Terrie's Job Tips -- Who is Really Unemployed?

Back in November, the government released statistics stating that Japan's unemployment fell a full 9% from 4% to just 3.7%. When I first saw this, I had just finished watching the latest TV news installment about how many more part-timers had just been fired by Japan's leading electronics and automobile makers. Talk about a contrast! I wondered if perhaps the government's statistician helpers were on drugs or something. Certainly they should have at least explained how, when unemployment is clearly becoming a major political problem, the official rate could in fact drop. It's enough to think we can't trust government statistics any more…

Well, I commented on this statistical oddity in my "other" weekly column, Terrie's Take (www.terrie.com) several weeks ago, and a reader wrote in with an interesting observation. As he said, "I recall someone telling me that in Japan you are only registered as unemployed for 6 months, which is the duration that people can receive unemployment benefits. After that the unemployed person is considered to either be back at work or at their choice opting out of the workforce. What do you think? Does this theory have credibility – it would certainly explain the job stats discrepancy.”

Now, I have heard this theory before as well, that Japan only counts those actively seeking unemployment benefits (while they actually can) and thereafter are not counted. I thought this was interesting and asked my very helpful HR Manager to do some research for me. What she came back with was interesting.

Firstly, there are three categories by which someone can claim unemployment: 1) someone who is fired, 2) someone who resigns, and 3) someone over the age of 45 who has lost their job for any reason – a special category. Let’s look at each of these and the conditions surrounding receiving benefits.

1) Fired. If a person has been fired they can apply for unemployment immediately. If they have been paying unemployment insurance for at least a year, they will get 90 days coverage. If they paid between one and five years, then they get 90 to 180 days coverage, depending on their age. If they paid between 5 and 10 years or 10 and 20 years, then they get between 120 to 140 days, or 180 to 270 days respectively, again, depending on their age.

2) Resigned. For all ages applicants have to wait 90 days before seeking benefits, and they can claim up to 90 days. However, where the person has paid unemployment insurance for more than 10 but less than 20 years, the benefit runs for 120 days, and for people insured for more than 20 years, it is 150 days.

3) Over 45 and under 65. This is a special category, no doubt recognizing the reality of legal discrimination of older workers when it comes to lay-offs. For these people, if they have paid in less than one year of unemployment insurance, they can receive 150 days benefits. If they have paid in for more than one year, then they can receive between 300 and 360 days, depending on their age.

OK, so that's the payment program. But what about those pesky statistics? According to my erstwhile researcher, looking through government websites and checking with our friendly Labor Consultant ("Sharoshi"), the government counts as unemployed those people who: 1) have lost their job and didn't work during the survey period, 2) people who have been out of the workforce through choice but are now looking for a job and haven't re-entered yet, 3) people who are temporarily outside the workforce because they are (for example) establishing a company. Therefore, the government actually does include those people who have come off their unemployment benefits.

So do we believe those statistics or not? One market analyst interviewed by the Nikkei reckoned that the numbers don't include those people who have simply given up looking. Quite frankly, if a person comes off unemployment benefit and doesn't make themselves known to a Hello Work center, then we have to assume that they become unknown to the government's all-seeing statistical eye and thus cease being counted.

If my assumption is correct, in the current environment 90 days is not very long to fall through the cracks. Further, it doesn't include all those people who are underemployed, either.

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