A151While the number of people employed in manufacturing has decreased, the number of people employed in service industries has increased, leading to servicization (the substitution of services for goods). In Japan, productivity in service industries is not as high as in manufacturing, and it might even be argued that the decline in the rate of employment in manufacturing industries actually reflects their health. Service industries have low productivity levels because: 1) they are labor intensive; 2) some, such as the power generation industry, which can store no stock, need to maintain equipment so that they can quickly respond to demand and seasonal fluctuations; and 3) many of the industries are government regulated. However, the demand for services is increasing. Rising incomes, the graying of society and deregulation have resulted in many new types of services. The structural transformation of the economy, which is creating the shift from manufacturing to service industries, is ongoing. Falling unemployment levels have caused the debate about the hollowing out ofJapanese industry to die down.