of regular employees before qqe number of full - time employees regular employees number of part - time employees + 0. 6 % ( annualized ) unemployment rate ( right scale ) youth unemployment rate ( age 15 - 24 years, right scale ) full - time employees - 0. 1 % ( annualized ) % after qqe + 1. 9 % + 1. 4 % part - time employees + 2. 3 % ( annualized ) + 3. 1 % cy sources : ministry of health, labour and welfare ; ministry of internal affairs and communications. chart 4 improvements in the fiscal balance and government debt qqe began in april 2013, but these developments indicate that if it had started earlier, the unemployment rate in japan without doubt would have remained at 3 percent or below throughout. given that the unemployment rate from the mid - 1990s to 2012 on average was roughly 4. 5 percent, unemployment was almost 2 percent higher than it could have been. this implies that, because 2 percent lower of workers could not find a job, the gdp level was on average slightly less than 2 percent lower than it would have been. in fact, the loss in gdp may have been even greater than that. what i mean is that an increase in the unemployment rate by 1 percent may reduce gdp by more than 1 percent. the reason is that if there is a recession and output decreases, firms do not decrease employment in line with the decrease in output but instead try to maintain employment levels. in addition, when holds " ( translated by the bank of japan ). see hayakawa hideo, " kinyu seisaku no'gokai':'sodai na jikken'no seika to genkai. " [ the'misunderstandings'of monetary policy : achievements and limitations of the'great experiment'] ( tokyo : keio university press, 2016 ). there is a recession, the desire to work decreases, the number of people seeking employment declines, the number of unemployed people falls, and the unemployment rate does not increase to the extent that employment has decreased. 6 moreover, the deterioration in the employment situation during the period before qqe began may have caused the subsequent long - term stagnation. as shown in chart 3, the rise in the unemployment rate was particularly pronounced among the young. if new graduates cannot get a good job, they will not receive sufficient vocational training and their human capital will decline, which will eventually lead to lower gdp growth rates. 7

to 10 percent. 16 in that case, it would be no surprise that real consumption expenditure declined by 3. 5 percent. however, even if we draw the trend based on this assumption, consumption has fallen further behind the trend since the end of 2015. moreover, if the explanation that people already responded to an expected 10 percent consumption tax hike is correct, the next consumption tax hike to 10 percent should have little effect on consumption, which i find hard to believe. in any case, if real consumption decreases, demand will decline and prices will be subject to downward pressure. while it is difficult to know exactly how large this downward pressure is, it is certain that such pressure will exist. another factor that should be mentioned is trends in the global economy. as shown in chart 7, it is clear that the stagnation in global trade since 2015 has cooled consumer sentiment through a decline in exports and stock prices, and has delayed the recovery of japan's economy. however, the tightening of the labor market seen in the decline in the unemployment rate shown in chart 3 should lead to a rise in wages and eventually in prices. there are already signs of this happening. in this context, it is useful to look at the phillips curve, which shows the link between the unemployment rate and the inflation rate. chart 8 shows the phillips curve for japan. in the chart, the inflation rate is shown on the vertical axis, the unemployment rate on the horizontal axis, and the phillips curve is given by the downward - sloping curve. as can be seen, prices only rise gradually as the unemployment rate falls, but once the unemployment rate approaches 2 percent, prices rise quickly. the unemployment rate has already fallen to 2. 8 percent. therefore, there is no doubt that prices will eventually rise as the unemployment rate continues to fall. unayama takashi, " keizai kyoshitsu 2014 - nen shouhizouzei no kyokun " [ economics class : what the 2014 consumption tax hike taught us ], nikkei, may 23, 2016. chart 8 phillips curve and tightening of the labor market y / y % chg. cpi ( all items less fresh food and energy ) price stability target of 2 percent - 1 - 2 - 3 unemployment rate % source : ministry of internal affairs and communications. concluding remarks as stated so far, the bank's monetary policy measures have produced excellent results so far and with regard to prices, at least a situation in which there is no longer deflation