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Japan labor market set for change as huge worker shortage looms

59 Comments
By Noriyuki Suzuki

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so no four day work week in Japan?

5 ( +17 / -12 )

In the short term, labor shortages are evident in the pandemic-hit services sector, with labor-intensive areas like nursing care and construction already struggling.

Many people talking about AI but at the end still need to do just people to do things.

-4 ( +6 / -10 )

Private-sector surveys point to more severe labor shortages for decades to come, with one of them estimating a shortfall of over 11 million workers by 2040

 It has opened its doors to more foreign workers, albeit slowly, but experts question whether Japan can compete with other nations where workers can get higher pay.

Not only Japan that currently need workers, other countries need more workers too. With failing yen, Japan will keep struggle to keep up with demand.

https://www.bbc.com/news/world-europe-66003238

https://www.cbc.ca/radio/whitecoat/philippines-nurses-canada-1.6952067

-3 ( +8 / -11 )

Known about for literally decades, and yet the powers that be, in their xenophobic rush to keep foreigners to a minimum, have shot themselves in the FEET.

-8 ( +22 / -30 )

Many people talking about AI but at the end still need to do just people to do things.

Yes, and programmers/developers to fix all the problems and bugs associated with it. Japan could really benefit from AI though if its used to generate solutions to problems the top brass oyagis are stuck in the mud on.

9 ( +11 / -2 )

The spotlight is increasingly on the sustainability of wage growth, which has been accelerating at the fastest pace in three decades.

Which translates to a few yen above the flatline it has been at and not even keeping pace with inflation.

Japan's widespread seniority-based employment system, low labor productivity, and workers' reluctance to hop from one job to another have been among the factors behind its tepid wage growth for years.

Leaving out the elephant of Japan Inc. acquisitiveness hoarding profits aided by Abenomics neo-liberal "reforms".

The International Labor Organization says generative AI, which is neither inherently good nor bad, will "augment" rather than destroy jobs. The U.N. agency is calling for governments and others to design the right policies to ensure a smooth transition because costs to affected workers will be "brutal."

Japanese workers need to get more aggressive against their twin foes of Japan Inc. and LDP cronies. There is a sea change happening in worker -capital relations with automation and late stage capitalism and oligarchs East and West are trying to snatch away what few benefits workers have to create more perfected forms of exploitation.

https://www.smh.com.au/business/the-economy/we-need-to-see-pain-the-developer-who-says-unemployment-must-rise-20230913-p5e48g.html

9 ( +14 / -5 )

There is no labour shortage in Japan. Raise wages, and watch this fake problem disappear. There is a lack of jobs paying a living wage; that is the crux of the issue.

7 ( +30 / -23 )

So, there’s a huge labor shortage looming?

No robots for that.

The only alternative is the foreigner and it’s already beginning to happen..

1 ( +8 / -7 )

The government is getting more serious about reforming the labor market, underscoring the need for reskilling the workforce

Good luck with that!

Japanese Industry is so anti-Japan, it's not even leveraging current skills in the workforce, what's the point in reskilling?

Look at the latest wave of global innovations where Japan has exported, wholesale the innovation to China: Nidec - EV drivetrain, TDK - EV battery, solar, AI, aviation....there are even highly skilled Japanese who have gone to work in China's emerging technology sector. Let's not forget the wholesale export of skills, manufacturing AND distribution of home appliances to China either.

Until the Japanese central government think it can withstand CCP punishment and initiate decoupling, like USA has, Japan will fade away.

-1 ( +7 / -8 )

Nobody is going to like this but considering the life expectancy today compared to when the national pension plan (こくみんねんきん) was established, Japan need to increase the age when benefits are paid out by 3 or 4 years ASAP.

-1 ( +5 / -6 )

Chinese factories boom while Japan's are in reverse.

https://www.bbc.com/news/business-64807491

-6 ( +3 / -9 )

Japan's tax system is designed for father to work in a big company and mother to stay home in a house they have bought. Women are encouraged to become full time housewives. Japan's supposed labor shortage could be easily solved by encouraging the millions of non employed women to return to the workforce. This may involve some tweaks to the tax system and investment in childcare facilities (long overdue) but no need to fall into the mass immigration trap. There are also an estimated 1.5 million hikikomori ( people who rarely leave home) of working age.

13 ( +13 / -0 )

I asked my “flexible” company if I could do a few hours a week part time consulting in light of inflation. They knee jerk said no. The following month I quit for a higher paying role. From the inside of a Japanese company I see a big problem with the backward HR departments stuffed with old thinking and procedures still based on when there was a glut of workers.

