Japan unemployment hits three-year high

TOKYO (AFP) – Japan’s unemployment rate hit a three-year high of 4.4 percent in February, the government said on Tuesday, as the deepening recession tightened its grip on Asia’s largest economy.

Consumer spending meanwhile fell 3.5 percent month-to-month in the latest set of gloomy figures for an economic powerhouse on course for its worst recession since World War II.

“There is no good news in those data,” said JP Morgan senior economist Masamichi Adachi.

Japan’s heavily export-dependent economy shrank at an annualised pace of 12.1 percent in the last quarter of 2008, as the downturn has dried up demand for its cars, high-tech goods and other popular exports.

Major manufacturers have cut back on production and slashed tens of thousands of jobs since the crisis began. Exports in February dropped nearly 50 percent year-on-year.

“The employment data is likely to continue worsening for the next three to six months,” said Hiroshi Watanabe, an economist at Daiwa Research Institute, a private think-tank.

The government said there were only 59 available jobs for every 100 job-seekers while unemployment rose to 4.4 percent from 4.1 percent the previous month — matching a high last seen in January 2006.

There were 2.99 million people without jobs, up 330,000 from a year ago.The government also estimated that more than 192,000 non-regular workers have been laid off or will have lost their jobs between October and June.

“We recognise that the current (employment) situation remains severe,” said government spokesman Takeo Kawamura. “There is a need for additional measures” to create new jobs, he said.

The global slowdown has left few economies unscathed, but Japan has been hit especially hard. The International Monetary Fund (IMF) says the economy will shrink by 5.8 percent this year, far worse than expected in Europe and the US.

To revive Asia’s biggest economy, Prime Minister Taro Aso outlined plans for a new stimulus package in a press conference before he was due to leave for the Group of 20 summit of world leaders in London on Thursday.

“Considering the current situation, I have ordered the formulation of a new economic package… by mid-April,” he said, without revealing the amount of spending.

“This will include a new extra budget,” Aso said, referring to what would become his fourth stimulus package since October.

Reports have said the extra spending is expected to total more than 10 trillion yen (102 billion dollars) and aims to help meet the goal of creating two million new jobs over the next three years.

The premier said the new stimulus plan should include measures to build a low-carbon society, stressing that “the environmental energy sector is an area where Japan is the most advanced in the world.”

Aso has also suggested scrapping the inheritance tax to encourage Japan’s elderly people to pass on their substantial savings to the young, hoping the money will be used to buy new cars and homes.

Japan has approved three stimulus plans since October with spending, tax cuts and other measures worth a total 75 trillion yen (765 billion dollars), although actual fiscal spending totalled only about 12 trillion yen.