Japanese unemployment data beat expectations yesterday, falling to 4.9%. Yet as Econompic highlights, the drop in unemployment was less about job growth and more about people simply dropping out of the jobs market. This is made clear by the chart below.
While unemployment fell in January to a 7-month low, the employment rate (the % of the adult population participating in the work force) fell simultaneously. In fact, the employment rate has hit a multi-year low, if not an all-time low. (feel free to enlighten us with some data)
Thus Japan’s unemployment good news isn’t quite as exciting as it would be if it had been accompanied by actual growth in the employment rate. As Japan’s population continues to age, the unemployment rate is likely to stay pretty low since the country will increasingly face a shortage of working-age labour. Yet this is far from a good thing given the massive current debt and future elderly care liabilities ahead.
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