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Projections obtained Sunday from the health ministry show that Japan’s unemployment rate could rise to almost 7 percent in 2007.

In addition, some 1.45 million people may be receiving employment insurance benefits by that time.

The internal documents were compiled for discussions reviewing the employment insurance system, officials at the Health, Labor and Welfare Ministry said. The system is currently under great strain given the rise in joblessness amid the protracted economic slump.

The government has never officially released unemployment rate projections.

The calculations are based on the 5 percent average yearly increase over the past 10 years in recipients of employment insurance. The ministry assumes this pace will continue.

Based on this, unemployment would be around 5.6 percent in fiscal 2003 and grow by 0.2 to 0.4 percentage point each year to reach 6.8 percent in fiscal 2007, according to their calculations. The figure does not take into account any rise in joblessness that may follow the acceleration in the disposal of banks’ bad loans — currently a top policy objective.

If employment insurance benefits are maintained at current levels, the insurance program will be in the red to the tune of some 880 billion yen in fiscal 2007 alone, according to the ministry. This is about three times the loss expected this fiscal year, which ends in March.

If the program is to balance out on an annual basis, insurance premiums would have to be hiked to around 2.1 percent in fiscal 2007, the calculations show. Such premiums currently stand at 1.4 percent of a worker’s monthly wage, with the payments equally divided between the worker and the employer.

The ministry has asked the Labor Policy Council to consider allowing the current premium to be raised to 1.6 percent beginning June. The plan has been put on hold, however, as both businesses and labor groups oppose it.

Ministry officials explained that the internal calculations were compiled because council members demanded to see long-term figures, as the premium has been raised for three straight years.

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