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Japan's youth worst hit by country's COVID job losses in 2020

Unemployment rate stands at 2.9% in December, up 0.7 point for year

Japan's overall jobs market has weathered the pandemic so far but young part-timers are suffering the brunt of restaurant and pub closures. (Photo by Shihoko Nakaoka)

TOKYO -- Japan's jobs market seems to have dodged a worse fate in December, with the unemployment rate coming in at 2.9%, unchanged from the previous month.

The figure, released by the Statistics Bureau on Friday, represents an increase from 2.2% a year ago. Still, the unemployment rate has been kept relatively low as the government of Prime Minister Yoshihide Suga has pulled out all stops to keep people in jobs and businesses from going under. "The jobs market is still in a gradual downturn," said Takuya Hoshino, an economist at Dai-ichi Life Research Institute.

The pandemic's effect is most pronounced in sectors such as pubs and restaurants and among casual workers and youths. The number of regular jobs was up 0.5% in 2020, while that of non-regular jobs, including part-time positions, declined 3.9%.

The unemployment rate for those aged 15-24 was 5.1% in December, up 0.3 point from November and was the highest number among all age groups. The figure jumped 1.9 points from a year before, showing that those in the age group suffered the most job losses. The increase in other age groups was largely in line with the average which worsened 0.7 point in 12 months.

Young people have borne the brunt of the economic downturn, both as part-timers and as job hunters. "The more employers try to protect their workers, the harder it becomes for young people to get into the job market," Hoshino said.

Japan has what it terms an "employment ice age generation," meaning people in their 40s who suffered from the bursting of the economic bubble in 1990. "It's important not to create another lost generation," Hoshino said.

Restaurants and hotels axed some 7% of their staff in 2020, the biggest cut among all industries, according to data from the Statistics Bureau. Restaurants have suffered the brunt of two state-of-emergency declarations as a result of the pandemic.

The sector not only accounts for about 6% of total employment in Japan, but is a crucial provider of jobs for young people who might otherwise struggle to pay for further studies or simply to live.

Japan has been hit by a new wave of virus infections since November, and bars and restaurants have been asked to close daily at 8 p.m. from Jan. 8 in Tokyo, Osaka and other metropolitan areas. The government also advised people to work from home and avoid nonessential outings.

Some part-time jobs may be lost forever, said Yosuke Yasui, senior economist at Japan Research Institute. Some people may continue to work from home even when the pandemic is over, while businesses will continue to shift to labor-saving technology and contactless service, he pointed out, all of which will have an impact on part-time employment.

His point is illustrated by the recent moves of pub chain operator Watami. The company said it would close 114 outlets, or some 20% of its chain, by March, and has replaced part-time workers with "robot servers" to reduce costs.

Such cost-cutting moves may be necessary to protect the company and those on its regular payroll, but it also means some college students may lose their means of survival. "When people quit college, they would end up with lower qualifications and lower lifelong income," Yasui warned.

Some universities are hiring students as part-timers to help support them. Most universities are also offering some kind of tuition relief.

In separately released data, the ratio of job openings to applicants, a leading indicator of the labor market, came to 1.06 in December, unchanged from November.

A reading of above 1 indicates that more jobs are available than people seeking employment.

During the financial crisis of 2008, the job availability gauge fell as low as 0.42, while the unemployment rate shot to 5.5%.

Employment has not suffered as much in the pandemic, even though the economic shock was much larger. Economists said that aggressive policy steps by the government and the Bank of Japan helped to save jobs.

The government introduced three stimulus packages that involved increasing spending by 72% in the current fiscal year to March. Policy banks provided zero-interest, collateral-free loans to cash-strapped businesses while the government gave them loan guarantees.

The impact is seen in the BOJ's Tankan quarterly survey, which showed that more businesses considered funding conditions easy rather than difficult, in a stark contrast to findings during the 2008 credit crisis.

The number of bankruptcies also dropped 7.3% last year to a 30-year low, according to data from Tokyo Shoko Research.

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