Unemployment hits all-time high of 5.7%

The jobless rate rose to an all-time high of 5.7 percent in July, government data showed Friday, dealing a further blow to Prime Minister Taro Aso's already embattled government just two days before Sunday's Lower House election.

The jobless rate hit a seasonally adjusted 5.7 percent, the highest level in the postwar era and worsening from 5.4 percent in June, the Internal Affairs and Communications Ministry said.

The previous record was 5.5 percent, last seen in April 2003. Japan's jobless rate has been rising every month since January's 4.1 percent.

The total number of jobless in July jumped 40.2 percent from a year earlier to 3.59 million. Those with employment fell 2.1 percent to 62.7 million.

Of the total, 1.21 million had been laid off, up 650,000 from a year ago, the largest increase since January 2003, the ministry said.

In a separate report the same day, the labor ministry said the ratio of job offers to job seekers in July fell to an all-time low of 0.42. That means there were 42 jobs available for every 100 job seekers.

With a pivotal Lower House poll coming Sunday, the dismal figures "will be negative for the Liberal Democratic Party," said Kyohei Morita, chief economist at Barclays Capital in Tokyo, adding that he expects the unemployment rate to reach 5.9 percent in the first half of 2010.

Aso's LDP is trailing the Democratic Party of Japan by a wide margin in opinion polls, with most of the media predicting a landslide victory for the main opposition party.

Aso's foes were quick to blast the government as badly mishandling the economy.

"Although the ruling bloc claimed that 'the economy has rebounded,' (the nation's) weak economic structure dependent on external demand has not changed," said Tetsuro Fukuyama of the DPJ. "It is necessary to swiftly realize the domestic demand-led economic measures we are advocating."

Under the mantra of "Putting People's Lives First," the DPJ is offering a platform heavy on social welfare initiatives, including cash handouts for job seekers in training and families with children.

Chief Cabinet Secretary Takeo Kawamura defended the government's handling of the economy, noting the economy climbed out of a yearlong recession in the second quarter, expanding at an annual pace of 3.7 percent.

"There is no denying the fact that the economy is improving overall," he told a news conference.

But economists note that exports served as the main driver of growth and that domestic demand still remains fragile. They believe the employment environment will not improve in the near future, with many predicting the rate to climb to at least 6 percent around the end of this year.

Kawamura told the news conference that the government intends to continue implementing the stimulus measures it put together to keep unemployment conditions from worsening.

But the government pledge to tackle unemployment wasn't convincing enough to keep criticism at bay.

Tadayoshi Ichida, secretary general of the Japanese Communist Party, said the latest figure invalidates the argument by the government and the ruling bloc that if big businesses make profits, people's incomes will increase.

"We need to work on reviewing labor laws, including the overhaul of the labor dispatch law," he said.

Social Democratic Party leader Mizuho Fukushima, whose party expects to form a coalition government with the DPJ if the latter wins the election, said a change of government must be achieved so laws can be enacted or revised to protect workers.

The unprecedented drop in global demand triggered by last year's financial crisis has forced companies to slash output and jobs.