Tokyo Offers Vague Plan to Create More Than 700,000 Jobs
By STEPHANIE STROM -- June 12, 1999
TOKYO -- The Japanese government Friday
announced a plan to create more than
700,000 jobs but did not say how much it
intended to spend, leaving the plan's potential
power to stimulate the economy somewhat
mysterious.
The plan, which would create the jobs through
a package of measures that includes subsidies
to emerging industries such as biotechnology
and telecommunications, was publicly offered
one day after Japan reported the first
significant economic growth in two years. But
the first-quarter expansion of 1.9 percent was
seen as a temporary effect of earlier
government spending.
The government hopes the jobs plan will help
strengthen support for the ruling Liberal
Democratic Party in advance of parliamentary
elections, which may come as soon as this fall.
Japan's unemployment rate, which has steadily
risen to a postwar high of 4.8 percent and
could rise further, has combined with falling
wages and bonuses to undermine government
efforts to spur consumer spending with
shopping vouchers, tax cuts and the like.
Friday's plan is part of an effort to reverse that
trend. "A continued severe employment
situation could cause consumption to be
sluggish," Takafusa Shioya, deputy director
general of the Economic Planning Agency, told
reporters.
The government did not attach a cost to the
plan. But Finance Minister Kiichi Miyazawa
said it would not exceed 500 billion yen, or
about $4.2 billion at current exchange rates. In
an economic stimulus package last November,
the government allocated roughly 1 trillion yen
to addressing the unemployment problem.
Economists said the amount mentioned by
Miyazawa was too small to matter. But some
said the way the employment plan was
structured was a departure from other job
stimulation measures tried by the Japanese,
because it was aimed at stimulating jobs in
promising industries.
"The important thing is that the government's
emphasis is switching from supporting excess
labor at existing companies to more
reallocation of labor," said Tomoko Fujii, an
economist at Nikko Salomon Smith Barney.
"That should eventually strengthen the
competitiveness of the Japanese economy and
lead to better economic growth."
The government intends to create almost half
of the 700,000-plus new jobs it promised by
itself, in other words, by hiring more people at
the local and central government level. Those
jobs, in areas like computer-related education,
health care and archaeological excavation, are
intended to be temporary, but some economists
fear that once the positions are filled, the
government will have trouble eliminating them
in the future.
Employers in 15 fledgling industries the
government has elected to foster, including
health care, telecommunications and
biotechnology, will receive subsidies for hiring
ahead of their needs, and others will receive
public financial support when they hire
middle-aged people who have lost their jobs.
The government also pledged to overhaul the
unemployment insurance program, something
it has been talking about doing for a while, and
to enhance job retraining programs, which are
outdated and full to overflowing.
And it repeated a variety of promises, ranging
from making spinoffs easier to overhauling the
bankruptcy laws, that would make it easier for
corporations to restructure themselves.
"Having the public sector hire more people,
loaning more public money to private business
development -- all this smacks of a
quasi-socialist attempt at engineering economic
growth," said Andrew Shipley, an economist at
Schroders Japan Ltd. "In the short term, if
you're worried about boosting competitiveness,
you should be willing to tolerate rising
unemployment, like South Korea did over the
last year."
While the government is skilled in deploying
large sums of money to build bridges and
repave roads, handing out money for "soft"
fiscal stimuli is more complicated. "I'm pretty
sure some of these items are not going to be
implemented because the external constraints
make implementation difficult," Ms. Fujii said.
For instance, in the past, the government set
aside money to address the chronic shortage of
day-care centers in Japan's urban areas. It left
implementation of the plan, which envisioned
the proliferation of child-care centers near
major commuter transportation terminals, to
the local governments -- but they are
preoccupied with their own financial travails.
Moreover, money alone was not enough
incentive to overcome the problem of high rent
and labor costs that any entrepreneur
considering opening a day-care center here
would have to overcome.
Copyright 1999 The New York Times Company |
