Japanese companies struggles to retain staff due to labor shortage

TOKYO: Labor shortage is becoming worse day by day in Japan. Companies are struggling to retain existing labor staff and looking for fresh workers.

That can include looking to housewives and the retired 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. In others, companies 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 percent in August, reflecting a strengthening economy and shrinking working-age population in a rapidly ageing society.

And on Monday, the Bank of Japan’s “tankan” 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, labor 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 Seth Sulkin, president and CEO of the mall’s owner Pacifica Capital KK. He also said a new spa due to open there in a few months has been forced to push back the opening date due to staff shortages.

“The pool of people seeking part-time jobs is shrinking rapidly, particularly outside of central Tokyo,” Sulkin said. “We’ve recommended that the tenants convert some of the positions to full-time and raise wages but they tell us they can’t-do that and still make money,” he said.

“In Tokyo, it’s easier to hire people but it’s not as easy as it used to be,” he said. By contrast, “in our Chiba mall, I think the location is the big issue, there’s just not enough people.”

With the economy at near full-employment, companies are being forced to try to find new sources of labour.

Fast food chain McDonald’s Holdings Co Japan Ltd, following in the footsteps of convenience store operator FamilyMart UNY Holdings, 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 don’t fit with their responsibilities at home.

Signs of companies moving to improve working conditions to retain and attract staff include Doutor Nichires Holdings Co Ltd, which has introduced severance pay for some temporary employees at its Doutor Coffee chain.

That is an unusual move in a country where there is a large gap in pay and working conditions between temporary and permanent employees.

Some restaurant operators, including Royal Holdings Co Ltd and McDonald’s Japan, have begun moving away from 24-hour operations, but that is far from the preferred option for companies in an industry that prides itself on offering convenience and service at all hours of the day.

More than 80% of companies surveyed in a Reuters poll in June reported that they expected labour shortages would force them to restrict the number of services they can offer over the next several years.

Some efforts to expand the labour force are finding corporate thinking has only changed so much.

This March, human resources firm Fullcast Holdings Co Ltd 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, says Fullcast Senior Works President Yasuhiro Sumi.

“If there were jobs that met their needs in terms of things like distance from home, job type and working hours there are lots of employable people,” he said.

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,” says Hideo Kumano, chief economist at Dai-ichi Life Research Institute.