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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: porcupine --''''> who wrote (1681)	6/12/1999 3:11:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

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