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Tuesday, 30 July, 2002, 09:23 GMT 10:23 UK
No respite for Japan's jobless
Jobless men in Tokyo at the government-sponsored Young Hellowork programme for the under-30s
Job clubs are a new and unwelcome phenomenon
Japan's stubbornly high unemployment is showing no signs of easing, adding to fears that the country's fledgling recovery is in trouble.

New figures from the government show that 5.4% of the workforce - or 3.7 million people - were without work in June, the same level as the previous month and 300,000 more than June last year.

The risk is that companies trying to restructure their hard-hit businesses will not be able to soak up the college and school graduates about to hit the job market.

That could damage consumer spending still further, just as the gloom spread by recent corporate scandals depresses the overseas demand on which Japan's fragile export-led turnaround is based.

Exports were the main driver behind the growth spurt seen in the three months from January to March.

Stubbornly high

Unemployment has now been above 5%, until recently an unthinkable level by Japanese standards, for a full year.

Part of the problem is the ongoing effort to reshape Japan after the wasteful "bubble economy" of the 1980s, which saw companies borrow massive sums for projects which could not survive the economic slowdown that followed.

Now bankruptcies are running at one a week for companies listed on the Tokyo Stock Exchange, throwing thousands of staff out of work.

But the keenness to lay off staff could mean an equal readiness to hire them back as business improves, some observers believe.

"Manufacturers were much more aggressive in cutting their workforces than in previous downturns," said Matthew Poggi, of Lehman Brothers in Tokyo.

"Now they can add workers as it picks up."

But Fiachra McCana, director of research at West LB Panmure in Tokyo, told the BBC's World Business Report he expects the numbers to stay fairly high for the time being.

"Unemployment numbers tend to lag economic recovery in other areas such as exports, industrial production," he said.

"But if the economic recovery actually gains momentum perhaps we will see them peak out and maybe turn down certainly lets say in the first quarter of next year's calender."

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Fiachra McCana, West LB Panmure in Tokyo
"Unemployment numbers tend to lag economic recovery in other areas"

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30 Jul 02 | Asia-Pacific
29 Jul 02 | Business
29 Jul 02 | Business
24 Jul 02 | Business
28 Jun 02 | Business
20 Jun 02 | Business
22 May 02 | Business
29 Jul 02 | Business
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