons with mental retardation since 1988. Their actual employment rate increased by 0.12 points in 1988. Due to the economic recession and restructuring, the total workforce in manufacturing enterprises decreased by 265,686 from its peak of 7,324,579 in 1992 to 7,058,893 in 1995 and the number of disabled employees decreased by 1,567 from its peak of 121,977 in 1993 to 120,410 in 1995. However the actual employment rate of disabled employees increased by 0.04 points from 1.67% to 1.71% during the same period as the decrease in the number of disabled employees was smaller than that of the decrease in the total workforce. On the other hand the workforce in service enterprises increased by 7,190 from 39,037 (1.39%) in 1992 to 46,227 (1.48%) in 1995 ( Figures 3 and 4 )(Figures 4&5).

According to surveys conducted by the Ministry of Labour in 1978, 83, 88 and 93 on private business enterprises with 5 full - time employees or more, the number of persons with physical disabilities employed in these enterprises increased by 111,000 from 233,000 in 1978 to 344,000 in 1993, while that of persons with mental retardation increased by 29,000 from 31,000 in 1978 to 60,000 in 1993. Among these disabled workers the percentage of those in manufacturing industry has been gradually decreasing while that in tertiary industries has been increasing as a result of the ongoing structural changes of business and industry in Japan.
The percentage of persons with physical disabilities who were employed in manufacturing industry decreased by 11.9 points from 56.5% in 1978 to 44.6% in 1993 while that of persons with mental retardation decreased by 11.6 points from 72.3% in 1978 to 60.7% in 1993. The percentage of non-disabled workers employed in manufacturing industry decreased by 11.2 points, from 39% in 1978 to 27.8% in 1993, during the same period. Nonetheless, in comparison with non-disabled workers the rates for disabled people in 1993 were higher by 16.8 points in the case of physically disabled workers, and by 32.9 points in the case of mentally retarded workers. The latest survey conducted in 1993 revealed that out of a total of 344,000 physically disabled workers in these enterprises, 185,000 workers had pre-employment disabilities while 159,000 workers had post-employment disabilities. Nearly 60% of the latter were employed by enterprises with 100 or more employees (Table 2).

Table 2: Employment Situation of Full - time Employees with Pre-/Post-Employment Physical disabilities (1993)

No. of employees
Per enterprise
Onset of disabilities
Before employment
185,000(100%)
Onset of disabilities
After employment
159,000(100%)
5-29
48%
20%
30-29
31%
24%
100-499
18%
33%
500-999
2%
9%
1,000 or more
1%
14%

These data clearly indicate that the employment quota system also gives impetus to business enterprises, especially to large-size enterprises which employ more than 1,000 full-time employees, to retain their employees who become disabled after they are employed. The average monthly wages of those workers who became disabled after they were employed was higher at 288,000 yen ( about US$2,500) while that of those with pre-employment disabilities was 218,000 yen ( about US$1,900) as of September 1993. This variation may also be a reflection in the difference of the age structure between physically disabled workers and non-disabled workers. The former consists of more aged people than the latter (Figure 5) ( Figure 6). The onset of physical disabilities is related to higher age. Many Japanese enterprises still maintain a life-time employment policy. Under this policy, the wages are linked to seniority; the longer a person works for the enterprise, the higher his wage. Thus, the older workers, who are more susceptible to physical disabilities, tend to have long term employment at these enterprises, with higher wages.

Future Tasks

As mentioned above, regardless of the various employment measures including the employment quota, and the levy and grant systems for disabled people that were used in the past to promote the employment of persons with disabilities in Japan, employment opportunities for the majority of disabled people are still limited. Many of them are employed in manufacturing industry. The employment situation of persons with mental retardation or psychiatric disabilities falls far below that of persons with physical disabilities. Their employment participation rate has been declining due to the rapid increase of those aged above 65 and those with severe disabilities. According to a survey conducted by the Ministry of Health and Welfare in November 1991, nearly 50% of persons with physical disabilities are aged 65 or more while around 40% of them are severely disabled. Therefore, in order to further improve the employment situation of disabled people in Japan it is necessary to take some new measures.

For a long time Japan enjoyed a much lower unemployment rate (1-2%) compared with other developed countries. However, as a result of the recent prolonged recession and the restructuring in business and industry, which led to the change in traditional employment practices in Japan, the unemployment rate increased to 3.4% by the end of 1995, which adversely affected the employment situation for persons with disabilities. The government now needs to actively create more job opportunities for the increasing number of unemployed people, including those with disabilities. At the same time the present employment quota, which takes into consideration the employment data of only persons with physical disabilities, needs to be revised to also include the employment data of other disabled persons. In addition to this, the present exemption rate for calculating the quota needs to be reviewed.