17 ( +20 / -3 )

Every country in the world wants to import skilled labour. Politicians can say whatever they like about attracting it, but skilled labour calls the shots and goes where it wants. A weak yen and low pay make Japan a hard sell. Life in Japan has other advantages, it must be good because I live here (!), but they may not be apparent until you get here.

As for workers in Japan, a swing in the balance of power between skilled diligent workers and employers is long overdue. Lifetime employment may have worked for Japan in the past, but it is not the future, not least with AI threatening to take over so many lifetime employees' jobs.

13 ( +17 / -4 )

On the one side you have the politicians and media. On the other, the market.

Politicians and the media can pursue perceived ephemeral trends for PR and column inches, boosting or demonising AI for example. But the market is operating at the pointy end, and will only implement what works, what is needed and what is economically viable (or cheap). Much AI is overpriced rubbish. In most cases, isn't a viable replacement for people without poisoning your brand and opening yourself up to bad publicity and court action when it goes wrong.

As for upskilling or reskilling, it's tough. Governments cannot force people into jobs they are physically, intellectually, creatively or temperamentally ill-suited to. Try it, and it will backfire. That's why migrant labour has always been such an important part of global economic growth.

Japan really doesn't want foreign blue collar labour (despite needing it). The UK is blocking them too, and has taken down Sterling so far that there are better places for migrant labourers to go. Both nations will suffer with staff shortages, loss of services and economic decline. Other nations (Australia, NZ, Canada) are courting migrant labour as the lubricant that makes their economies function. Migrant labour at most levels, is akin to rare-earth elements in terms of economic necessity.

So you'll hear politicians telling you what they are planning, but the assortment of virtuous cycles and virtuous circles won't necessarily happen, even if they throw a lot of cash at it. The incredible inertia in the Japanese labour market will be difficult to shift, as it would require little short of a revolutionary change of mind-set at all levels of society, from parental expectations and educational provision through to flexibility of employment and promotion by ability. And Japan doesn't change easily.

The likelihood is that people will work harder, your cash won't go as far, services will decline (no new Suica cards - nobody saw that coming), and those actually taking the plunge with start-ups, the sharing/gig economy (AirBnB, Uber) and self employment, will have to continue to dodge government crackdowns and fight against the tide, despite representing the flexibility and innovation that economies need to switch to, going forwards.

3 ( +4 / -1 )

@David Brent

Without robust immigration to provide an impetus for inflation, wages won’t increase.

The same goes for the much touted tourism push to fill seats in restaurants which aren’t being filled by the native population.

A sea change in immigration is coming.

The politicians know this but the electorate does not.

Land prices and building prices will rise

Countries such as Australia and Canada with massive land areas, for different reasons have not or cannot build housing units and look at the prices in those countries.

Will Japan be the same in the near future?

I think so.

Sure, there will be some Japanese that will push back but it is the open minded company presidents that will see the chance to make money and they will.

-3 ( +2 / -5 )

Chinese factories boom while Japan's are in reverse.

Six months ago. Things have changed.

 

Chinas youth unemployment rate at 21% Japan everyone who wants a job has a job.

China's youth unemployment crisis could dent world's second-biggest economy

https://www.foxbusiness.com/economy/chinas-youth-unemployment-crisis-dent-worlds-second-biggest-economy

2 ( +4 / -2 )

Look at the latest wave of global innovations where Japan has exported, wholesale the innovation to China: Nidec - EV drivetrain, TDK - EV battery, solar, AI, aviation....there are even highly skilled Japanese who have gone to work in China's emerging technology sector.

 

In other words, Japan has the skills and tech and China does not.

0 ( +2 / -2 )

huge worker shortage looms

In other words too many jobs and not enough people. Great problem to have. It means Japanese people will have no problems finding a job. Other countries, wished that they have that problem

2 ( +4 / -2 )

Productivity is the key. Reduce the useless paper pushing and internal bureaucracy within the companies, thin out the middle management layers, increase, autonomy and encourage employees to be bold and take action to improve processes. The so-called labor shortage is based on the abysmal levels of productivity the country is at currently.

5 ( +6 / -1 )

Wall Street economists with major firms in Tokyo have been saying this for over 20 years and not much has been done. They even went as far as to say that a relaxed Japan Inc. workplace would not even need foreign labor. I just can't imagine how many billions of gallons of green tea have been consumed at bureaucrat meetings to arrive at the same conclusion and just do nothing.

