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Japanese Jobless Numbers Reflect Sluggish Labor Market - 2002-06-28

Japan's latest jobless numbers reflect the sluggish labor market while heavy competition forces a Japanese airline into bankruptcy.

Japan's unemployment rate in May rose to 5.4 percent from 5.2 percent a month earlier. It now stands just below the postwar high hit in December. The figures show that despite signs of a tentative recovery from an 18-month recession, companies are still restructuring and holding back on hiring new employees.

Chikara Sakaguchi, the health, labor and welfare minister, told reporters that he recognizes the nation's employment conditions remain severe. He adds that he is determined to take steps to stop the job market from deteriorating.

A Japanese airline has filed for bankruptcy, the first to fail since the deregulation of the country's airline industry five years ago.

Hokkaido International Airlines, better known as Air Do, filed for court protection from its creditors. It started business four years ago and became known for undercutting its rivals with cheap fares.

Transport Minister Chikage Ogi said that when Air Do slashed fares by 40-percent, larger airlines followed suit. She adds that the bigger companies cannibalized the smaller one and impeded the newcomer's entry. Air Do says it is seeking support from the country's number two domestic carrier, All Nippon Airways, and hopes to form a tie-up.

In the auto sector, a bankrupt South Korean company, Daewoo Motor, gets a new lease on life with some help from U-S and Japanese investors. The tie-up is the result of a $400 million deal between General Motors of the United States and Daewoo's creditors.

Suzuki Motors, Japan's top mini-vehicle maker, will take a 15-percent stake in the new Daewoo venture. Suzuki, an affiliate of GM, will pay $89 million for its stake in GM Daewoo Auto and Technology. The automakers will share vehicle development costs and sell vehicles in Europe and Australia.