How has Covid impacted jobs in Japan over the last 2 years?
COVID-19 had a significant impact on the world economy. The injection of this virus into the world affected the routine habits of every individual. It made "never heard before concepts" such as lockdown, quarantine, masks, sanitize, order-in, rationed supply, daily cases, and deaths hackneyed vocabulary over time. "Remote work," an unsung concept, became the new average overnight. Zoom calls became the new age conference room. Most desk occupations requiring only access to a laptop computer adopted "work from home." However, certain professions such as healthcare, logistics, construction, security, manufacturing, etc., require people to work in person. This gave rise to modifications in the Standard operating procedures accounting for the COVID protocols, and the world's supply chains became more costly than ever before.
Two years into the pandemic, there is still no sign of returning to normalcy. The life of the new normal made most people recognize the fact that there is more to life than a monotonous job leading to movements such as "Great Resignation" in the USA where people quit tedious jobs to beat the inflation by taking a brave step to skill up and move to higher roles with higher pay. This vast movement in the USA suddenly dictated the wages, job functions, and job location.
Meanwhile, Japan saw little to no surge in the price of commodities or oil like the rest of the world during the ongoing pandemic. This is due to the concept of "Japanification," which is a great topic but does not concern the objective of this blog. So, I'll leave some links to interesting videos at the end of the blog for curious minds to explore. For a quick fact check, visit the links below and compare the inflation rates of Japan and the rest of the world.
Amidst the pandemic, low inflation rates stayed constant in Japan, but it saw fewer job vacancies (https://tradingeconomics.com/japan/job-vacancies) compared to previous years.
In this blog, I’m going to take a look at the pandemic's impact on Japan's job market and explore how the COVID-19 cases or deaths influenced the job vacancies and the minimum monthly salaries at different prefectures. Let us also compare the top five regions by GDP with the bottom five to understand the purchasing power role during the pandemic.
Intuitively we might imagine that (a) number of jobs get lower when covid cases are high and (b) average job salaries get higher during times with high covid cases as lower wage employees lose work opportunities (this happened in the US).
But how well does intuition hold up? First off let’s take a look at the data.
About the Data:
We have the HelloWork (Japan's No.1 Job Postings Portal) Dataset from 2020–01–16 to 2021–12–20 (roughly 24 months)
The granularity of job postings: weekly (crawled once every week)
We have the following features associated with a job posting:
- Crawled date
- The prefecture of the job
- Minimum monthly Salary
- Maximum Monthly Salary
- Main Category
- Sub Category
- Company (Corporation)
- Job Title
- Covid Cases (corresponding to the crawl date)
- Covid Cases per 100k(corresponding to the crawl date)
- Covid Deaths (corresponding to the crawl date)
- Hospital Beds in the prefecture
- Clinic Beds in the prefecture
- Area of prefecture
- The population of the prefecture
The number of unique job titles is 894,501, making it impossible to do any analysis at the job title level. We have two other job fields: category1 (22 unique values) and category2 (132 unique values), we can use these categorical values in our analysis, but they are not a perfect representation of the occupation as defined by the SOC (Standard Classification of Occupations). Some category values are at the Industry level while others are at occupation or job-timings level. Thus, due to the lack of proper industry and occupation categories of a job posting, we will limit our analysis to the vacancies and salaries at the prefecture-level.
The platform HelloWork, defines the two classification fields. We can see that on hello work demand is more skewed towards Medical, Pharma, Logistics, and Sales than any other occupation.
IMPACT OF COVID ON JOB VACANCIES
We do not have the exact date of the job advertisement. However, since the crawl frequency is at the weekly level, all the new jobs can be safely assumed to be posted approximately on the crawl date except for the jobs crawled in January 2020 due to the abnormally high number of jobs in Jan 2020. Hence, we must exclude the jobs observed in Jan 2020 in our analysis.
Number of Jobs posted online: 7,087,884
New Number of Jobs posted online: 6,273,017
As one can see in the above graph, the job vacancies posted online were affected significantly in the initial days of the pandemic despite the low count of cases and deaths due to the initial shock.
Almost all prefectures followed the same pattern, but of course, the delta in jobs postings was in concordance with the prefecture's population, area, GDP, and other facilities or economic factors. This can be observed when we convert the count of jobs to a logarithmic scale, as shown below.
In the above chart, we can see that more than the covid cases, the initial shock of the pandemic impacted the drop in the job vacancies. But it does not mean that cases had no impact on job vacancies. The regression table below quantifies that the increase in cases leads to a decrease in the number of jobs when we absorb the fixed effects of prefectures.
IMPACT OF COVID ON JOB SALARIES
Did the cases or deaths related to the covid impact the minimum salaries offered on the online job postings in a region/category?
On average, the minimum monthly salaries offered increased from Jan-2020 to Dec-2021. A combined bar and line chart shows that the minimum wages increased as the covid cases per 100k improved. Over the 24 months, the average minimum monthly Salary increased from 175.5k JPN to 180k JPN (including part-time work). Government policies may also influence the increase, correction for inflation, or shift in skill requirements, not solely due to covid cases or deaths. However, since we cannot control for these factors due to the unavailability of the data points, our analysis is limited to assessing the sole impact of covid cases on the salaries offered.
The above regression tables speak for the significance of the cases per 100k in last week, the covid deaths, and the job vacancies on the minimum wages offered in japan. We see that increase in deaths, cases, or vacancies strongly correlates with the rise in the minimum salaries.
Interestingly, job demand and covid cases are drivers of the minimum salaries associated with new jobs despite the covid cases leading to a decline in the number of jobs.
The charts below are a pictorial representation of how covid cases per 100k in last week and job vacancies have impacted job postings' minimum salaries.
Conclusion:
The covid-19 significantly impacted the number of jobs posted online in Japan. However, it wasn’t the number of cases or deaths that caused the most impact, but rather the initial shock (and the corresponding lockdowns) that caused the most reduction in jobs. Since the initial major shock in April 2020, the job number of jobs have somewhat recovered but even after two years, they have not returned to the pre-covid levels in Japan.
Salaries offered saw a significant increase during the past two years. We see that the covid-19 and the number of job vacancies (demand) strongly correlates with the increase in minimum salaries offered. However, it is likely that the rise of minimum salaries are also being driven up by other factors such as government policies, a shift in the demand for advanced skills, and inflation rates. Further, the data shows that the correlation between salary growth and covid case growth suddenly gets decoupled toward the end of 2021. So, we must definitely take the results of covid-19's impact on the increase in salaries with a pinch of salt.
Let me know if the data backed your intuition in the comments!
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An interesting video on Japan-ification:
