Japan's unemployment rate higher

Temporary workers protest, Tokyo, 15 Feb 09

Workers are protesting against layoffs and fear more to come

Japan's unemployment rate has risen to a three-year high as companies continue to slash jobs.

The jobless rate rose to 4.4% in February, from 4.1% in the previous month, the government said.

Separate data showed that consumer spending last month fell by 3.5% from a year earlier.

Prime Minister Taro Aso is planning to announce a new package of stimulus spending to try to revive the world's second-biggest economy.

Jobs aim

The package, the fourth since last year, may be worth up to 20tn yen ($200bn, £140bn) and include temporarily lowering or scrapping inheritance tax to encourage elderly people to pass on their savings to the young.

The government hopes to spur the creation of two million jobs.

The number of unemployed people in Japan in February stood at 2.99 million, up by 330,000 from a year ago, the government said.

Japan's Finance Minister Kaoru Yosano said on Tuesday that he supported a proposal, put forward by a task force set up by Mr Aso's ruling Liberal Democratic Party, to set up a public entity to buy stocks with public funds directly from the market.

The fund would buy exchange-traded funds, which track the gains and declines in stock indexes.

The benchmark Nikkei 225 shares index in Tokyo has dropped 8.5% this year, adding to last year's 42% drop.

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