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No.233 (2017/4/10)
Economic and Labour Situation in Japan (April 2017)
The 2017 Spring Struggle

On March 24 RENGO (Japanese Trade Union Confederation) carried out its second tally of wage hike settlements reached in the 2017 Spring Struggle for a Better Life. RENGO's survey revealed that 1,243 unions that had demanded average wage hikes for members and engaged in labour-management negotiations had reached settlements by that time. The average wage hike in these settlements (including the regular wage hike) was 6,224 yen, the equivalent of 2.05% of the average wage before the hike. This figure was 111 yen, and 0.05 percentage points, less than at the same stage last year.

Keidanren and Rengo Agree to Overtime Cap
The government's work reform committee plans to revise the Labour Standards Act and stipulate for the first time that overtime should be capped at 720 hours per worker per year, which means basically that the monthly average throughout the year would be 60 hours at most. However, the rules would allow companies to authorize up to 100 hours of overtime during a single busy month. If the peak period spanned two months, the average cap for that timeframe would fall to 80 hours. Nippon Keidanren (Japan Business Federation), the nation's biggest business lobby, had pushed for the 100-hour cap, while RENGO had demanded less. RENGO President Rikio Kozu had retorted that a 100-hour benchmark was unacceptable.

Meeting with the leaders of Nippon Keidanren and RENGO at the Prime Minister's Office, Prime Minister Shinzo Abe asked them to settle for "less than" 100 hours. On March 13 both sides came to understand Prime Minister Abe's proposal and agreed that overtime should be limited in principle to 45 hours a month, or 360 hours a year. According to the agreement, the monthly limit can be exceeded six times a year but should be capped at less than 100 hours in any one month.

The government aims to submit related bills to the Diet by the end of the year.

Industrial Production
The industrial production preliminary report for February showed movement to be picking up. Production and inventories rose over the previous month, although shipments fell and the shipments and inventory ratio also decreased.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from
previous month (%)
Index Change from
previous year (%)
Production 102.2 2.0 98.9 4.8
Shipments 99.1 0.1 91.2 3.7
Inventories 108.4 0.9 110.2 -3.3
Inventory ratio 111.0 -0.1 113.6 -3.1

Industries that mainly contributed to the increase were as follows: (1) transport equipment, (2) general-purpose, production, and business-oriented machinery, and (3) chemicals (excl. drugs), in that order.

Industries that mainly contributed to the decrease were as follows: (1) electronic parts and devices, (2) plastic products, and (3) textiles, in that order.

According to the Survey of Production Forecast in Manufacturing, production was expected to decrease by 2.0% in March and to increase by 8.3% in April.

Family Income and Expenditure Survey in January
(1) Expenditure for Two-or-More-Person Households

The average monthly consumption expenditure per two-or-more-person household in February was 260,644 yen, down 3.4% in nominal terms and 3.8% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 484,038 yen, up 1.1% in nominal terms and 0.7% in real terms year-on-year. The average consumption expenditure was 298,092 yen, up 0.1% in nominal terms but down 0.3% in real terms year-on-year.

Labour Force Survey Monthly Results
The unemployment rate in Japan fell to 2.8% in February 2017, the lowest rate since November 1993.

(1) Employment
The number of employed persons in February was 64.27 million, an increase of 510,000, or 0.8%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in February was 1.88 million, a decrease of 250,000, or 11.7%, from the same month in the previous year. The seasonally adjusted unemployment rate in February was 2.8%, down 0.2 point from the previous month. The unemployment rate for men was 3.0%, down 0.1 point, while that for women was 2.7%, the same level as the previous month.

(10,000 persons)
  February figures Change from previous year
      (%)
Population aged 15 years or over 11,105 2 0.0
Labour force 6,615 26 0.4
Employed persons 6,427 51 0.8
Employees 5,754 48 0.8
Unemployed persons 188 -25 -11.7
Not in labour force 4,485 -25 -0.6
Labour force participation rate (%) 59.6 0.3 -
Employment rate (%) 57.9 0.5 -
Unemployment rate, original series (%) 2.8 -0.4 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 2.8 -0.2 -

(3) Job Availability
Japan's job availability in February was at the highest level since August 1991, with the ratio of job offers to jobseekers standing at 1.43, the same level as the previous month. This figure means that there were 143 jobs available for every 100 jobseekers. The ratio of new job offers to applicants, a leading indicator for the labour market, rose to 2.12. This figure shows that there are more than two new vacancies available for every new jobseeker. Japan has likely achieved full employment and faces a severe labour shortage.

Consumer Prices
The consumer price index in February was 99.8 (2015 = 100), up 0.3% over the previous month and up 0.1% over the same month of the previous year. The inflation rate continues to hover around zero and remains far below the 2% target set by the Bank of Japan.

February 2017
Index Annual
change (%)
Monthly
change (%)
All items 99.8 0.3 -0.1
All items, less fresh food 99.6 0.2 0.0
All items, less food (less alcoholic beverages) and energy 100.3 0.1 0.0
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