7 ( +9 / -2 )

Things will get much worse before they even start to get better.

proxyToday  08:24 am JST

Nobody is going to like this but considering the life expectancy today compared to when the national pension plan (こくみんねんきん) was established, Japan need to increase the age when benefits are paid out by 3 or 4 years ASAP.

Raise it 88 years old? That should help people out.

3 ( +4 / -1 )

If there were really a labour shortage in Japan, then wages would increase; it's basic economics : low supply and high demand equals higher prices (in this case wages).

But this won't ever happen in Japan.

Wages are not going up for 90% of Japanese people, at least not in a meaningful way.

There isn't a labour shortage in Japan.

Are you seriously telling me that if your local 7/11/Joyfull etc. were to raise hourly wages to 2000+ yen per hour, that those positions would not be filled within a day? I rest my case.

-6 ( +10 / -16 )

This is a misleading article planted to plant the seeds in the minds of the sheep of letting in more cheap foreign labor in to keep wages down and Japan Inc rich. They have no interest in AI or such. That is just smoke.

There is no labor shortage in Japan. Only a shortage of firms willing to pay living wages, run efficient, be flexible on hiring non traditional folks (50+ or married women), etc. If you see a company complaining they cannot hire - you should suspect other things badly about them and take your business elsewhere. They are likely rotten.

-2 ( +11 / -13 )

They kind of need to revamp the education system, not just for students but for teachers. While testing is important, there is too much revolving on scores and not enough focus on creativity and using learned knowledge. Labor output from teachers is hampered by unnecessary red tape, unproductive meetings, and again, too much emphasis on useless scores.

6 ( +6 / -0 )

In other words too many jobs and not enough people. Great problem to have

Too many jobs that Japanese workers don't want. Because....the best jobs requiring skills and tech is more appreciated in China and working there offers greater reward.

In other words, Japan has the skills and tech and China does not.

Being sniped for the best skills and tech by China is bad in anyone's book.

IMHO, USA, as usual, is first mover in recognising that supply chain, innovation and labor has become a national security issue of generation significance. So the sooner USA's allies follow its lead the better off they will be. If for nothing, at least they will be immuned to China's trade weaponization and coercions.

-2 ( +1 / -3 )

Actually it is easy to get a work visa in Japan compared to the US. The problem now is wages on an international comparison have dropped drastically in Japan and there are few if any newcomers. The coronavirus immigration blockade also soured a generation of potential japanophiles.

1 ( +7 / -6 )

@Noriyuki Suzuki

I appreciate you can't upset your masters, but I believe in the subtle underlying narrative of this piece, being, global competition is not just about what's best for corporations, given China, it's now also about what's best for the people.

Time to skill the local labor force, reward them accordingly and incentivize them to stay in Japan.

2 ( +3 / -1 )

There is no labor shortage. The evidence of one is steeply rising real incomes, in line labor supply and demand -- and that's certainly not happening!!

It's in employers' interests to crow about supposed labor shortages. They're never going to say everything is fine on the labor front.

In Canada, a rep from a car tire fitting chain told a news reporter the other day they'd offered 10 positions at near minimum wage: they got around 700 applications. And, yes, Canada is official having a labor shortage. Amazing how gullible people, and journalists and even economists, can be.

0 ( +5 / -5 )

The factor for tepid wage for years. No wrong. Seniority is bonus due to the experience factor alone. Low productivity but margin growth each finical year and 3% unemployment rate indicates BS on those factors. If you want to talk facts let talk about the tight fisted elite Management with their performance bonuses they excepted with wallets open without no flow on to 95% that work force that hit the KPA assigned to each department creating their growth in margins year after year without a pay rise. This economy fast talk make me totally sick and what is sicker is these elite management believe their own BS.

-3 ( +1 / -4 )

David BrentToday  07:41 am JST

There is no labour shortage in Japan. Raise wages, and watch this fake problem disappear. There is a lack of jobs paying a living wage; that is the crux of the issue.

I do not understand.

It would mean these people are currently staying home earning nothing. If it is the case how could they live?

-3 ( +4 / -7 )

It would mean these people are currently staying home earning nothing. If it is the case how could they live?

Sponging off parents.

-1 ( +7 / -8 )

Japan labor market set for change

doubt it

huge worker shortage looms

no, low wages continue

The government is getting more serious about reforming the labor market

which government? the one run by some joker who always runs away from Japan and is never around? Or the 80+ year old Aso, who has already fossilized?

