Subsistence and Commercial Activities. The postwar economy of Japan is based on a competitive-market, private-enterprise system. Less than 8 percent of the population remains fully occupied with agricultural production, although many families retain farming as a secondary occupation. The most usual pattern is that the wife works the farm while the husband is employed full-time in business or industry. Rice remains the principal crop, although its production is strictly controlled and there are financial incentives for diversification. Over the past forty years there has been a steady reallocation of labor from agriculture and a large number of relatively inefficient small-scale industrial and service occupations to highly productive, technologically sophisticated enterprises. The majority of the population is occupied today in manufacturing, business, financing, service, and the communication industries. Japan consistently has kept its unemployment rate at 2.5 percent or lower—by far the lowest in the industrialized nations. Most businesses are privately owned, and demand for goods and services determines what will be produced and at what prices. The role of government in the economy is indirect, largely through close cooperation with business, wide dissemination of information to shape incentives, and provision of research and development funds.
Despite the steady reallocation of labor, not all production is concentrated in giant companies. Small units of production remain very prevalent; for example, more than half the workers in manufacturing are in enterprises with fewer than 100 workers. Japan is an exceedingly wealthy country, with the second-largest gross national product (GNP) in the world. There is a reasonably good distribution of income across the population; abject poverty is virtually nonexistent.
Industrial Arts. Throughout Japanese history the production of ceramics, cloth, silk, paper, furniture, metal implements, and so on has been carried out by individuals in extended households, by professional artisans, and in cottage industries. Techniques were usually passed on from one generation of specialist families to another, sometimes over hundreds of years. A few such families remain in existence, although it has become increasingly difficult to find successors. Distinguished craftspeople are sometimes recognized by the government as "national treasures." Today the bulk of industrial arts is mass-produced, and workers are trained in an apprenticeship system or in technical schools, but handmade crafts continue to be highly valued and play a major role not only in the art world and the tourist industry but also in daily life.
Trade. Most trade in Japan is organized and conducted by the nine very large, highly diversified commercial houses known as sōgō shōsha, which structure and facilitate the flow of goods, services, and money among client firms. These trading houses operate both within Japan and internationally. The total sales of these nine firms account for about 25 percent of Japan's GNP, and the imports and exports handled by them amount to about half of foreign trade. These companies originated in the Meiji period, and today maintain a system of domestic offices linked by the latest communication techniques to a worldwide network of overseas offices. Japan's trade is characterized by the export of finished products and the import of raw materials, of which oil is perhaps the most strategic. At present the nation has an enormous trade surplus with most of its international trading partners.
Division of Labor. Since 1945 Japan has adopted a comprehensive legal framework dealing with labor conditions including labor relations, labor protection, and social security. Labor conditions are managed largely by the Ministry of Labor. The Labor Standards Law of 1947 contains a "bill of rights" for individual workers and guarantees minimum wages, maximum hours of work, and so on. Many white-collar workers are nevertheless required to put in long hours of overtime work. About one-third of Japanese workers are unionized; almost all Japanese unions are organized at the level of the enterprise, and they include in their membership blue- and white-collar workers and, often, low-level managerial personnel. Branch unions often form an enterprisewide federation, which in turn may participate in a national industrywide federation. Most union activity takes place, however, at the level of the enterprise.
The school system is designed to be egalitarian and, in theory, entrance into the work force is based on educational merit. In practice, graduation from certain schools provides a greater guarantee of entry into the top universities, graduation from which facilitates entry into the professions and high-ranking civil service jobs. Employment based on personal connections is still prevalent in Japan. A provision for equal wages for equal work regardless of gender was adopted in 1947, but discrimination against women in the workplace continues to the present time. In April 1986 the Equal Employment Opportunity Law, designed to eliminate gender inequalities, was passed, followed in 1988 by the Labor Standards Law. These laws remove many of the restrictions placed on working women—in particular, the number and timing of the hours they can work each day. In practice, considerable social pressure remains for a woman to give up work during her first pregnancy. When they return to work, women are very often hired as part-time employees, although their working hours are long, and many of them work a six-day week. Employers are not required to pay benefits to such employees, who can be hired and fired easily during economic cycles of expansion and contraction.
Land Tenure. At the end of World War II, nearly 50 percent of the population still lived in rural surroundings. At that time 36 percent of the farm families owned 90 percent or more of their land; another 20 percent owned between 50 and 90 percent; 17 percent owned 10 to 50 percent; and 27 percent owned less than 10 percent. Tenants paid rent in kind. Landholdings were, and remain, small (1 hectare on average). Land reform was carried out during the Allied occupation, including the transfer to the government of all land owned by absentee landlords. Today 90 percent of the farmland is owned and worked by individual families. Of urban land area, over 77 percent is residential, nearly 11 percent industrial, and just over 12 percent commercial. Urban residences are small and prohibitively expensive, on average more than three times the cost of housing in the United States. Many families live in apartments for years until they can afford a down payment on a house. Approximately 65 percent of the families in Japan own their home, but in the metropolitan areas this number falls below 30 percent.