TOKYO: Japan’s unemployment rate has been a relatively bright spot on what would otherwise be a bleak picture for the wide economy. Surprisingly, despite a lack of consumer confidence and collapsing inflation, the unemployment rate has continued to decline and actually reached a 20 year historic low of 3.00% in July. Subsequently, classical economists would then argue that the tightening of the labour market would suggest that inflation and improved conditions are on their way…but are they really?
The reality is that the historically low unemployment rate has exposed some of the deeper structural problems within Japan’s economy that is likely to forestall any march towards growth or momentum. Although unemployment has declined sharply over the past few months, most of the job gains have been filled by women in largely part time roles. In fact, males between the ages of 25-44 dominate the ranks of the unemployed and the numbers of male workers (25-44) within the work force has fallen to its lowest point in over 48 years.
