Cablegate: Japan's Unemployment Rate Improves

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UNCLAS SECTION 01 OF 02 TOKYO 002512

SIPDIS

STATE FOR E, EEB AND EAP/J
NSC FOR LOI, RUSSELL
USTR FOR AUSTR CUTLER, BEEMAN, LEE, AND HOLLOWAY

E.O. 12958: N/A
TAGS: ECON EFIN ELAB JA
SUBJECT: JAPAN'S UNEMPLOYMENT RATE IMPROVES

1. SUMMARY. September saw Japan's unemployment rate improve
from 5.5 percent to 5.3 percent. Japan uses a slightly
different method than the United States to calculate
unemployment. Also, the Hatoyama Administration announced an
emergency measure that aims to create 100,000 new jobs by
March 2014. END SUMMARY.

UNEMPLOYMENT RATE BEATS PREDICTIONS THAT IT WOULD WORSEN
--------------------------------------------- -----------

2. On October 30, Japan's Ministry of Internal Affairs and
Communication announced unemployment had improved from 5.5
percent in August to 5.3 percent in September. This marks
the second month of improvement coming after July figures hit
5.7 percent, the highest level since such surveys began in
1953. Unemployment for men fell 0.2 percent to 5.6 percent,
and for women it fell 0.1 percent to 4.9 percent. The same
day, the Ministry of Health, Labor, and Welfare (MHLW)
announced that the job-to-applicants ratio also improved 0.01
from the previous two months worst ever figure of 0.42 to
0.43, meaning 43 jobs were available for every 100 job
seekers. MHLW also reported the number of job offers
increased 1.5 percent, marking the strongest growth since
March 2005, and the number of job seekers fell 1.6 percent,
the first drop since April 2008. Deputy Prime Minister Naoto
Kan welcomed the numbers at a press conference and said that
the overall economy was on a recovery trend, but he did
express some concerns about deflationary pressure.

3. The improvement in the unemployment rate beats the
predictions from both the Kyodo News and Nikkei economists
surveys, which predicted unemployment would increase to 5.6
percent in September. Secretary General Hiroyuki Nagumo of
the Japan Trade Union Confederation (Rengo), Japan's largest
labor organization, predicted in a statement on October 23
that Japan was likely to pass the 6 percent level for
unemployment. Reason for caution remains, however, as MIC
reports the number of employed persons continued to decline
for the 20th straight month, down 1.5 percent (980,000
persons) to 62.95 million compared to September 2008. The
number of unemployed rose for the eleventh straight month, up
33.9 percent (920,000 persons) to 3.63 million since last
September. Laid off employees accounted for 1.13 million of
the total unemployed, a rise of 510,000 for the same period.

DIFFERENCES BETWEEN U.S. AND JAPAN UNEMPLOMENT CALCULATION
--------------------------------------------- -------------

4. Japan calculates its umemployment in a slightly different
manner than the United States. According to the "Data Book
of International Labor Statistics 2009," published by the
Japan Institute for Labour Policy and Training (JILPT), both
Japan and the United States follow the basic standards and
definitions set by the International Labor Organization
(ILO). The ILO defines "unemployed" as "all persons over a
certain age who are, during a set period of time, 1) not
working, 2) are currently capable of working, and 3) are
searching for jobs." Substantial flexibility is allowed,
however, to each country in defining these conditions, which
makes uniform comparison difficult.

5. Unemployment in Japan is based on the "Labor Force
Survey," and persons aged 15 and over who were not working,
were capable of immediately accepting work, and had been
seeking work during the survey week are considered
unemployed. Those awaiting results from past job searches
are also counted as unemployed. The unemployment rate is
then calculated by dividing the number of unemployed by the
total labor force, which, unlike in the United States,
includes military personnel (members of the Japan Self
Defence Forces).

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6. For comparison purposes, the JILPT estimates that the
2008 official unemployment rate for Japan of 4 percent would
be 3.4 percent if U.S. definitions and calculation methods
were employed. The OECD, which conducts an international
comparison of unemployment rates using harmonized ILO
standards, calculated August 2009 unemployment rates at 9.7
percent for the United States and 5.5 percent for Japan. The
OECD calculations match the announced U.S. and Japanese
government figures for August.

GOJ PACKAGE TO INCREASE EMPLOYMENT
----------------------------------
7. On October 23, the Hatoyama Administration announced a
package that aims to create 100,000 jobs by March 2010. The
measures focus on increasing employment in areas with growth
potential, such as nursing care, agriculture, tourism, and
the environment. Funds will go to bolster the popular Hello
Work public job-placement centers that provide advice on
employment and job training. The package also contains
provisions to provide emergency lodging and loans with easy
terms to the unemployed.

8. Some in the media have criticized the plan for not
providing specific targets for creating new jobs in each of
the designated industries. There are also complaints that
the package is insufficient. Financing for the program comes
from the previous Liberal Democratic Party's budget, and the
current Democratic Party of Japan administration has no plans
to spend any new money on the programs.
ROOS

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