Presently it is expected that the number of workers employed in manufacturing industry will continue to decrease as a result of its restructuring and the prolonged recession, as well as due to rising manpower costs. Therefore, employment opportunities for persons with disabilities should be expanded in tertiary industries by providing them with relevant training in collaboration with educational institutions, vocational training institutions and enterprises. Their training opportunities can be significantly expanded through promoting integration of persons with disabilities into regular programmes, rather than training them mainly at specialised vocational training facilities for disabled people.

The number of sheltered workshops and welfare factories for disabled persons which were established according to the Law for the Welfare of Mentally Retarded Persons, and community workshops for disabled persons, have been rapidly increasing due to the lack of employment opportunities for persons with severe disabilities, especially for those with mental retardation or psychiatric disabilities. There are around 1,200 sheltered workshops and welfare factories for disabled people with the total capacity of about 52,000 (as of October 1993), and approximately 4,000 community workshops with the total capacity of around 70,000 (as of August 1995). Though these workshops aim to assist their clients in obtaining employment in the open labour market, their annual placement rate in business and industry remains low at 2%. In the meantime the clients' length of stay at sheltered workshops for disabled people has been becoming longer; as of 1991 the majority (55%) of them had stayed at these workshops for more than 5 years while only 29% of the clients had stayed less than 3 years. Therefore, in reality sheltered workshops for disabled people in Japan have been providing long - term work opportunities for the majority of the clients, who find it difficult to be integrated into the open labour market.

In 1994 a new scheme was introduced by the Ministry of Labour to promote the employment of those clients who are served by sheltered workshops. It established community -based employment support centres for persons with severe disabilities in close co-operation with local municipal governments. A major objective of such centres is to facilitate the employment of these people in the labour market by providing them with relevant further training in close collaboration with sheltered or community workshops, or local businesses, and mobilising local human resources as volunteer instructors, job coaches and personal attendants to assist the clients in their smooth transition to employment. By 1996, six such centres were established in Saitama and other Prefectures. However concerted efforts need to be made by all parties concerned, to change the physical and social environment in Japan and make them more accessible and amiable for persons with severe disabilities so as to promote their integration into working life.

Technological innovations centred around micro-electronics have led to an increase in industrial robots and specialised office machinery in clerical and non-clerical areas of employment. These innovations have begun to influence the employment situation in many ways. Such special machinery is less accessible and available to persons with disabilities. Thus, disabled persons could become more susceptible to the negative effects of technological innovations. On the other hand advanced technology has brought about some advantages for disabled people through the development of various machines and specialised devices for them in their workplaces, enabling persons with disabilities to perform jobs in areas previously not possible or available to them. Conceivable measures for persons with disabilities in the future could include the further development of vocational rehabilitation programmes, including relevant ability development programmes, to cope with the changes brought about by technological advancement. Also, it is necessary to pursue further research in the positive use of such technology for people with disabilities.

During the period of 1983-1993 the total budget of the government for disability measures in Japan increased from around 1.4 trillion yen (US $12billion) to about 2.3 trillion yen (US $20 billion), out of which approximately 37 billion yen (US $320 million) was allocated for the Ministry of Labour's vocational rehabilitation and employment measures for disabled people. In comparison with the rate of increase of the total national budget (122%) during the same period the increase for disability was much higher (165%) partly because of the Government response to the UN Decade of Disabled Persons (1983-1992). However, taking into consideration the escalation in costs of pension, medical treatment and personal care of elderly, and the worsening of the national economic situation due to the prolonged recession, it is unlikely that there will be a similar increase in the government's budget allocation for disability measures in the future, including the vocational rehabilitation and employment measures for people with disabilities. The only solution is to introduce more cost effective vocational rehabilitation programmes by avoiding duplication of services among relevant agencies, so as to fully utilise the limited financial and manpower resources in the country for the benefit of people with disabilities.

Figure2 - Employment Trends of Persons with Disabilities at Private Enterprises by size
Figure2 - Employment Trends of Persons with Disabilities at Private Enterprises by size


Figure3 - Trends of Actual Employment Rate of Persons with Disabilities at Private Enterprises by size
Figure3 - Trends of Actual Employment Rate of Persons with Disabilities at Private Enterprises by size


Figure4 - Employment Trends of Persons with Disabilities at Private Enterprises by Industry
Figure4 - Employment Trends of Persons with Disabilities at Private Enterprises by Industry


Figure5 - Employment Trends of Persons with Disabilities at Private Enterprises by Industry
Figure5 - Employment Trends of Persons with Disabilities at Private Enterprises by Industry


Figure6 - Age Structure of Full-time Workers with/without Physical Disabilities
Figure6 - Age Structure of Full-time Workers with/without Physical Disabilities
Ryosuke Matsui
Japan Association for Employment of the Disabled, North Tower, New Pier Takeshiba, 1-11-1 Kaigan, Minato-ku, Tokyo 105, Japan.

ASIA PACIFIC DISABILITY REHABILITATION JOURNAL (VOL.9, NO.1, 1998)

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