Despite sluggish economy, Japanese unemployment rate remains low

4 Nov 2012 by Jim Fickett.

Last week the Statistic Bureau in Japan reported the unemployment rate through September. The latest unemployment rate is as low as it has been in several years, at 4.2%.

It seems a little surprising that with industrial production falling sharply and GDP stagnant (Japan GDP), the unemployment rate should remain very low. Noahpinion suggests that this is due to falling real wages as people are shifted into less productive work:

Wages plummeted in the recession, but they were falling even in 06-07, when things were doing better than they had been since the 80s. If real wages fall, unemployment will not rise as much for a given growth slowdown.

(Note: One place that falling real wages will show up is if companies or governments that feel a social obligation to maintain employment levels will shift regular employees to low-wage make-work jobs in a recession. The thought that this may be happening occurred to me as I observed the massive armies of rent-a-cops thronging the streets of Tokyo and Osaka on my most recent visit.