BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Monday, 27 August, 2001, 14:38 GMT 15:38 UK
Japan 'aid' for unemployed?
Prime Minister Junichiro Koizumi
Prime Minister Junichiro Koizumi: Under pressure to reform
Speculation is mounting that the Japanese government is set to unveil a 10bn aid package for the unemployed.

Prime Minister Junichiro Koizumi has said he thinks it is too early to say whether a supplementary budget is needed.

However, on Sunday, Taku Yamasaki, second-in-command of the ruling Liberal Democratic Party, said the government was planning a supplementary budget for the current fiscal year.

The news comes as Toshiba announces job losses and one day ahead of Japanese unemployment data - expected to reach a record high.

Jobless rise

The slowing global economy has weakened demand for Japan's high-technology exports, causing manufacturers to cut production and workers.

Profit warnings announced earlier in the year are now feeding through into job losses.

Figures for July are expected to show that the unemployment rate will reach a high of 5%.

"We are in new territory. It is psychologically a very important barrier to break," Commerzbank's Tokyo economist, Ron Bevaqua, told the BBC's World Business Report.

"It is larger firms that have over invested and need to scale back... it has not become an economy wide phenomenon just yet... I think we are going to see a lot fewer new hires and a lot more attrition-based lay-offs," he said.

"By the time this is done, it will be dragged to about 6%.

"If we start to see structural reform at the grass roots, it would not be surprising to see it tick even higher than that," he said.

Urban appeal

He doubts the jobs package will do much to help those made redundant from the electronics sector.

While generally these packages consist of reconstruction-related spending, aimed at helping rural workers, this aid is likely to be targeted at urban areas.

"What Koizumi has done is try and appeal to the urban electorate," he said.

The problem for Prime Minister Junichiro Koizumi is balancing the need to push through reforms, control spending and cushion the electorate from the worst impact of the job losses.

On Monday, he said he thought it was too early to decide whether to draw up an extra budget to support the ailing economy.

The reforms promised include a pledge to clean up the banking sector, a promise which if implemented could see several job losses.

Commerzbank Tokyo's Ron Bevaqua
"It is larger firms that have over invested and need to scale back"
See also:

31 Jul 01 | Business
Japan's jobless at record high
29 Jul 01 | Business
Can Koizumi save Japan?
20 Aug 01 | Business
Bank of Japan targets deflation
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories