Why Japan’s Jobless Rate Is Just 2.6% While the U.S.’s Has Soared


TOKYO — When the coronavirus hit Japan, Mari Nagata, a single mother who works in a restaurant, had a lot of worries. Her children’s school closed, and she feared what would happen to them if she got sick.

But there was one thing that Ms. Nagata, unlike millions of service industry workers in the United States, did not fret about: her job security.

“I was able to relax and take time off” to focus on child care, said Ms. Nagata, 38, an assistant manager at a takeout restaurant in Tokyo.

The pandemic has devastated economies around the globe, shutting businesses and slowing spending. However, the fallout has been much more severe in some countries than others, and nowhere is that more apparent than in unemployment figures in the United States and Japan.

The U.S. jobless rate skyrocketed in the past three months, peaking at nearly 15 percent in April and standing at 13.3 percent in May. That is the highest level since the Great Depression and a nearly fourfold increase since February, when the rate was 3.5 percent.

In Japan, though, the number has barely budged. The unemployment rate has ticked up just two-tenths of a percentage point since February, to 2.6 percent. Wages and working hours have also remained relatively stable.

That does not mean Japan’s economy — the world’s third largest after the United States and China — has been unscathed. Output shrank by 2.2 percent in the first three months of the year, pushing the country into recession. And data from April suggests that the picture is growing only bleaker.

But a constellation of social, demographic and epidemiological factors in Japan has meant that the economic slowdown has not produced mass layoffs.

Before the pandemic, Japan’s shrinking and graying population had created one of the planet’s tightest labor markets. Even now, some companies are having difficulty finding workers, with more than 120 job openings for every 100 job seekers nationwide in April.

And Japan, unlike the United States or China, has avoided a devastating spike in coronavirus cases, allowing it to keep more of its economy open. It asked businesses to close on a voluntary basis during a state of emergency that lasted a month and a half and ended in May.

But those differences account for only part of the gap. The rest comes down to a fundamental divergence in attitudes and policies toward labor.

In the United States, “when the economy gets bad, people get laid off one after the other, and the unemployment rate shoots up,” said Tomohisa Ishikawa, director of the Macro Economic Research Center at the Japan Research Institute. But for Japanese employers, “laying people off is difficult both psychologically and practically.”

Companies in Japan are more likely than their American counterparts to prioritize employees’ interests over those of shareholders, focusing on the sustainability of their business rather than maximizing growth, said Naohiko Baba, chief Japan economist at Goldman Sachs.

“During good times, companies accumulate profits on their balance sheets by restricting rises in worker’s salaries,” Mr. Baba said. “During bad times, companies refrain from firing redundant workers by…



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