Japan considering extending special employment subsidy, labour ministry official says

By Tetsushi Kajimoto

TOKYO (Reuters) - Japan is considering extending a special employment subsidy to help firms hit by the coronavirus pandemic that would keep furloughed workers on the payroll, but no decision has been made yet, a labour ministry official told Reuters on Wednesday.

The comments come after the Nikkei business daily reported the ministry was working to extend the subsidy, citing an unnamed ruling party official.

The news underscores concerns among policymakers that the expiration of the subsidy could trigger a spike in job losses as many firms struggle to make ends meet amid difficult financing conditions.

"It has not been decided yet, but we are considering it," the labour ministry official told Reuters on condition of anonymity because he was not authorised to speak to the media.

"Lawmakers have floated an extension to the year-end during a meeting with us yesterday."

The special measure was designed to increase a subsidy, given to companies who keep furloughed employees on their payroll, for the six months through to the end of September.

The daily payment was raised to up to 15,000 yen (108.54 pounds) per employee from up to 8,330 yen previously.

Some 2.36 million people were furloughed as of June, up 0.9 million from a year earlier, government data showed, prompting lawmakers to urge an extension of the special measure.

The government has set aside about 1.6 trillion yen for the special subsidy, and as of the end of July, had already provided 585.1 billion yen of that to companies.

The government will make the necessary arrangements to deal with an increase in the fiscal burden stemming from an extension, the business daily said.

Japan's job market has been cooling as the spread of the coronavirus forced businesses to close and people to stay home.

Although the restrictions were lifted late in May, policymakers have had to balance containing the virus with the need to resume economic activity as the world's third-largest economy faces its deepest recession in decades.

(Reporting by Tetsushi Kajimoto; Editing by Sam Holmes and Ana Nicolaci da Costa)