MNI INSIGHT: BOJ Eye Part-Time Workers For Recovery Signals

A looming government deadline to start scaling down support for furloughed employees in the 'face-to-face' service sector could put increased pressure on part-time workers' jobs and economists at the Bank of Japan are closely watching for the wider impact on the labour market, MNI understands.

Many of the positions under threat are lower paid jobs in the hospitality sector and the overall impact on GDP will be limited, officials at the bank believe, but they are unconvinced yet whether the mismatch of underemployed staff and smaller firms looking for staff can be rectified.

Government data in April shows that 35.68 million of those with jobs were 'regular workers', up 50,000 on March and higher for an 11th consecutive month. Part-time worker numbers rose 200,000 to 20.39 million, the first rise in 14 months.

The government prolonged exceptional employment adjustment subsidies to support workers through July as the state of emergency was extended, but will likely scale them down from August – although there are some suggestions support could remain until after lower house elections in September.

SENTIMENT

A main concern for the BOJ is that a worsening of the part-time worker situation could lead to a renewed downturn in consumer sentiment, which in turn will push household spending lower.

Repayment of emergency loans for many services remains an issue, with companies sales or profits dependent on a release of pent-up demand as the vaccinations roll out picks up, bank officials view.

Although the BOJ is happy firms have access to the liquidity needed on the back of the lending facilities put in place by both the bank and the government last year, the focus is now shifting to solvency concerns and whether they will be able to repay their debts.