Japan's Production and Employment Collapse Due to COVID-19... Unemployment Nears 2 Million

by Kwon Jaehee

Published 30 Jun.2020 11:06(KST)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Japan's employment and production indicators rapidly deteriorated again this month following last month due to the impact of the novel coronavirus disease (COVID-19).

According to the Nihon Keizai Shimbun on the 30th, the effective job openings-to-applicants ratio announced by the Japanese government for May was 1.2 times, down 0.12 percentage points from the previous month. This is the largest drop in 46 years since January 1974. Also, the May effective job openings-to-applicants ratio (1.2 times) is the lowest in 4 years and 10 months since July 2015.

The effective job openings-to-applicants ratio is an indicator showing the number of job openings per one job seeker; a higher ratio means higher corporate demand for labor.

The unemployment rate in May was recorded at 2.9%, which is an increase of 0.3 percentage points compared to the previous month. The number of completely unemployed people who are willing to work but cannot find a job was 1.98 million, an increase of 330,000 compared to the same month last year. This is the highest level in 3 years since May 2017. The number of employed persons was 66.56 million, a decrease of 760,000, mainly due to a significant reduction in non-regular workers (610,000).

The number of workers on leave was surveyed at 4.32 million. Although this is 1.74 million fewer than the record high in April, it is still the second highest level ever. Some of the workers on leave have become unemployed and are being excluded from the labor market.

Production indicators also worsened significantly. The industrial production index, which shows the production activities of Japanese companies, fell 8.4% from the previous month to 79.1. This marks the fourth consecutive month of decline.