Japan's jobless at record high

Japanese unemployment is expected to rise further

Japan's unemployment rate stayed at a record high of 4.9% in June, unchanged from May, and is expected by the government to move even higher.

The number of unemployed rose for the third straight month, reaching 3.38 million, up 170,000 from the previous month, according to data published by the Ministry of Public Management.

"There are concerns that economic and employment conditions such as bankruptcies and joblessness will worsen further," Trade & Industry Minister Takeo Hiranuma said on Tuesday.

"It's possible the overall jobless rate could exceed 5%," he added.

The global economic slowdown has weakened demand for Japan's high technology exports, causing manufacturers to slash production and workers.

Japanese restructuring

Economic restructuring proposed by Japan's prime minister Junichiro Koizumi for the banking sector and through privatisations is also expected to add significantly to unemployment.

The Tokyo stock market's Nikkei index closed higher on Tuesday after dropping to a 16-year low on Monday following the victory of Mr Koizumi's party in elections to the upper house of parliament.

The Nikkei ended the day 281.5 points or 2.4% higher at 1,860.7, recovering from a near 2% fall the previous day.

"Monday's losses looked like a message from the market to Koizumi demanding more details on reform, and worries over whether he can really deliver," said Haruki Takahashi, head of equities dealing at Tsubasa Securities.

"But investors may have taken a second look and said there's no reason to be so concerned, there were few expectations for policymakers to boost the market in the first place," he added.