Japan’s headline unemployment data doesn’t tell the full story of its jobless pain.

Figures from the statistics bureau last week showed the unemployment rate ticked up to just 2.6 percent in April, a figure of envy for other countries as jobless rates rocket around the world amid the pandemic. Problem is, the numbers don’t include an extra 4.2 million people who are technically still attached to their employers but aren’t actually working and may not be getting full paychecks, if anything.

Factor in these people and the unemployment rate would jump to 11.5 percent. Then consider that another 940,000 people left the labor force in April and aren’t considered in the stats, either. Put it altogether and a grimmer jobs picture comes into focus that’s a little closer to what has hit the U.S. and other major economies.

“The reality is that you shouldn’t be looking at the jobless rate” to get a gauge of what’s really happening in Japan’s labor market, said economist Takuya Hoshino at Dai-ichi Life Research Institute.

There are always a certain number of workers who are on leave because their employers have less work for them do, or because of illness or family care. The law requires companies to pay these workers at least 60 percent of their salaries.

Now, though, the numbers of those who are technically employed but not working have swelled, from about 1.8 million a year ago to 6 million in April.

While the government has stepped up by expanding subsidies for leave pay through September, execution has been spotty. As of Wednesday, the labor ministry had processed only about half of roughly 100,000 applications from companies during the crisis, according to the ministry’s figures.

Hoshino says the official employment rate could jump by as much as 6 percentage points if companies go out of business and their furloughed workers end up with no jobs to return to. This is a big risk because labor-intensive industries, like restaurants and hotels, have been hit so hard by the crisis.

“During the great financial crisis it was the manufacturers that took the major hit,” he said. Given the labor-heavy nature of the service industries being hit now, “the labor market could get a lot worse.”

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.