There are a total of 52,670,000 employees in Japan. The number of non-regular employees has been increasing to reach 19,530,000, or 37.1% of all employees. This is almost double the 9,580,000 non-regular employees in 1992, immediately after the collapse of the bubble economy. This is attributable to labor regulations that are designed to protect regular employees. They do this so well that, contrary to intention, they result in the institution of high eligibility criteria for regular employment that many cannot meet. To support the growth of the Japanese economy, it is essential to develop labor regulations that enable the smooth transition of workers to growth industries. We need to change the labor regulations in a direction that will mobilize and activate the labor market.