The gross domestic product is expected to decrease between 7.8 percent and 8.6 percent in 2025 from 533.7 trillion yen in 2001 due to a decrease in the labor force caused by the falling birthrate, labor minister Chikara Sakaguchi said Wednesday.

Sakaguchi made the estimate on the assumption that the nation's working population will decrease by 4.56 million from 67.52 million in 2001 and that per capita labor productivity will remain unchanged.

The health, labor and welfare minister also said Japan will see its GDP -- the total output of goods and services minus foreign income -- post a negative annual growth rate of between minus 0.3 percent and minus 0.4 percent in 2025 as a result of its declining working population.

To enable Japan's GDP to grow between 1.3 percent and 1.4 percent in 2025, labor productivity needs to be raised by 1.5 times through such measures as creation of new businesses, financial revitalization, reduction of high costs and deregulation, Sakaguchi added.

He presented the estimate to the day's meeting of the Council on Economic and Fiscal Policy, a key government panel chaired by Prime Minister Junichiro Koizumi.

Separately, Sakaguchi told the council he is considering easing controls on job-placement companies to correct mismatches between job seekers and businesses offering positions, according to participants.

Koizumi pointed out that deregulation is necessary to utilize placement companies' knowhow for correcting such mismatches.

Placement companies are currently allowed to arrange jobs in return for fees only for certain types of workers including corporate managers and engineers.