Japan's unemployment rate dropped to 3% in July. However, the country’s economy is still in recession as low unemployment rate is its only advantage.
Unemployment at 3% is the lowest level since 1995. The number of employed women (28.3 million) and women's labor participation rate (66.3 percent) rose to a record high in July.
According to conventional economic theory, low unemployment rate should provide good inflation, increasing household spending, and solid growth. Looking at Japan, we see none of that.
Even when situation on the labor market improves, the yen is rising, thus affecting the country’s exports.
According to the latest data, Japanese household spending fell by 0.5% in July from a year earlier, for a fifth straight month, while retail sales declined by 0.2% from the prior year.
Long-term unemployment among men aged 25-44 rose fivefold since early 1990. Despite an overall increase in the workforce, there were 14.7 million male workers aged 25-44 in June, the lowest level over the past 48 years.
The tendency of growing unemployment among men is a disaster for the Japanese government. The number of jobs in the manufacturing sector decrease to 10.3 million from 11.7 million a decade ago. Meanwhile, the medical, healthcare and welfare sector added 2.7 million jobs.
Moreover, rising unemployment among men could aggravate Japan’s demographic problems - a rapidly aging population and a very low birth rate. Currently, only 39% of men in their 20s want to get married compared to 67% three years ago.
Analysts claim the Bank of Japan has no other way out of this situation but to give out money to households. This could at least stimulate a temporary increase in the birth rate.
