Japan plans $666.7m job creation programme

The Japanese government would implement a job creation program worth more than 80 billion yen (666.7 million dollars) in anticipation of increased unemployment as a result of bad loan disposals by major banks, a report said Friday.

The program will target more than 100,000 workers, whose employers have had bank loans sold to the government's Resolution and Collection Corp. and would be forced to lay off staff, the Nihon Keizai Shimbun said, citing labour ministry sources.

"The program will give such workers better access to assistance by private job placement agencies, and companies that hire such redundant workers will be granted a subsidy of 600,000 yen per person, double the sum given under the government's current program," the newspaper said.

As banks step up their bad loan disposal, companies, especially in the troubled construction and retail sectors, are expected to be compelled to scale down their operations because they will be cut off from bank lending.

The new program will, among others, fund up to 300,000 yen of the costs in hiring a private job placement company to help soon-to-be dismissed employees find new jobs, the Nihon Keizai said.

A company that refrains from firing workers and transfers them to an affiliated firm instead, will also receive a subsidy to partially compensate for the resulting decline in productivity, it said.

If major banks dispose of problem loans extended to companies on the brink of bankruptcy and loans of even poorer quality, about 140,000 workers are expected to lose their jobs, the Nihon Keizai said.

Japan's unemployment rate in November was 5.3 per cent, down from a record high 5.5 per cent in October.

However, economists have remained cautious over the outlook of the employment situation in Japan, expecting the nation's economy to turn tougher in months to come.