-6 ( +6 / -12 )

Mr KiplingToday  09:06 am JST

Japan's tax system is designed for father to work in a big company and mother to stay home in a house they have bought. Women are encouraged to become full time housewives. 

This is not the case. Only one person working and getting 12M a year vs 2 people getting 6M a year, the latter wins in every aspect due to the taxation and system that only head pf house hold counts when doling our child support or other benefits. The former is basically in a hole and has leas take home pay and gets zero benefits.

4 ( +4 / -0 )

I think one of the problem is that it is difficult to find a decent job past 55. I think that there was an article here recently saying that 50 % of the 65 to 70 wanting to work could not find a job.

5 ( +5 / -0 )

Prime Minister Fumio Kishida now wants to see pay hikes that will be "several percentage points higher" than the country's inflation rate.

This is too radical for companies in Japan. Not even Japanese companies, but the international companies that have been in Japan market for a few decades.

Annual pay hikes are on average 2%~4%, which with current inflation does not even scratch the surface.

Now, asking companies to hike the wages several % higher than inflatin rate... In real world terms that should be 15%~20%, considering JPY's plunge and increase in average cost of living (utiities, commodities, groceries).

But with Jgov's official stance on inflation rate is like what? 2%, 3%?

Again, all this talk, and in the end Jgov would only demand companies 6%~7% salary increase, which is shambolic.

Foreign companies are also no different. They always lowball, because that's the market in Japan.

With such conditions, you cannot attract enough skilled workforce from abroad.

-3 ( +2 / -5 )

Some weeks ago there was an article mentioning that more than 50% of unemployed people over 60 years were unable to find a job, so, this is strange to have a shortage of workers but ageism, age prejudice is much stronger than the market needs.

8 ( +9 / -1 )

Along with wages, having some level of teaching your foreign workers valuable skills and certifications would be amazing. Once I finally got out of the teaching hustle it was a big hurdle for me and everyone I now interview. Coming off several or more years of just teaching and hopefully speaking Japanese is nothing when interviewing in Japan. Sadly many organizations offer nothing to their workers career on that side of things. People end up having to do it themselves, meanwhile the average Japanese employee has these opportunities yearly( if they take them that is)

sucks seeing good people with basically nothing to offer our company beyond willing to learn while being 30 and desperate to escape ALT or Eikawa life

2 ( +3 / -1 )

If Japan doesn’t increase wages the only people coming to work will be the developing countries and Japan will not improve services technology or business development. Mediocre salaries for educated first world counties talents keeps them going to other destinations. Time to wake up.

1 ( +1 / -0 )

There is no labor shortage...

per se

But there is a shortage of labor at of certain cost, or skill.

Obivously there's a massive shortage of 'cheap' labor, hence all the foreign imports (cough cough, technical trainees), and of course a shortage of highly skilled labor, because they've gone to Taiwan and China, eg Rapidus is finding it very difficult to find 'local' workers with skills in chip making for its Hokkaido plant. Similarly, some chip packaging companies have also moved their entire operation to China.

-2 ( +3 / -5 )

There is no labour shortage in Japan. Raise wages, and watch this fake problem disappear.

exactly!, what there is a shortage of are companies that refuse to raise wages substantially, many of these companies are making record profits yet refuse to invest in their staff by offering better wages to retain workers.

there are literally millions of house wives that are very educated and skilled, my wife being one of them.

her last job was a good wage but the hrs were far too long. if they reduced hrs by 20% payed the same wage im sure shed go back to her last job. or raise the wage by 20% and theyd be lining up

8 ( +9 / -1 )

One never reads about labour shortages or poor wages in the political market, all these ministers and their hangers on get exorbitant wages for very little work, or in fact the very little time they actually do work. The vast majority of these quasi officials are surplus to requirements and have no 'real' set purpose. Just look, the next time you see a government minister or what ever, going abroad or some where at home, there will be an abundance of these clip board carriers going along for the free trip abroad......all expenses paid.

3 ( +4 / -1 )

They should change the holiday law to make the number of paid holiday dependent on number of years worked not in specific company, but all companies in total... If you finally reach the annual 20 days of paid leave, changing job to start form zero sounds riddiculous...

