The government is set to implement a JP¥300 billion (US$3.88 billion) program to boost employment in Japan under a third extra budget for fiscal 2011 in response to the March 11 earthquake and tsunami as well as the negative impact of the yen's recent sharp rise.

Under the new program, the government will create a JP¥100 billion (US$1.29 billion) fund in each of the three prefectures heavily damaged by the natural disaster -- Iwate, Miyagi and Fukushima -- and use the fund to provide subsidies to companies hiring people affected for at least one year.

As for measures to ease the negative fallout on the economy caused by the yen's strength, the government would give incentives to companies to keep their payrolls, the officials said.

The government fears that domestic manufactures may accelerate shifting production abroad in pursuit of cheaper labor costs since the strong yen has increasingly weighed on the profitability of exporters in Japan.