The youth labor problem is very serious in modern Japan. This paper examines the youth employment and unemployment policy of the Japanese government during the Heisei Recession. During the Heisei Recession, the youth unemployment rate rose heavily and the presence of young people called "freeters" (people who prefer not to take regular jobs) and NEET (Not in Education, Employment, or Training) increased. This paper's purpose is to show the characteristics of the policies during this time and to discover the frontier of employment policy. This paper uses empirical evidences from the documents of the Ministry of Health, Labor, and Welfare (MHLW), the Council on Economic and Fiscal Policy, and the Strategy Council to Foster a Spirit of Independence and Challenge in Youth. First, this paper explores the implications of the Human Capability Strategy (Ningenryoku Senryaku), which the government believes empowers young people. The government, which depends on the Human Capability Strategy, executes policies to improve individual vocational views and capabilities and to dissolve mismatches in labor markets. However, this paper shows an alternative strategy to match young people and employers through various social networks. Theoretically, these two strategies are not contradictory to each other. Second, this paper uses the MHLW documents to analyze the youth employment and unemployment policies during the Heisei Recession. Three characteristic concerns on policies are revealed by this analysis: (1) Prior to fiscal year 2002, the government prepared policies to foster the vocational views of students and provide a placement service for students and "freeters." (2) Since fiscal year 2003, when the Human Capability Strategy appeared in the documents of the Japanese government, the policy to cultivate vocational views was adopted for both students and "freeters." (3) However, youth employment and unemployment policies lack in matching young people and employers through social networks. Finally, this paper insists that the frontier of the youth policy is to make use of social networks.
