* 61 pct of firms say harder to secure sufficient workers
* 44 pct say labour costs may squeeze profits this financial
* About a third plan to increase hiring in next business
By James Topham
TOKYO, Aug 22 Some 60 percent of Japanese firms
are finding it increasingly difficult to secure sufficient
workers, hit by a pervasive labour shortage that is pushing up
hiring costs and starting to eat into profits, a Reuters poll
Stemming from a rapidly ageing society where immigration is
limited, the labour 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 labour 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.
The survey, conducted from Aug. 4-18 by Nikkei Research for
Reuters, polled 487 firms capitalised at more than 1 billion yen
($9.6 million) which responded on condition of anonymity. Around
270 firms answered questions on hiring.
PROFIT PAIN FOR SOME
Asked about the impact of the labour shortage on profits, 44
percent of firms said corporate earnings could be squeezed this
financial year, with most of those firms predicting recurring
profits could fall between 1 percent and 10 percent.
The remaining 56 percent said they did not expect any
impact, with some respondents saying they were able to absorb
costs as profits were growing.
"Even though labour costs are rising, this leads to a better
life for employees and eventually to increased consumer
spending. It is not all bad," wrote an executive at an
One third of respondents said they plan to hire more workers
in the next financial year while around 60 percent said they
expect the number to be flat.
But for firms unable to secure sufficient workers or pass on
the extra costs to customers, the labour shortage will continue
to be an intractable problem. Japan's working age population is
expected to shrink by 13 million people by 2030 and talk of
immigration reform garners little interest in the homogeneous
"From the perspective of 30 to 50 years, maybe there will be
a chance to reverse this trend, just like France did, but in the
next five to 10 years the trend may continue," said Shintaro
Okuno, a partner at consultants Bain & Co Japan, who reviewed
the results of the survey.
Japan's economy is expected to grow between 0.3 percent and
0.5 percent this financial year - down from an average 0.7
percent after a hike in the sales tax resulted in a sharp
contraction during the April-June quarter.
With Japan keen to curb runaway government debt, Abe must
soon decide whether that sales tax hike - from 5 percent to 8
percent - will be followed by another planned increase to 10
percent next year. The survey found that companies were largely
resigned to the prospect, with more than half saying it is
unavoidable, compared with about one fourth saying Abe should
postpone or scrap it.
(1 US dollar = 103.8300 Japanese yen)
(Addtional reporting by Ritsuko Shimizu, Yoko Kubota and
Stanley White; Editing by William Mallard and Edwina Gibbs)