Japan’s jobless rate is likely to have stayed at the March’s level of 3.2% in April, said Societe Generale in a research report. Several companies have bolstered hiring activities because of labor shortages since the start of the new fiscal year. With the help of Abenomics policies, a rising number of workers are joining the labor force. Even with the increasing number of workers in the labor market, several workers are still able to find jobs. Hence, the number of employees is rising and the jobless rate continues to be low.
The job-to-applicant ratio, meanwhile, has continued recovering and is expected to have reached 1.31 last month, the highest since December 1991, noted Societe Generale. The rate of rises in the number of job-seekers has decelerated as a growing number of workers have got stable jobs. Meanwhile, because of shortage of labor, there is an increase in the number of available positions. Also, the ration of job-to-applicant is expected to continue rising after the beginning of the new fiscal year.
The Japanese jobless rate has continued to stay lower than 3.5% for some time now. This will ultimately result in a situation where growth in wage will help accelerate inflation at the rate of about 1%. But the Bank of Japan and government are focusing at attaining a stable inflation of 2%. For this the jobless rate requires to be lower than 3%, at about 2.5%.
While the jobless rate is likely to keep declining continuously and wage growth to keep accelerating, it might take about three years for Japan’s jobless rate to decline to about 2.5%, and subsequently for wage inflation to accelerate inflation up to about 2%. Until then, the Bank of Japan is unlikely to tighten its monetary policy.
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