Might the labour market be looser than it appears?

There is a plausible argument that widespread “underemployment” of employees who would like to work longer hours means that labour market conditions in Japan are not as tight as the historically-low unemployment rate suggests. We find no evidence that this is the case, though an increase in the number of part-time workers probably has helped ease labour shortages. But the key reason why wage growth remains muted is the lifetime employment model which is keeping job mobility very low.