Japan’s Unemployment Rate Climbs to a Record 5% in July

Japan’s unemployment rate hit a record-high 5% in July, the government said today, amid a drawn-out economic slowdown that is spurring a spate of job cuts and bankruptcies.

The increase to 5% from the previous rate of 4.9% is more than a question of numbers. Japan’s jobless rate has never hit the 5% level since the government began compiling such statistics in 1953.

The global downturn in demand for electronics and other technology products has prompted job cuts as production stalls and exports shrink. Rising bankruptcies and weakness in the construction industry also have hurt jobs.

At midday today the Nikkei-225 stock index was down 1.6% to a new 17-year low of 11,094.01. In June, the jobless rate was at the previous record high of 4.9%. In July, the number of unemployed rose to 3.38 million.

Prime Minister Junichiro Koizumi is trying to carry out economic reforms, which he says will bring about “pain,” reflected partly in rising unemployment.

Past administrations have relied on public-works spending to jump-start the economy. But Koizumi is backing more-basic changes such as privatizing the public sector and encouraging new, more-profitable businesses.

For decades, Japan has boasted relatively low unemployment rates.

The Ministry of Public Management said the number of jobless jumped by 230,000 last month from a year earlier.

The global electronics downturn is crimping exports and dealing a blow to Japanese electronics companies such as Toshiba Corp., Fujitsu, NEC Corp. and Matsushita Electric Industrial Co., which have all announced job cuts recently.