For a long time Japan has had one of the lowest unemployment rates in the world. Between 1960 and 1974, when many countries were facing high unemployment rates, Japan had an average unemployment rate of 1.3 % and a maximum of 1.7%. Only Germany bettered Japan in terms of unemployment rates during this period. Japan’s unemployment rates increased after the world oil crisis of 1973, and after 1975 it rose to more than 2%. However, Japan still maintains an unemployment rate which is much lesser than most industrialized nations of the west.
However, some economists are of the view that unemployment rates in Japan may be understated in comparison to western countries due to differences in definitions and conceptions. Japan’s low unemployment rates even during recessions have led many economists to think on these lines. A study by Koji Taira in July 1983, revealed the fact that if Japanese unemployment rates were adjusted to US concepts, the actual rate would be twice that of the United States of America.
By the end of the 20th century, unemployment rates in Japan had risen above 3%-4% levels. The Japanese job market began to collapse since 1993. By 1995, unemployment rates in Japan had exceeded the 3% mark. In April 1998, unemployment rate in Japan rose to over 4% for the first time since World War –II. The average unemployment rate of Japan in 1997 was 3.4% while that in 1998 was 4.1%.
During this period major changes took place in the Japanese job market that led to increase in unemployment in Japan. Firings, early retirement schemes, redeployment of workers, limiting of overtimes, flexible pay schemes and increasing part time employment were undertaken by a vast majority of Japanese companies. This was a major shift in the Japanese job market which once boasted of companies that offered jobs for a lifetime.
The new strategy of the Japanese companies was to reduce workforce to the minimum possible number. By June 1999, 3.42 million people in Japan were jobless and unemployment rate in Japan rose to 4.8%. While this is still an enviable rate for many other countries, however, for a country that has always maintained a very low level of unemployment, this has been a matter a concern.
Japan’s unemployment rates fell consistently during 2006-2007 for eleven consecutive months to reach 3.6% in July 2007. However in August 2007, unemployment rose by 0.2% to reach 3.8%. In September 2007 again, unemployment rate in Japan rose by another 0.2% and reached 4%. The rate of unemployment remained unchanged at 4% in October 2007 and declined by 0.2% in November 2007 to reach the 3.8% mark. 2.46 million Japanese people were unemployed during November 2007 which was less than the number of people unemployed in November 2006 by 5%.
According to latest available estimates, at the end of February 2008, unemployment rate in Japan stood at 4%. The total number of unemployed people in Japan during February 2008 was 2.7 million. This was a decrease of 70,000 in the total number of unemployed people from February 2006.