[OPE] Japan's unemployment bombshell...

(As I noted on OPE-L a month ago, there are big changes in the wind now in
Japan's political economy, and this is again confirmed by reports in recent
days. Unemployment has begun to rise steeply in Japan, across the last six
months, and this will affect all the Pacific rim countries as well).

Japanese jobless rate hits record high
By Mure Dickie and Robin Harding in Tokyo and Justine Lau in Hong Kong
Published: FT August 28 2009

Japan's unemployment rate on Friday hit its highest level since records
began in 1960, underscoring the economic problems that could result in a
political earthquake in Sunday's general election.
Widespread dissatisfaction with the Liberal Democratic party and the
sharpest recession in decades have set the stage for what polls say could be
a landslide victory by the decade-old Democratic party. (...) efforts to
rebuild confidence in the LDP's economic competence will have suffered a new
setback from the bleak data released on Friday on the two economic issues of
most concern to the electorate - prices and employment. Seasonally adjusted
unemployment rose to a record 5.7 per cent in July, up from 5.4 per cent in
June, while deflation also tightened its grip on the economy, with core
consumer prices excluding fresh food - the central bank's preferred
measure - down 2.2 per cent on a year earlier.
http://www.ft.com/cms/s/fef1e438-93fb-11de-9c57-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Ffef1e438-93fb-11de-9c57-00144feabdc0.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Feurope

The change may seem slight to the layman, but consider what this means:

In a separate report the same day, the labor ministry said the ratio of job
offers to job seekers in July fell to an all-time low of 0.42. That means
there were 42 jobs available for every 100 job seekers. (...) Tadayoshi
Ichida, secretary general of the Japanese Communist Party, said the latest
figure invalidates the argument by the government and the ruling bloc that
if big businesses make profits, people's incomes will increase. "We need to
work on reviewing labor laws, including the overhaul of the labor dispatch
law," he said. http://search.japantimes.co.jp/cgi-bin/nb20090829a1.html

The pressure therefore builds up for labour market flexibilization:

Japanese employment practice is traditionally founded on lifetime
employment. The employee usually remains with one company for his/her entire
working life. The employment period is thus not stipulated and the post is
assured until mandatory retirement age, which is usually somewhere between
55 and 60 years. Such a regular employee normally does not have special
skills when he/she enters but tends to be trained within the company by
being rotated between different jobs and departments. However, this
tradition does not meet the needs of all employers and employees. In the
year 2000, the regular staff was 74% of all employees and the number is
decreasing
http://www.ilo.org/public/english/dialogue/ifpdial/info/national/jp.htm

Unemployment continues to increase, while labour mobility slows:

Taro Saito, senior economist at NLI Research Institute
[ http://www.nli-research.co.jp/english/index.html ], said the jobless rate
will
reach the 6-percent mark by the end of the year even though the rate of
increase is expected to slow. (...) The unemployment rate for men rose 0.4
point from June to 6.1 percent, exceeding 6.0 percent for the first time.
For women, the jobless rate increased 0.1 point to 5.1 percent. Japan had
3.59 million unemployed people in July, up by a record 1.03 million from the
same month last year. Of the unemployed, 1.21 million, up 650,000, lost
their jobs based on the decisions of their employers, while 1.1 million
people, an increase of 100,000, left their jobs on their own. The harsh job
situation was particularly tough on young people in July, with the jobless
rate at 9.9 percent for those between 15 and 24 years old. (...) The ratio
of job offers to job seekers, based on information from the government-run
Hello Work job placement centers, had dropped by at least 0.06 point every
month from January to April.
http://www.asahi.com/english/Herald-asahi/TKY200908290092.html

Maybe old loony news, but nevertheless of interest:

A Marxist novel written in 1929 has climbed to the top of Japan's best
seller list, reflecting growing anxiety about job security and widening
income gaps in the world's second-biggest economy. (...) "A Crab-Canning
Boat" tells the tale of a crab boat crew working in harsh conditions under a
sadistic captain. It was written by Takiji Kobayashi, a communist who was
tortured to death by police at the age of 29 in 1933. Most of the novel is
devoted to the crew's struggle to unite and coordinate a strike, and the
story ends with their vow to topple their capitalists masters.
http://www.reuters.com/article/lifestyleMolt/idUST31778020080812?sp=true
August 15 2008, the day of the 63rd anniversary of the end of World War II
(day of the surrender of Japanese imperialism), was commemorated by a rally
titled " ' Crab-Canning Ship ' -Do we allow the Constitution succumb to
national interest and chauvinistic nationalism?'". 580 participants gathered
to the rally in Nakano, Tokyo. (...) The rally was opened by the address of
a young social welfare worker who articulated the purpose of the rally in
the following words: "Now the whole world has become 'Crab-Canning Ship'. We
all live in a 'Crab-Canning Ship'. But we can change the whole world when we
are united."
http://www.zenshin.org/blogEnglish/2008/08/rally-on-august-15-we-can-chan.html

For more labour force data see:
http://www.stat.go.jp/english/data/roudou/154.htm
Yen reference rates:
http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-jpy.en.html
(the Yen did not gain ground much after its fall in Q4 2008, and most likely
will go down more).

Jurriaan

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Received on Sat Aug 29 12:08:24 2009