More unemployed than ever before in Japan
John de Boer (University of Tokyo)
Approximately 80,000 people in the IT-computer industry lost their jobs this past week as Japanese electronic giants successively released their plans for drastic restructuring measures. NEC, Fujitsu and Toshiba all admitted to a complete miscalculation in their profit forecasts for this business year. A calculation made only a few months ago and one that will cost at minimum 25,000 Japanese and many more Filipinos and Thai's their livelihoods. These announcements served as a prelude to the 'never seen before' 5 per cent (equivalent to 3.3 million people) Japanese unemployment rate expected to be confirmed shortly by the Ministry of Public Management.
However, do not fret, says Dan Ackman of Forbes for, "Japan's problems, like those in the U.S., are relatively minor. It remains a rich nation, if not an optimistic one." On top of that, markets responded positively to these measures with Fujitsu's shares trading up 2.8 per cent immediately after it announced that it was pulling the plug on 16,400 people. In each case, newspaper articles reported, it was all about returning to profitability. Analysts applauded these measures, as did the markets.
Incredulously, no mention was made and no recognition given to the human tragedy those massive layoffs represent. The degree of mismanagement on the part of these companies was extreme and grave. For example, back in April 2001, Toshiba announced that it would make a 50 billion Yen profit for the fiscal 2001/2 year, however, it now realizes that this number will be closer to 100 billion Yen in the red.
Japan's problems are far from minor and Japan's unemployment rate is not likely to stop at 5 per cent. It will continue to make history as construction, high tech, manufacturing, banking and service sector industries all plan to create their own pool of unemployed personnel. "By the end of 2002," says Takehiro Sato, an economist from Morgan Stanley, "unemployment will be around 5.7 per cent." Furthermore, Japan's Nikkei Stock Average hit a 17-year low on August 20. Such a fall for the Dow Jones Industrial would mean a drop from its current average of 10,241 to 1,184. The fact is there are few reasons for optimism.
Amidst this grim reality, Prime Minister Koizumi stood tall stressing that, "this kind of pain is part of the remedy for curing Japan's economic ills." Unfortunately, I for one, see 80,000 more cases in urgent need of a thoughtful response on the part of policy makers rather than a source of remedy.
The future of the unemployed is bleak. Japanese are beginning to face an insecurity that has not been experienced since the end of World War II. The life-time employment system has been abandoned and Japan's national health insurance system is in jeopardy. Market analysts have praised company executives for their 'brave' decisions and markets have responded positively, yet all have neglected the reality of the matter: more people are without work in Japan today than ever before.
- "Toshiba to cut 20,000 jobs globally," Reuters, August 25, 2001
- "Japan's Jobless Rate to Hit 5 Per Cent," Associated Press, August 23, 2001
- Ritsuko Ando, "Japan's economic gloom deepens with jobs, trade data," Reuters, August 23, 2001
- Dan Ackman, "Fujistu Fumbles," Forbes.com, August 20, 2001