MNI BRIEF: BOJ Waits On Govt Subsidy Changes For Labor Mkt

Bank of Japan officials are paying attention to the risk that the labor market could deteriorate as the government unwinds the Employment Adjustment Subsidy, MNI understands.

The rise in the unemployment rate and bankruptcies is being restricted by the government subsidy and the BOJ lending facility, but the subsidy is set to expire at the end of June, after the state of emergency is lifted.

It is unknown at this point if the government will return the subsidy to the previous level gradually over a period of time, or return it to the previous level immediately.

The government subsidizes a part of wages for firms that do not dismiss employees or ask workers to take leave, even if sales or profits decrease. The subsidy has played a key role in preventing a sharp deterioration in the labor market.