Package

By Ben McLannahan in Tokyo

Japan’s government has approved its second round of stimulus in a little more than a month, as prime minister Yoshihiko Noda tries to pep up a flagging economy in the run-up to December’s elections.

On Friday the cabinet announced that it would tap reserve funds to spend Y880bn ($10.7bn) on a variety of measures, including rebuilding areas hit by the March 2011 earthquake, employment support and aid to cash-strapped small businesses. The plan is roughly double the size of a package announced in late October, which was also drawn mostly from reserves and aimed at reconstruction efforts.

The stimulus comes as Japan hovers on the brink of atechnical recession, its fifth of the past 15 years, as manufacturers cut production amid a steady worsening in their sales and profit outlook. Falling exports were the main contributor to a 0.9 per cent contraction in gross domestic product between July and September, and economists are braced for another in the three months to December. Last week the government slashed its quarterly assessment of business sentiment in all 11 regions of the country – the first clean sweep since February 2009 – blaming sluggish output and consumption.

Economic data released on Friday were a little more encouraging, showing an unexpected rise of 1.8 per cent in industrial production from September to October. The nationwide consumer price index (excluding fresh food) was unchanged from a year ago, improving from five months of year-on-year declines to September.

However, with more job cuts expected in amanufacturing sector exposed to tepid demand in developed economies and an uncertain outlook in China, analysts expect renewed deflationary pressure on the world’s third-largest economy.

“We are yet to see any light out of this recession tunnel,” said Takiji Okubo, principal at Japan Macro Advisors, a Tokyo consultancy.

The government fears that if the economy slips further, it could threaten plans to increase consumption tax from 2014. Provisions attached to the legislation, passed in August, require the government to consider the overall economic situation before implementing any increase.

According to the latest opinion poll carried out by the Nikkei newspaper, the Liberal Democratic party is leading with 23 per cent support, followed by the recently created Japan Restoration party on 15 per cent and Mr Noda’s ruling Democratic Party of Japan on 13 per cent.

The jobless who would rather lose benefits than work

Almost two thirds of benefits claimants referred to a mandatory work scheme do not turn up because they either take a job or stop claiming welfare, figures have shown.

By James Kirkup, Deputy Political Editor

8:45PM GMT 19 Nov 2012

The Department for Work and Pensions said 6,000 people were stripped of benefits after refusing to take part in a work scheme and trying to go on claiming welfare. Government sources said the figures showed the lengths to which some claimants will go to avoid working.

Mark Hoban, the employment minister, has published figures for the mandatory work activity scheme.

Under the rules, unemployed people judged to lack the personal skills required to find and keep a job must do work placements in exchange for benefits.

Critics say the scheme amounts to forced labour. Ministers say it helps the jobless develop personal discipline and other habits required for employment. Between the start of the scheme in May last year and August this year, more than 90,000 claimants have been referred to the Mandatory Work Activity scheme by Jobcentre staff.

Of those, little more than 33,000 began work placements. Of the remaining 57,000, some found work, while others chose to stop claiming benefits.

Anyone referred to the scheme who does not complete a work placement is liable to have benefits stopped. Mr Hoban said that in the first year of the scheme, 6,230 people had refused to take up a work placement but continued to claim Job Seekers’ Allowance, which was subsequently denied.

Mr Hoban said the figures proved that the scheme was helping push people off benefits and into work.

“Some people will go to great lengths to avoid having to get a job,” he said. “But sitting at home on benefits doing nothing is not an option for those who are fit and capable of work.

“We will give jobseekers all the help and support they need to try to find work, but in return they have an obligation to use our help to get ready for a job.”

Placements under the scheme typically last a month. Sanctions are in place for those who fail to last the course.

Anyone who fails to complete their first placement can lose their allowance for three months. A second incomplete placement means a six-month ban. A third offence can lead to a three-year ban. Despite ministers’ praise for the work scheme, watchdogs fear that the system is open to abuse by contractors.

Roles are arranged by private companies, who get up to £600 for each claimant they put into a placement.

The Commons public accounts committee warned earlier this year that contractors could claim for candidates and placements that did not exist.