The number of Japanese without a job has fallen to a level not seen in over two decades. Still, the country faces tough challenges in the form of lackluster economic growth and stubbornly low inflation.
Japan’s unemployment rate declined to 3.0 percent in July from 3.1 percent in the previous month, the government said Tuesday. At the same time, the availability of jobs in the country – measured as the ratio of job offers per job applicant – remained unchanged at 1.37, which is the highest in 25 years.
This is the lowest level of joblessness in Japan in 21 years, and the East Asian nation’s unemployment rate is much lower than that in other industrialized countries in Europe and North America.
Still, Japan’s economy continues to face a multitude of problems such as tepid expansion and an apparent inability to spark inflation.
The country’s central bank recently revised downward its growth estimate for the world’s third-biggest economy, projecting it to now expand 1 percent in the year through March 2017, down from the April forecast of 1.2-percent growth.
It also predicted Japan’s consumer price index would inch up just 0.1 percent for the year, down sharply from the 0.5 percent predicted three months ago, and far below the 2-percent target it set in April 2013.
The Japanese government, led by Prime Minister Shinzo Abe, has strived hard to jumpstart growth with the help of a series of economic policy measures, dubbed Abenomics. The program called for big government spending, massive monetary easing by the Bank of Japan (BOJ) and structural reforms to free up the nation’s highly-regulated economy.
Boosting the economy
As part of the efforts to get the ailing economy on its feet again, Abe last month announced a massive stimulus package worth nearly 28 trillion yen ($265 billion, 241 billion euros). The package included direct fiscal measures such as boosting spending by national and local governments as well as loan programs.
And days after the announcement, the Bank of Japan chipped in with additional monetary stimulus, doubling purchases of exchange-traded funds (ETS) to 6 trillion yen from 3.3 trillion yen.
The central bank also has a negative interest rate policy in place, in a bid to encourage financial institutions to increase lending to consumers and businesses.
Nevertheless, Abe has only made limited progress when it comes to the third leg of his economic policy, namely structural reforms. They include inducing more competition by opening up previously protected sectors of the economy, easing stringent labor regulations that discourage job hopping and steps to encourage more women to work, among other measures.
Another major issue confronting the Japanese economy is the nation’s ageing and declining population, which is projected to drop to about 87 million by 2060 from the current 127 million.
Some economists, in fact, say the tightening of the labor market is due to the falling population, pointing to the declining number of people in the employable 15-64 age group.
sri/hg (Reuters, dpa, AFP)