Labour pains for Japanese firms as shortage worsens

Companies in Japan's service industries are struggling to hire and retain staff as the labour market becomes the tightest in decades, and are increasingly taking unorthodox steps to alleviate the shortage.
Japan has a rapidly ageing society, putting a strain on its shrinking working-age population. As it is, the labour squeeze can reduce the speed of economic development, and even curb some economic activity altogether, hurting Japan's chances of a per
Japan has a rapidly ageing society, putting a strain on its shrinking working-age population. As it is, the labour squeeze can reduce the speed of economic development, and even curb some economic activity altogether, hurting Japan's chances of a period of sustainable growth.PHOTO: REUTERS

Some seek housewives, retirees; others cut services, delay growth

TOKYO • Companies in Japan's service industries are struggling to hire and retain staff as the labour market becomes the tightest in decades, and are increasingly taking unorthodox steps to ease the shortage.

These can include looking to housewives and retirees to come into or rejoin the labour force. In some cases, it means offering better working conditions for some staff, even if this requires raising prices of their products. In others, firms are reducing the services they offer, perhaps by cutting opening hours or delaying expansion plans.

Japan's jobless rate stood at a 23-year low of 2.8 per cent in August, reflecting a strengthening economy and shrinking working-age population in a rapidly ageing society. And on Monday, the Bank of Japan's quarterly survey showed that the ratio of companies complaining of labour shortages, rather than excess staff, was at its highest level since 1992.

The labour squeeze can reduce the speed of economic development, and even curb some economic activity altogether, hurting Japan's chances of a period of sustainable growth.

For example, at Sun Mall in Chiba, east of Tokyo, labour shortages have led some tenants to abandon plans to take up space at the site, and others to shut up shop when key workers could not be replaced, according to Mr Seth Sulkin, president and chief executive of the mall's owner, Pacifica Capital KK.

He also said a new spa due to open there in a few months had been forced to push back the opening date due to staff shortages.

Japan's jobless rate stood at a 23-year low of 2.8 per cent in August, reflecting a strengthening economy and shrinking working-age population in a rapidly ageing society.

"The pool of people seeking part-time jobs is shrinking rapidly, particularly outside of central Tokyo," Mr Sulkin said. "In Tokyo, it's easier to hire people but it's not as easy as it used to be," he added.

With the economy at near full-employment, companies are being forced to find new sources of labour. Fast-food chain McDonald's Holdings Japan, following in the footsteps of convenience store operator FamilyMart UNY, says it will try to expand its core workforce beyond young people by targeting housewives for part-time positions.

More than half of housewives with children would like to work but are not able to find a suitable job, a survey of more than 4,000 married mothers by the Jobs Research Centre found. They were particularly concerned about long working days that do not fit with their responsibilities at home.

Some restaurant operators, including Royal Holding and McDonald's Japan, have begun moving away from 24-hour operations.

Some efforts to expand the labour force are finding corporate thinking has only changed so much. In March, human resources firm Fullcast Holdings set up a recruitment agency aimed at Japan's over-60s and, while almost 2,000 retirees have registered, many companies are not able to accommodate them, said Fullcast Senior Works president Yasuhiro Sumi.

Many companies remain hesitant to spend their record cash piles on raising wages, in part because they are unable to pass on costs to their customers, who are accustomed to nearly two decades of mostly falling prices.

"It seems that deepening labour shortages are not resulting in higher prices that reflect rises in wage and labour costs,"said chief economist Hideo Kumano at Dai-ichi Life Research Institute.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 04, 2017, with the headline 'Labour pains for Japanese firms as shortage worsens'. Print Edition | Subscribe