Japan's unemployment worsening
By Yoshiko Matsushita
Bloomberg News Service
TOKYO — Japan's economy shed 230,000 jobs in January, the biggest decline in four months, and more people will join unemployment lines as Hitachi Ltd. and Misawa Homes Ltd. plan to cut thousands of workers.
Associated Press
Companies are trimming costs as falling prices wreck earnings. Japan's 2 1/2-year bout with deflation worsened last month as Tokyo consumer prices, excluding fresh food, fell 0.9 percent from a year ago.
Commuters walk across an intersection at Tokyo's Ikebukuro railway station during morning rush hour. Japan's unemployment rate stood at 5.3 percent in January, and government officials warned that conditions remain severe and that job loss may accelerate this month. Falling prices are forcing companies to cut more employees.
Job losses may accelerate this month as companies try to complete severance plans before the March 31 end of the fiscal year so they can put billions of yen in charges behind them. That may push the jobless rate toward 6 percent, analysts said.
"Falling prices are eating into company earnings, especially at manufacturers, forcing them to cut costs," said Yasukazu Shimizu, a senior economist at Aozora Bank Ltd. "Joblessness will surely rise."
The unemployment rate unexpectedly dropped to 5.3 percent from a revised 5.5 percent in December as people gave up looking for work as jobs become scarcer. Economists had expected the jobless rate to rise to 5.7 percent from December's initial estimate of 5.6 percent.
Government officials downplayed the drop in the jobless rate. "The trend is still not good," Finance Minister Masajuro Shiokawa said. Economy Minister Heizo Takenaka said the job situation remains "tough."
Japan's third recession in a decade is fueling disenchantment among the unemployed. The participation rate, which measures the proportion of the work force with a job or looking for one, fell to 60.6 percent from 61.4 percent.
The number of people not looking for work rose by 1.2 million from a year earlier to 43 million, a record.
"More people are discouraged about looking for jobs," said Taro Saito, an economist at NLI Research Institute.
Jobs are getting scarcer. A Labor Ministry report showed there were 51 jobs for every 100 applicants at state-run work centers in January, or two people chasing each job. That's down from 65 jobs for every 100 applicants a year ago.
A total of 3.55 million people are registered as unemployed, the government said. The real figure is probably twice that, said Kiyoshi Sasamori, the chairman of Japan's biggest trade union group.
"It's just so scary," said Sasamori, who leads the Japan Trade Union Confederation, or Rengo. "The government has no time to lose. They have to come up with immediate and effective job- boosting measures."
The manufacturing industry, which employs one in five Japanese workers, shed 70,000 jobs. The construction industry, which employs one in 10 workers, shed 240,000 jobs.
More construction jobs are set to disappear. Misawa Homes, a Tokyo-based homebuilder, today said it will cut 2,000 jobs over the next three years as part of a plan to trim debt and stay in business.
Other companies are racing to finish job cuts by the end of the month. Hitachi's 15,100 job reductions will cost Japan's third-largest chipmaker $1.1 billion this fiscal year and save it 110 billion yen next fiscal year. The company last week doubled its projected loss.
Workers are digging into their savings to maintain their lifestyles. The propensity-to-spend ratio fell to 69.6 percent in January from 73 in December, the lowest since June. Spending by households headed by salaried workers rose 4.6 percent in January, seasonally adjusted, following a revised 5.9 percent drop in December.
Companies continue to reduce prices in a bid to lure shoppers.
