The unemployment rate in Japan rose to 3 percent in August, or 2.06 million, its highest since May 2017, according to statistics released last Friday by the Ministry of Internal Affairs. Most of the job losses came from the manufacturing sector, which has been badly affected by a fall in demand in international markets and lost almost 500,000 jobs since 2019. Another 250,000 jobs were lost in the accommodation and restaurant services sector, which has suffered from border closures.

Other data released by the Ministry of Health, Labor, and Welfare showed that during the same period, the job availability ratio dropped to 104 openings for every 100 job seekers, down from 120 in April. This is its lowest level since January 2014. The figures are on the surface considerably better than what other developed economies have seen. But the numbers are unusual for Japan's tight labor market and aging population.

On the other hand, layoffs have been fewer and less severe than in other countries, due to a combination of legal barriers, strong unions and a culture that focuses on long-term business sustainability and shuns layoffs—a Reuters survey in June found that less than half of the companies polled had actually laid off workers, although they had frozen hiring and cut pay. Many large companies also had sufficient cash reserves to keep workers on the payroll, and were further buffered by government support that subsidized furloughs.