Behind the dip in the jobless rate

The internal affairs ministry announced July 30 that the nation’s unemployment rate declined to 3.9 percent in June, down 0.2 percentage points from the previous month. It represents the first improvement in three months.

And it is the first time that the unemployment rate has dipped to a level below 4 percent since October 2008, just after the Lehman Brothers shock.

The effective ratio of job offers to applicants also improved 0.02 points to 0.92, for the fourth consecutive month of improvement. Chief Cabinet Secretary Yoshihide Suga said that the effect of the economic policy of the Abe administration is spreading to the employment situation.

Labor, Health and Welfare Minister Norihisa Tamura said that companies have become active as the economy has improved. But the problem is that people don’t have a strong sense that the economy is bouncing back. It is necessary to carefully look at what is actually happening in the labor market.

Attention must be paid to the fact that while the unemployment rate for women is relatively low at 3.5 percent, for men it is still high at 4.1 percent. This situation reflects the continuance of an existing trend, but the situation isn’t as cut and dry as it appears at first glance. Although job opportunities have increased for women, many are apparently taking jobs in the services sector, where wages are low. And many women have given up looking for jobs. Such women are not counted as among the jobless, a factor that has helped to lower women’s unemployment rate.

While the share of manufacturing has shrunk in the labor market, that of the service industries has grown. Compared with 2002, the number of manufacturing and construction workers decreased 1.7 million and 1.15 million, respectively, in 2012 while the number of medical and welfare services workers increased 2.32 million.

A rise of employment in medical and nursing care services helped to lower the overall unemployment rate. But in this sector, the percentage of irregular workers is high and wages are low. Therefore an expansion of job opportunities in this sector does not necessarily lead to an improvement of working conditions.

Job offers in the accommodation (hotels and inns) and food and drink service sectors increased 13.5 percent in June from a year earlier, reflecting an increase in the flux of foreign tourists taking advantage of the cheaper yen. But the percentage of irregular workers is also high in these sectors.

One report by the internal affairs ministry shows that the overall percentage of irregular workers in the labor force was as high as 36.4 percent in June. Another report by the same ministry shows that irregular workers account for 38.2 percent of the nation’s employed workers, numbering 20.43 million and topping 20 million for the first time. As many as 57.5 percent of female workers fall into the irregular workforce category.

It is highly likely that the lower unemployment figures means that many people have no other choice other than to accept low-paying and unstable jobs. Therefore it is important that the government not feel a sense of satisfaction with the latest unemployment figures. Instead it must push policies that will help increase the number of regular full-time employees who earn higher wages and can enjoy a stable economic outlook.