Also, introduce sick leave like in most civilized countries, do not force people to waste holiday for sickness recovery... I think these are the biggest problems with Japan labor law

0 ( +0 / -0 )

Labor shortage? There isn't such a thing. There's enough labor everywhere and enough people having time to work fully or a few hours or even at night or weekends or on specific call. Maybe it's only not well paid or work that is not even paid at all. Look, I don't find any job offers in my letterbox, also not in those local printed papers they put into it. The only seldom offers are the similar distribution of flyers (means they distribute those flyers for finding someone for distribution of flyers, how sick is this lol) or a few volunteer work offers where nothing is paid and I would have to pay for transportation, tools, clothes, food etc, how sick is this lol) or the yearly post office work campaign around new year's season. No change of that for years, so you can't tell me that companies now have begun to really and honestly search for staff by all means. They in fact show zero or low effort to find someone fitting and available, so I guess that's also what they would pay afterwards if instead people searched successfully. They have all the money, so they can afford and should write an job offer letter and pay for the stamps, not me. Why should or how could I?

-1 ( +0 / -1 )

Employer: Would you like to work gruelling hours for peanuts?

Person: Not really, no.

Government: What could possibly be done to solve the labor shortage???

0 ( +4 / -4 )

The elite and those with vested interestests in companies have it all. The minions get nothing.

Remember companies profit are always existing, but hardly ever give back to the employees.

The current strike in the USA in the automobile sector is an example to fight this system. Japanese have forgotten how to struggle against that but they should.

The wages in Japan are appalling in view of the work conditions (no holidays, no work agenda HR adaptation, etc.)

-3 ( +3 / -6 )

I have corrected the headline-- "Japan labor market set for change as huge **very low wage worker shortage looms" **

-1 ( +4 / -5 )

Massively misleading article. Worker shortage ONLY exists in the low paying manual labor and services sector, i.e. under 3M jpy annual salary jobs.

There is a huge worker surplus in high paying and knowledge based white collar positions, which is experiencing mass layoffs this year, with the layoffs expected to accelerate in the next 5 years. 30% of jobs above 6M yen will be gone by 2030 would be my prediction.

1 ( +1 / -0 )

This is the second article in two days where they are talking labor issues here, ultimately bouncing around this discussion of foreign labor needs, but again for crap jobs. Japan will never change just accept it, country has been on the decline for some time now, losing to places like Singapore, Malaysia, Taiwan, Thailand to name a few as far as attracting highly skilled expats. This country has a fascination with robots, so might as well let them start doing these cheap labor jobs they expect foreign workers to fill. We know the Japanese themselves won't do them. Aging population, low birthrate, low wages, costs for everything increasing, dependant on other countries for energy and raw materials because they have none of their own, future is bleak here, prove me wrong.

0 ( +2 / -2 )

The world's gone mad.

-1 ( +0 / -1 )

This is nothing but a cry for opening the flood gates to immigration!! The media has it on full blast once this happens and I can see it now all the little neighborhoods pooping up in Japan with their foreign populations in them will only bring a mix bag of nuts. Look at the US immigration and people from all over it is doing nothing but adding to total confusion with all the other people demanding inclusion being basically sponges. The majority men with no education and skills.

0 ( +2 / -2 )

As I have commented before there are several significant solutions to solving Japan’s labor shortage. Japan must do the following contemporaneously:

Raise the minimum wage.

Mandate equal pay for equal work.

Improve immigration policies to allow workers with families to revive abandoned farms in rural communities.

Allow the immigration and naturalization of workers with needed skills to address the short fall of the current and future labor market.

Remove the glass ceilings that block the upward mobility of the female labor market

0 ( +0 / -0 )

Japan will never have a large demographic of immigrant workers on the path to citizenship because that would one day upset the power structure.

1 ( +1 / -0 )

Look at the US immigration and people from all over it is doing nothing but adding to total confusion with all the other people demanding inclusion being basically sponges.

I'm surprised to read stuff like this^^ on JT. But I'd like to point out that Elon Musk, Peter Thiel...etc. etc. most of the scientists on SpaceX, Blue Origin etc. etc. are immigrants.

To blame immigrants for the failure of a state is just daff and ignorant, immigrants in USA don't even get to vote let alone any lobbying power to change the course of the state.

Just because Japan has a largely anti-foreign skilled workers policy does not necessarily mean it's more successful at skilling up its own workers. I know for one thing, gen Z who I see in remote work paradise like Zanzibar, Bali, Bahamas etc., are mostly western European, US, Chinese, and continental Africans BUT rarely Japanese, and I would guess it's because their country of origins has cultivated connections to the rest of the world, enabling them to generate income from the modern 'connected' world.

Japanese gen Z's absence was a surprise to me, and certainly their presence only in Japan, and only on US created Youtube, Etsy is another surprise.

So IMHO, skilled immigration should be good for most countries.

0 ( +0 / -0 )

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