Japan's employment rate isn't falling for economic reasons. Population shifts are causing it.
Yet contrary to what he writes, this does not reflect an increase in unemployment, hidden or open. The reason is that this number refers to employment relative to total population older than 15. But if you look at 15-64 year olds alone, the employment rate has in fact increased, from 68.8% in 2001 to 70.2%, and increasing further to 71% in June 2012. The unemployment rate has fallen from 5% in 2001 to 4.6% in 2011 and 4.3% in June 2012.
Unemployment is thus in fact lower than in a very long time. The reason why the ratio of workers to the total population has dropped is not that unemployment has increased -again, it has in fact dropped- but that Japan is rapidly becoming something of a nation of geezers.
Japan has, much like the other former leading World War II axis power, for decades had a very low birth rate something that together with Japan's "no gaijins allowed" immigration policy now results in a shrinking work force. Meanwhile, Japan's extremely high life expectancy means that the number of old people grows fast even as the number of young people shrinks fast.