Sections of the Japanese press have been warning that Prime Minister Naoto Kan’s “economic tone deafness,” demonstrated by his failure to take countermeasures against the steady appreciation of the Japanese yen, may result in “hellish unemployment” for folks living here.
In addition to making Japan’s exports more costly, further appreciation of the yen may worsen the general unemployment levels, even for those not working in manufacturing.
The Ministry of Internal Affairs and Communications announced on Tuesday that in the April-June quarter, 3.49 million workers in Japan were categorized as completely unemployed. Those who had been without work for one year or longer rose by 210,000 to reach 1.18 million – the second-highest number ever.
Exchange rate differentials, particularly for labor costs, are making it increasingly expedient for Japan’s companies to shift more production offshore.
“Around 1995, companies began moving production of general-purpose components overseas,” says an economic analyst from Teikoku Data Bank. “But now we’re seeing a shift in production of core components to foreign plants. Nissan Motors has announced it would produce its popular March compact in Thailand. Lower labor costs in Thailand coupled with the higher purchasing power of the Japanese yen at home have generated a ‘March shock.’ If companies eventually transfer their key functions overseas, then it won’t just be factory workers who lose their jobs, but elite staff as well.”
Shukan Shincho (Aug 28) has its own take on this “hyper yen-daka,” muttering that the government’s non-interventionist position toward foreign exchange has led, as professor Kazutaka Kirishima of Josai University puts it – dusting off a political term from 1940 here – to Japan’s financial “encirclement” by the U.S., Europe and China.
But one doesn’t need an astute grasp of forex or commodities trading to profit from the high yen. Japanese shoppers for example are taking advantage by going bargain hunting, with one example being a woman’s Burberry trench coat that can be purchased from the UK’s net-a-porter site for 796 pounds (roughly 107,000 yen). On Japan’s Rakuten Ichiba shopping site, the same coat was selling for 183,000 yen — realizing a handy profit even after outlays for shipping and import duty.
Finding the best deals is often a matter of timing. Prices for overseas package tours, for example, take three months to reflect the latest exchange rates, so December through February will be the best time to plan a trip to overseas – try taking advantage of that with our special offer here. Also on the positive side, when Japanese people feel the pinch such as this there is often an uptake in education, as those in the workforce go hunting for skills that will help them stand out.
Photo credit: Shibuya246