Land of the subtle recession: The Japanese are tightening their belts, but a high demand for labour protects the workers, writes Terry McCarthy in Tokyo

LIKE so many other things in Japan, economic recessions look different here from in the West. There are no long dole queues, no profusion of 'For Sale' signs outside houses where owners can no longer afford to pay the mortgages, no street riots by disaffected youths who see no future for themselves.

However, in strictly economic terms, the cost of the current slowdown is high, and looks like getting higher. The stock market has lost 60 per cent of its value since 1989, the property market is going the same way although more slowly, corporate profits are tumbling, banks are sitting on bad debts that some economists estimate at more than 50,000bn yen ( pounds 204bn) and bankruptcies of small companies are rising quickly.

In human terms, the effects of the recession are more subtle and only barely noticeable. The fact that the unemployment rate is standing at 2.1 per cent, compared with 2 per cent at this time last year, and that job offers still outnumber job seekers, hides a quiet cut-back in paid overtime and bonuses by Japanese companies.

This summer, millions of Japanese will fly out of the country for foreign holidays but an increasing number will be on cheap tickets, as the bucket-shop travel business in Tokyo experiences a boom in business compared with the more expensive tour operators.

Summer is also a traditional time for making gifts, but this year the department stores say the expensive Y30,000 ( pounds 122) gift- box combinations of imported meats, fruits and alcohol are not moving. Instead customers are buying Y5,000 single item gifts.

So far, at least, the average Japanese salaried worker is experiencing a bit of belt tightening, but none of the economic despair that has hit huge swathes of the British and US populations. And with Japanese households sitting on one of the world's highest levels of personal savings, there are few fears for the immediate future.

The biggest difference between Japan and the West which is not about to disappear is the chronic shortage of labour in Japan. Highlighting this was a report released this week by the Japan Federation of Employers' Associations, or Nikkeiren, which said that the country will have a shortage of 6 million workers by 1996 if the economy is to grow at the government's target of 3.5 per cent annually at the same time as average work hours are reduced to the government's professed goal of 1,800 hours a year.

It is this labour shortage which makes Japanese employers so slow to lay off workers. Instead companies have been cutting their wages bill in two ways. There has been a nationwide reduction in paid overtime and this year's winter and summer bonuses are being reduced.

Bonuses are an integral part of Japanese wage schemes - in December and June employees receive bonuses which in the good days can amount to three months' salary each time. This year, bonuses are down to two months' salary or even one month's in particularly badly-hit industries.