【Aging, safety net and fiscal crisis in Japan】No.263: Despite the economic stagnation due to COVID-19, the number of regular employees is increasing

The unemployment rate rose from 2.4% in February 2020 to 2.8% in June 2020, due to the economic stagnation caused by the spread of COVID-19 (Figure 1). However, the June figure of 2.8% is still much lower than the 2009 unemployment rate of 5.1% (just after the Lehman shock), and therefore, it can be said that the Japanese economy is still close to full employment. Similarly, although the effective ratio of job offers to applicants fell from 1.57 in December 2019 to 1.11 in June 2020, it is still 2.5 times higher than 0.44, the ratio in December 2009 (Figure 2).

As shown in Figure 3, the number of people who lost their jobs due to an employer’s reason increased from 230,000 in March 2020 to 410,000 in June 2020. Most of this increase was due to the increase in unemployment among non-regular employees. It is worth noting that the number of full-time employees increased by 550,000 from 35,060,000 to 35,610,000 during the same period (Table 1). This seems to reflect the fact that companies are working to secure necessary human resources from a medium- to long-term perspective, as the labor force population continues to decline. However, if the economic stagnation caused by COVID-19 continues over a long period of time, it is feared that companies will shift toward reducing their regular employees, in turn, increasing social unrest.

Figure 1: Unemployment rate

Source: Ministry of Internal Affairs and Communications

Figure 2: Effective ratio of job offers to applicants

Source: Ministry of Internal Affairs and Communications

Figure 3: The number of people who lost their jobs due to an employer’s reason

Source: Ministry of Internal Affairs and Communications

Table 1: The number of employees (excluding officers) by employment type

Source: Ministry of Internal Affairs and Communications