| TOKYO, July 11
TOKYO, July 11 Japan's labour shortage is
nearing crisis in some key industries as it spreads from
construction to services, curbing companies' operations, pushing
up wages and potentially crimping a tentative recovery in the
world's third-largest economy.
Airlines, retailers, truckers and restaurant chains are
being forced to rethink expansion plans and, in extreme cases,
shut up shop because they cannot fill jobs at any wage.
Peach Aviation Ltd, a joint venture backed by Japan's
largest airline, ANA Holdings, said last month it would
cancel more than 2,000 flights this year, 16 percent of its
planned total. Budget carriers Jetstar Japan and Vanilla Air
have also cancelled hundreds of flights this summer, a
government report on pilot shortages showed.
"There aren't enough captains and training one takes time
and money," said Peach Aviation spokesman Hironori Sakagami.
"We wanted to increase the number of flights, but we had to
Peach's predicament underscores a broader problem facing the
world's fastest-aging country. Jolted out of two decades of
deflation by Prime Minister Shinzo Abe's reforms, many Japanese
companies are struggling to secure workers due to minimal
immigration, inflexible hiring laws and a working age population
that is expected to shrink by 13 million people by 2030.
The problems facing companies in their bricks-and-mortar
expansion come just as doubts arise about the prospect for
business investment to drive the recovery. Machinery orders, a
key gauge of plans for manufacturers' capital spending suffered
a record plunge in May, data showed on Thursday, prompting the
government to say the trend of rising orders was stalling.
"There's a high risk of labour shortages causing a growth
bottleneck particularly if the labour market remains rigid,"
said Yasuo Yamamoto, senior economist at Mizuho Research
Institute. "More efforts are needed to enhance liquidity in the
labour market to shift more workers to growth sectors while
increasing the number of workers, including immigrants."
LOW-WAGE, LOW-MARGIN BUSINESSES AT RISK
Japan's deepening labour shortage has led it into uncharted
territory among its developed nation peers, but is little
surprise given its rapidly aging and shrinking population. It
has done itself few favours by so far resisting calls to open
its doors wider to long-term immigration or dismantle strict
A proposal floated among Abe's advisers to increase the
number of immigrants to 200,000 a year by 2050 was recently
rejected. Instead, in his growth strategy unveiled in June, Abe
expanded a foreign trainee scheme which accounts for less than
0.3 percent of Japanese workers. He is also encouraging greater
workforce participation by women and the elderly, but critics
say these measures will never be enough.
Japanese employers were offering 109 jobs for every 100 job
seekers in May, the 18th consecutive rise in the ratio,
government data show. Job advertisements were up sharply in
manufacturing and services.
Especially hard-hit are low-wage, low-margin firms which
sprang to prominence during deflation, from discount furniture
outlets like Nitori Holdings Co to restaurant chains
like Sukiya which serves cheap bowls of rice and beef.
Zensho Holdings Co, which operates Sukiya, last
month apologised to shareholders for temporarily closing some
200 stores as the chain failed to secure workers ahead of spring
when many seasonal workers quit.
Japanese-style pub chain Watami Co will close about
60 less-profitable locations, 10 percent of its total, this
business year, partly because it can no longer afford enough
The labour crunch began in construction where demand for
rebuilding after the 2011 earthquake and tsunami has combined
with the start of preparations for the 2020 Tokyo summer
Olympics. In May, there were eight times as many job offers for
highly qualified workers putting together steel construction
frames as there were workers.
"The lack of construction workers has pushed up the costs of
new stores by 20 to 30 percent over the last year," said Manabu
Sasaki, investor relations officer at Komeri Co, a
hardware and furniture chain that opened just 30 of its 40
planned stores last business year.
"We are trying to offset the hike in costs by modifying the
design and the materials we use to build the stores."
York Benimaru, a supermarket chain controlled by Japan's
largest retailer, Seven & I Holdings Co, and discount
clothing chain Shimamura Co have been forced to open
fewer stores than planned due to the higher construction costs.
Trucking is also feeling the crunch.
Because of a lack of drivers, Taiho Transportation
, which operates about 400 trucks in Japan's industrial
heartland of Nagoya, had to keep one-tenth of its fleet idle
during a spike in demand before April. A transport ministry
survey released on Monday found 55 percent of trucking firms
experiencing a labour shortage in the first quarter and 60
percent forecasting a squeeze.
"The shortage is so deep and the market so inflexible that
whenever there's a busier period the companies can't keep up,
causing delays in transport and putting a strain on businesses,"
said Hiroaki Oshima, analyst at Nittsu Research Institute and
Consulting based in Tokyo.
For a few companies, Japan's labour shortage is more dire.
Ten companies failed in the first six months of the year
because of the cost of higher wages, up from four during the
same period last year, said Tokyo Shoko Research.
The credit research firm predicts such bankruptcies will
continue to rise, citing construction, distribution and service
industries as the most vulnerable.
(Additional reporting by Tetsushi Kajimoto; Editing by William
Mallard and Lincoln Feast)