Prime Minister Junichiro Koizumi said Thursday that Japan's unemployment rate will inevitably rise as a result of his economic structural reform agenda.

He reaffirmed his intention, however, to implement employment measures to soften the blow.

"A rise in unemployment is inevitable in the process of reform," Koizumi told reporters. "I believe now is the time to brace ourselves to endure the pain."

When asked about declining stock prices, Koizumi said, "Near-term measures will not do. We will carry out the reform that needs to be done."

In reference to the Bank of Japan's monetary policy, Koizumi ruled out inflation targeting, saying it could cause inflation to spiral out of control.

Government sources had revealed earlier that an official report for July, due out next week, will show the seasonally adjusted unemployment rate at 5 percent.

This is its highest level since the government began reporting monthly jobless figures in 1953.

The government has repeatedly said it views the 5 percent mark as the threshold for taking drastic employment measures. These could include the provision of safety nets for the unemployed via the implementation of a supplementary budget for the current fiscal year.

Koizumi made the remarks at the Hakone hot-spring resort in Kanagawa Prefecture, where he is spending his summer vacation.