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The latest employment figures confirm that Japan’s job market is continuing to contract. The number of unemployed hit a record 3.39 million in March, as the jobless rate rose 0.2 points to 4.8 percent. Both figures mark the worst-ever downturn since the government began keeping such records in 1953.

The number of people holding full-time jobs fell to 63.84 million in March, down 840,000 from the same month last year. The number who involuntarily quit their jobs for various reasons, especially company bankruptcies and corporate downsizing, increased by 320,000 from March last year, pushing up the total of such suddenly jobless people to a record 1.06 million. Another 40,000 joined the 260,000 new graduates from colleges and high schools who have failed to find jobs. The total unemployment figure also includes 1.07 million people who had voluntarily quit for personal or other reasons.

The worst, it is feared, is not over. As companies continue to restructure, it seems it will be only a matter of time before the unemployment rate hits 5 percent. One estimate suggests that the jobless rate could top 10 percent if companies were to get rid of all underemployed staff. The surge of unemployment in March seems partially attributable to the fact that companies stepped up their downsizing in attempts to boost their bottom line in the last month of the fiscal year. Whatever the reason, the plight of the jobless is real, particularly for middle-aged employees who have been brought up on the myth of lifetime employment.

So far, the picture is a sorry mess. Everyone knows someone or has heard of salarymen who suddenly lost their jobs. There are also stories of people being forcibly reassigned to subsidiaries or subcontractors, only to be laid off later.

The government’s attempt to spend the economy out of the blues has resulted in little progress on the job front. No matter what the government says or does, depressed earnings and worries over job security are forcing consumers to cut back on spending. Without buyers, companies can hardly thrive. This is a vicious circle.

The unemployment situation has prompted the government to undertake further measures to stimulate employment. But it is hard to see what the government can actually do, apart from perhaps providing more retraining opportunities or stretching unemployment benefits. Any measure to force companies to continue the fabled lifetime employment system can only boomerang and may actually hamper the chance of a real recovery.

In today’s global economy, Japan’s rigid employment system has clearly outlived its purpose. This is one reason why the dismal employment figures were greeted with only a general whimper rather than massive outrage. Even the most belligerent labor unions know that the Japanese economy needs to become globally competitive to survive and that ultimately job security requires staying ahead, at home and abroad.

It is high time Japan worked out the necessary legal and support framework that would foster a more flexible labor market. Better retraining programs can definitely help, but it is more important to wean the public from its overdependence on company identity. Like the national economy, the employee needs to remain nimble and flexible to stay ahead. Japan must be ready to adapt to new economic realities.

While a U.S.-style job system in which companies are free to hire and fire is clearly too disruptive and painful at this point, the pressure to move in this direction is bound to grow. As the March employment figures show, companies have shed 890,000 full-time jobs, while creating 260,000 temporary positions. Thus, the trend seems to be moving toward the shedding of full-time regular employees in favor of temporary staff.

Remodeling the current employment system need not be totally painful. Even in Japan, an increasing number of younger workers are attracted to the idea of getting jobs that fit their personal inclinations and abilities. If the American example is any guide, nurturing individual talents and abilities is the best way to create new companies and jobs that are sustainable in the global market. After all, economic vitality, rather than government stimulation, holds the key to prosperity.

What Japan needs is no less than a complete economic makeover, starting with the personal mind-set favoring employment by big corporations. The challenge is to strike an imaginative balance between economic competitiveness and work for all people who want it. Rather than throwing good money after more useless public projects, the government, too, should use its resources to work out a comprehensive tax and corporate-accounting program that can nurture new businesses.

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