Jobless deepen Japan's woes

JAPAN'S economic annus horribilis continued today as jobless figures for November showed a rise to a record 5.5%. The number of people out of work rose 100,000 from October to 3.7m, the highest since figures were first collected 50 years ago. The year-on-year increase was 290,000.

But the news failed to dampen a strong rebound by the yen, which was lifted 0.7% against the US dollar on reports that the government was prepared to use taxpayers' money to bail out the ailing banking system. Stocks also climbed on the reports but the Nikkei 225 average ended the trading year down 24%.

The record level of unemployment is presenting the government with one of its biggest headaches as it battles to push forward reforms which are likely to cause even more pain in the short term.

November's jobless rise was the eighth in a row and the economy's dive deeper into recession makes it inevitable the numbers will deteriorate. 'It's getting worse,' admitted a government spokesman today. 'Statistics are clearly showing that companies are downsizing and restructuring.'

Some analysts have estimated that the jobless rate could peak at more than 6% next year, a shocking figure for a country that has always prided itself on providing lifetime employment for its workers. That tradition has been shattered this year as the slump in demand for electronic parts, cars and other major export items has forced big-name Japanese firms to shed staff or put them on extended, unpaid leave.

Among recently announced major jobs cuts was a cull of 10,000 workers by electronics giant Matsushita, while other companies have switched production to cheaper centres such as China to keep costs down.

The unemployment figure is now part of a deadly downward spiral, as consumer confidence has evaporated, prompting a slowing in retail sales, further damaging the domestic performance of Japanese companies. A 1.7% fall in consumer spending in the third quarter helped send industrial production down to a 14-year low last month, which in turn forced companies to cut 107,000 jobs in the three months to the end of November.

Despite today's rally in the yen, analysts in Tokyo predicted the government would do nothing to prop up the currency, instead hoping that the increased competitiveness of the manufacturing sector's exports would help to stem the flow of job losses next year.

The continuing economic slide and the apparent inability of the government to bring it under control will present Prime Minister Junichiro Koizumi with huge challenges next year. His pledges to reform Japan's debt-bound and sclerotic economy have so far met with little success.

FRENCH unemployment rose for the fifth month in succession in November to 9%, the highest for a year. On the same measure, the British unemployment rate is just 3.2%. The number of people out of work in France increased by 39,000 during the month - twice as much as economists had forecast - to 2.399m.

French unemployment reached an 18-year low of 8.6% in the spring but has been rising since June as exports have been hit by the global economic slowdown.