Japan unveils employment scheme to boost economy

Japan unveils employment scheme to boost economy

Agencies

Tokyo, June 12: The Japanese government has announced a massive employment package, designed to create more than 700,000 new jobs. It is yet another attempt to kick-start the country's economy, which was in recession for a period of 18 months. Government programmes are already proving their worth. Massive spending on infrastructure projects prompted a surprisingly strong jolt to the country's economy, which grew during the first three months of the year by 1.9 per cent. This was much more than analysts had expected, although they warn that it is unlikely that such growth rates can be sustained once government programmes run out. Finance Minister Kiichi Miyazawa himself said the economic data did not mean that a full recovery was underway. Deficit spending The costs of the new job creation programme have not been worked out yet, but Miyazawa said an extra budget of around 500bn yen ($4.2bn) might be needed. Japan is suffering from record unemployment. The jobless rate currently stands at 4.8 per cent -- notbad for most economies, but highly distressing in a country accustomed to a culture of lifetime employment with one company. The job package is designed to scrap the so-called "three excesses" of overcapacity, mounting debt and bloated payrolls. However, the plan means the government will bloat its own payroll for a while, offering over 300,000 jobs with central and local government bodies. As part of the scheme, many public service tasks will be contracted out to private companies and non-governmental organisations. As the lifetime employment system crumbles, the government tries to promote labour mobility through retraining programmes. However, Japan's debt-burdened companies are reluctant to hire new people. To tackle this problem, Tokyo is proposing debt-for-equity swap schemes, where banks would cancel all or part of a company's debts in exchange for a share in the business. In an attempt to inject some dynamism into Japan's corporate culture, companies are encouraged to spin off divisions. At thesame time, though, the government is luring 15 "new and growing" industries like telecoms and information technology into a new dependency, by offering companies special subsidies if they hire additional staff.

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