Japan’s unemployment rate fell to 2.4 percent in January, the lowest in over 24 years, and job availability remained at a four-decade high, government data showed Friday.
The figures suggest companies are facing intensifying competition to secure workers as the economy enjoys its second-longest postwar economic expansion cycle.
Tightness in the job market, however, has yet to fully translate into robust wage growth — a headache for policymakers grappling with pulling the economy out of deflation.
The unemployment rate fell 0.3 percentage point from December to the lowest level since April 1993. It has stayed below 3 percent since June 2017, Internal Affairs and Communications Ministry data showed.
The jobs-to-applicants ratio stood at 1.59 in January, unchanged from December and staying at its highest level since January 1974, according to the Health, Labor and Welfare Ministry. This means there were 159 job openings for every 100 workers.
“Japan’s employment conditions have been steadily improving,” an internal affairs ministry official said.
The administration of Prime Minister Shinzo Abe has been encouraging women and the elderly to join the workforce as the country’s rapidly aging working population is expected to shrink in the years ahead.
Unemployment among women dropped 0.5 point from December to 2.2 percent, the lowest since October 1992, while the jobless rate for men fell 0.3 point to 2.5 percent, a level unseen since September 1993. The number of unemployed people slipped a seasonally adjusted 12.6 percent to 1.6 million.
As global economic growth gains traction, business sentiment has been improving at domestic firms. But small and midsize companies are seen facing severer labor shortages.
“It’s a situation where people can find jobs if they are not particular about job types and pay,” said Yasutoshi Nagai, chief economist at Daiwa Securities Co.
“The data came ahead of the spring wage talks, which may be positive (for pay hikes). That being said, the recent falls in share prices and the yen’s appreciation are worrying,” as they could hurt the outlook for corporate earnings, Nagai said.
Abe has been asking companies to raise pay by 3 percent during annual wage negotiations between management and labor unions, which will shift into full gear toward mid-March.
Still, many economists say 3 percent could be a tall order given that companies remain cautious about their business prospects.
Strength in domestic demand — such as private consumption and capital expenditure — is seen as vital for the world’s third-largest economy to maintain its recent growth momentum.