Japanese companies struggle to hire, retain employees

Companies in Japan’s service industries are struggling to hire and retain staff as the labour market becomes the tightest in decades, and are increasingly taking unorthodox steps to alleviate the shortage.

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 per cent 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, labour 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.