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Japan's labour market shortages hit certain sectors harder

Publication Date : 01-07-2014


Not every Japanese company has been enjoying the recent economic recovery thanks to Prime Minister Shinzo Abe’s Abenomics economic policies. Some businesses, in the restaurant and construction sectors in particular, are suffering serious labour shortages.

The crunch is said to be caused by the compound impacts of the ongoing economic recovery, the population decline and mismatches between job seekers’ wishes and working conditions.

The government growth strategy recently approved by the Cabinet includes measures to increase the working population. The task now is to promptly implement those measures.

Takamichi Nozawa, a 52-year-old employee who normally works at the head office of the chain pub operator Teraken Co., was busy cooking in the kitchen of Sakura Suisan izakaya pub near JR Tokyo Station. Nozawa is supposed to train cooks working at the company’s pubs, rather than cooking at the restaurants himself.

“I have no time to train other employees,” Nozawa said with a sigh.

Because Sakura Suisan pubs are short on staff, employees from the head office are being dispatched to branch kitchens almost every day to help cook, wash dishes or clean up.

The company’s managing director, Tomio Ouchi, said, “Hard work and long hours have become a fixed part of people’s image of chain izakaya pub jobs.”

Sukiya, a gyudon beef-on-rice chain restaurant, was likewise unable to operate many branches this April due to labour shortfalls. Sometimes as many as 123 restaurants were forced to close on a single day. Entering the month of June, 30 restaurants remain closed.

The construction industry is recently very busy due to an increasing number of public works projects thanks to 2020 Tokyo Olympics and Paralympics, as well as reconstruction demand following the Great East Japan Earthquake.

Hiroyuki Watanabe, president of Watanabe Kensetsu, a Tokyo-based construction company, said, “We have had one project after another delayed due to labour shortages, and sometimes we have had no choice but to turn away orders.”

Public support

The government and local chambers of commerce and industry began offering help to private firms working to secure human resources.

Honda Technical College, a Honda Motors Co.-affiliated school to foster auto mechanics, said that it is a job seeker’s market for its graduates and the school has been unable to offer staff for all the job offers it receives.

Because a shortage in auto mechanics can pose a risk to lives, the Land, Infrastructure, Transport and Tourism Ministry in June began dispatching district transport bureau officials to high schools urging students to go to vocational school for mechanics. It is unusual for the state to encourage people to seek job in specific sectors.

Non-Japanese nationals are also asked to help out. Last Thursday, the Tokyo Chamber of Commerce and Industry held a job fair for foreign students set to graduate from Japanese universities and vocational schools in spring of 2015.

Yasushi Yabiku, head of the human resource development department at Contec, a construction company in Tokyo, said, “We want to hire 70 new workers, regardless of their nationalities.”


Many companies have moved to improve working conditions to overcome the labour shortage, but some have apparently miscalculated.

Fast Retailing Co., operator of apparel brand Uniqlo, set up in April a regional regular employee system. The system allows for more relaxed working conditions, including shorter working hours than the previous system.

The firm plans to make about 16,000 of its 30,000 current part-time employees at about 850 stores across the nation regular employees over the next few years. But as of early June, it has only transitioned about 200 part-timers to regional regular employees, along with a few dozen mid-career recruits.

When part-timers become regular employees, they receive better pay and other improved working conditions, but many still hesitate to make the change, presumably because they expect that they will be asked to bear more responsibility and work less flexible hours.

US-based coffee chain Starbucks offered all of its contract employees the opportunity to become regular employees if they chose to do so on April 1. But about 100 people, about 10 per cent Starbucks’ contract workers, have not applied to become regular workers, citing reasons including the number of work days, according to the company.

Risk wasted opportunities

Hisashi Yamada, chief economist at the Japan Research Institute said: “Labour shortage conditions vary greatly between industries. Large manufacturers have excess workers, but businesses in retailing, service and restaurant industries are suffering serious labour shortfalls. Those firms may miss out on opportunities to grow even if the economy—currently feeling the impact of the consumption tax hike— recovers pushing consumption upward in the future. Employment reform is necessary to address labour shortage issues. In the construction industry, firms need to improve working conditions, making the work more attractive for young people. It is also necessary to make working hours shorter to make it easier for homemakers to start working. In the restaurant industry, it is important for firms to create a structure that can make profits even with a smaller number of workers, instead of expanding sales by increasing the number of outlets.”

Workforce mismatches need resolution

Mismatches between labour supply and demand and the chronic decline in working population lie behind the country’s labour shortage.

The working population in Japan, comprising people aged 15 or over with the ability and willingness to work, has fallen from 67.93 million at its peak in 1998 to 65.77 million in 2013 and is continuing its slide.

In addition to the shrinking working population, mismatches between companies seeking workers and workers seeking better jobs are growing to serious levels.

As the economy recovers on the back of Prime Minister Shinzo Abe’s economic policies, more workers are choosing comfortable jobs with higher hourly wages over menial part-time jobs.

The ratio of restaurant serving and waiting jobs available to the number of job seekers, for example, is 2.49—more than twice as many jobs as job seekers. The same ratio for clerical and desk jobs is 0.22.

In workplaces facing labour shortfalls, a vicious cycle takes root, where employees quit out of fears of increasing workload per worker. In addition, many young people remain unmarried, living in their parents’ homes for many years and working part-time to earn only as much money as they feel they need.

The government’s latest growth strategy includes measures to secure a sufficient labour force including further incorporation of foreigners and women in the workforce and the use of robots to reduce labour requirements. The government should ensure that these measures are carried out as soon as possible.--  Takeshi Kurihara


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