TOKYO -- Japan's jobless rate stood at 2.6% in March, compared with 2.9% the previous month, the Statistics Bureau said on Friday, as the nation's labor market stays relatively stable despite the coronavirus pandemic over the past year.
The month saw the nation emerge from a coronavirus state of emergency, which put curbs on nighttime dining and drinking in the nation's metropolitan regions from Jan. 8 to March 21.
But such restrictions did not result in big job losses, thanks to a government program of providing subsidies to businesses to keep their employees. The program will be scaled back starting in May, covering only up to 90%, instead of 100%, of employee benefits.
Economists warn that the declaration of a third state of emergency, from April 25 to May 11, means that the improvement may get derailed, at least temporarily. "The labor market is treading water," said Takuya Hoshino, an economist at Dai-ichi Life Research Institute, describing a "two steps forward, one step back" situation. "There is no linear improvement."
Hoshino also noted that the decline in the jobless rate was caused in part by 330,000 people falling out of the labor force between February and March. The number of people on the job also decreased but by a smaller margin, of 130,000. Hoshino said the labor market may not be as strong as the unemployment rate suggests.
The jobless rate was 2.4% before the coronavirus crisis.
Job losses have been concentrated among non-regular workers and customer-facing businesses, such as restaurants and hotels.
Friday's data paints another picture of a K-shaped recovery. The information and communications sector posted a 10.5% rise in employment from a year before, helped by growth in teleworking and shortages of IT engineers, while the restaurant and hotel sector recorded a 10% drop in employment.
Japan's economy is seen to have shrunk 1.6%, or an annualized pace of 6.1%, in the January-March first quarter, according to an analyst poll conducted by the Japan Center for Economic Research. The economy is expected to return to growth in the April-June quarter.
On Tuesday, the Bank of Japan forecast that the economy is expected to grow 4% in fiscal 2021 and 2.4% in fiscal 2022. Hoshino, the economist, said that whether such growth will actually be attained depends on progress in vaccinations. Japan has been lagging other countries in this regard. "Progress in vaccinations will determine the pace of recovery," he said.
The labor market has been recovering in other countries as well, although it is still softer than before the COVID crisis. In the U.S. the jobless rate in March stood at 6%, down from 6.2% in February, but up from 4.4% a year ago.
In separately released data on job availability in Japan, the ratio of job openings to applicants stood at 1.1 in March vs 1.09 in February.
A reading of above 1 indicates that more jobs are available than people seeking employment.