Japan's unemployment rate stood at 4.9 percent in June, setting the worst post-World War II record for two consecutive months. It is likely to go up higher still, as Prime Minister Junichiro Koizumi's economic-reform plans received a solid mandate in the July 29 Upper House election. For one thing, bad-debt writeoffs by private banks are expected to put a great many people out of work.
Mr. Koizumi has said time and again that "there is no reform without pain." If pain is unavoidable, however, he must also see to it that unemployment is held to a minimum. He must also give the nation reasonable assurances that after the pain will come a better life, otherwise the people will not accept sacrifice. They will revolt against his reform program if it promises only pain and no gain.
The question is: What kinds of pain will "structural reforms without sacred cows" bring? And how long will the pain last? The answers are unclear because the reform program itself remains vague. But one thing seems certain: A considerable number of workers will lose their jobs. Indeed, unemployment will constitute the most severe form of pain.