Labor Shortage Limit Japanese Firms Profits

Some 60 percent of Japanese firms are finding it increasingly difficult to secure sufficient workers, hit by a pervasive labor shortage that is pushing up hiring costs and starting to eat into profits, a Reuters poll showed.

Stemming from a rapidly ageing society where immigration is limited, the labor crunch has emerged amid an economic turnaround engineered by Prime Minister Shinzo Abe and threatens to drag on growth.

Some restaurant chains and retailers such as home improvement firm Komeri Co have said they have been forced to rethink expansion plans, while others have actually shut stores. At the same time, a dearth of construction workers needed after the 2011 earthquake and tsunami and ahead of the 2020 Olympics has pushed up building costs for all sectors.

But even firms that are not as badly affected are worrying about a jump in labor costs, the pressure of having to scramble to attract qualified employees and to retain the ones they have.

“The hiring situation has become very severe,” Yoshiki Mori, vice president at retailing giant Aeon Co, said at an earnings briefing last month. He said Aeon is embarking on a range of initiatives to encourage part-timers to work more hours and is looking to employ more retirees and foreigners.

By sector, 80 percent of retail firms and 72 percent of companies in construction and real estate said they were finding it more difficult to secure enough workers, the Reuters Corporate Survey found. Among manufacturers, 70 percent of firms in the auto sector, which includes suppliers, said they are having more difficulty.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza