The unemployment rate in Japan rose in January for the first time in four months, according to government statistics released last Friday. Although the increase was not large—it went up 0.2 percent to 2.4 percent, or an additional 120,000 unemployed workers—it is still noteworthy given the country’s chronic labor shortage. Statistics from the Ministry of Health, Labor, and Welfare also show that in January, the job availability ratio had dropped to 1.49, or 149 job openings for every job-seeker, although this may reflect the increased number of job-seekers rather than a fall in the number of job openings. 

The shift may be partly due to regulatory changes that have affected business performance and also the ease of recruitment: last October, the government raised its consumption tax to 10 percent, which hit spending. And beginning this January, employers were required to provide more documentation when hiring, which may have resulted in a temporary hiring hiatus as businesses adjust to the new rules.

Another possibility is an increase in the number of mid-career job seekers, according to the Ministry of Internal Affairs and Communications. The number of layoffs and voluntary resignations had both increased in January, to a considerably greater extent than the number of new job-seekers.

However, this small rise may herald a more serious shift. With the Covid-19 outbreak hitting the hospitality, F&B, and tourism sectors hard, the unemployment rate may continue to rise more steeply in coming months.