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Labor shortage poses challenge to Japan's economic growth: report

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If population is falling then it's only common sense that the economy will shrink. Abe's fixation on "growth" is extreemly short-sighted.

The focus should not be simply on growth in a bid to outdo the "competition" but on citizens quality of life and, if you like, domestic product per person.

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, promoting the government to describe it as a "new phenomenon." The white paper stated that companies, aware of future economic and other risks, appear to be dragging their feet.

It's not a new phenomenon, businesses used the recessions as an excuse to cut wages and stop hiring full time employees, and outsourced what they could, while attempting to maintain profitability.

The labor shortage is real, and the quickest way for businesses to get people to work for them is to pay them a decent wage, but they won't, not with the threats of continuing instability.

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With a collapsing population, the economics of yesterday will continue to make no sense in Japan today and tomorrow. A steady state economy is what to aim for

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How about housing? It should be possible for everyone in a tent or frankly anyone in the country now to have a house given the declining towns across the country. Who is facilitating that arrangement? It's not like there aren't possibilities for improvement in Japan, just that no one is elected to think about them. This wouldn't have much economic value for the banksters but it would have significant social value for the nation. Add some quality Internet across the country and not just big cities and you have opportunities again.

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One of the things that exacerbates the labour shortage when you have a shrinking population is the proliferation of surplus 'zombie' businesses. We saw this after the bubble burst.

Take for example 2 pachinko parlours across the street from eachother. 20 years ago each parlour was busy and profitable, but as their customers have died off, their profitability has declined to the point where they are just breaking even. Yet they still each need to employ a cleaner, a person in the prize exchange booth, and all of the other essential staff. If one pachinko parlour were to shut down or they were to merge, they could cut down their staff and be profitable again, but instead they just fight for the same staff and continue to barely march on as zombie companies without any future.

The same scenario is now playing itself out in every Japanese industry; banks, insurance companies, convenience stores, family restaurants, amusement parks, etc. It's one of the big problems associated with population decline.

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 It should be possible for everyone in a tent or frankly anyone in the country now to have a house given the declining towns across the country. 

Ok who is going to pay for it?

 Who is facilitating that arrangement? 

Why should anyone be doing it in the first place? It's not up to the national government to hold everyone's hand all the time, but it's sounds to me like that's what you want.

Add some quality Internet across the country and not just big cities and you have opportunities again.

It's available if YOU are willing to pay for it, but again I dont think you are. I know it's available because why?

I have a dedicated fiber optic line connected to my house for internet only.

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I find this statistic hard to believe. If there is such a huge labor shortage why isn't there a plethora of jobs available? Also, why are people so afraid of losing their jobs and doing hundreds of hours overtime to keep their job? I'm sure that, all these people doing stupid amounts of overtime has very little (if anything) to do with a labor shortage. Japanese people are afraid to take any time off for fear of being fired. This does not reflect a labor shortage. It just reflects intimidation and threats by employers. People are given a dozen sick days per yer and only take them if they are near death. People are also given 20 days annual leave, but most are never used. Furthermore, if an employee wants time off, it has to be when the employer states it is a suitable time and must get permission from every senior employee right up the line. The stress of a Japanese employee is not their work, it is the intimidation and threats of the management that create the stress. This is why you see so many people running to catch a train that comes every three minutes in the mornings. It's also why you see so many broken minds.

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Excellent comment Disillusioned. You hit the nail on the head. The two other guys on my team wait obediently every day after lunch bell until our boss is ready to go to lunch with them. Then they all three rush to brush their teeth together after. Astonishing but true.

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I wonder if those claiming labour shortage are the ones who who put job adverts up asking for "female, under 25"

If employers could look past their obsession with age and gender they might just surprise themselves.

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I find this statistic hard to believe. If there is such a huge labor shortage why isn't there a plethora of jobs available?

The shortage seems to be a shortage of cheap labour.

Also, the female labour participation ratio in Japan is only 70%. Meaning that there are 70 women working for every 100 men. In America it's 82%, Canada 87%, and Sweden 89%. If there was a real shortage you would see increasing wages and more women enticed into the labour market. So far that doesn't seem to be happening.

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In analyzing consumer trends, the white paper refers to a growing number of "minimalists" among young people

Surely, this is a good thing, isn't it?

Perhaps a better option is to just accept the need for economic de-growth( An equitable downscaling of production and consumption that increases human well-being and enhances ecological conditions). IOW, a more mature economy not obsessed with GDP - but an economy that puts societal and environmental needs before the relentless profit needs of the market.

Japan(and the world) doesn't need more people, in more factories, making more Toyotas.

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The focus should not be simply on growth in a bid to outdo the "competition" 

In Japan there is no "competition". Japanese companies rely on the government to keep the yen weak so they can get a cost advantage on exports and keep imports out of Japan. Japanese companies collude to fix prices and control the domestic market. The most unique thing about Japan and it's economy is the utter lack of competition.

Competition is not a bad thing. Competition gives us the best product at the lowest cost. This does not necessarily mean that competition drives down wages, it doesn't. To be competitive company one must be efficient, and being efficient requires efficient workers and management. Such people command higher wages than workers who are not efficient.

There is no competition in Japan, and because of this, prices are higher.

Two years ago I wanted to expand my business into cycling. I noticed that Japanese shops tend to charge a lot for bicycles, and didn't keep much in stock, and prices on Rakuten and Amazon were also not very good. Having been in the business in America, I thought I could get into it here in Japan. I contacted various manufacturers, and was directed to contact their Japanese distributor. Lo-and-behold, these Japanese distributors wanted to charge me 40% more for bikes than I would have paid for them in America, Europe, or Singapore and Taiwan.

Yesterday I went shopping for camping equipment. I needed a tent for a trip we are planning next month. The tent I wanted was a Coleman 6 person model, the price and Victoria Sports and Amazon Japan was exactly the same, as were numerous other items I looked at. Price-fixing even extends to Amazon. The tent at Victoria sports was 49,800 yen, the same tent sells in America for $119.

You can see examples of price fixing everywhere. Movie tickets, the beer and alcohol sold at convenience stores, the fees charged for professional services like real estate and accounting. No matter which agency you use, they charge the same price.

Population is dependent upon resources. In Japan the main resource, money, is lost in antiquated and uncompetitive business practices, price fixing and collusion, and limiting supply to consumers (like imported food, which is heavily tariffed). When prices are high, people have less money to raise and feed children. Japanese people are educated enough to understand basic math. They can look at their salaries, and subtract the cost of raising children. For most, the sum left over is too small for them to swallow.

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In Japan there is no "competition". Japanese companies rely on the government to keep the yen weak so they can get a cost advantage on exports and keep imports out of Japan. 

Except the yen is strong and is not helping exporters. (once upon a time the yen was 360 to to the dollar, now that was weak)

I contacted various manufacturers, and was directed to contact their Japanese distributor. Lo-and-behold, these Japanese distributors wanted to charge me 40% more for bikes than I would have paid for them in America, Europe, or Singapore and Taiwan.

As you probably know very few complete bikes are made here now so of course import fees/tax etc are added to the price. Especially if they are buying low volume they won't get much of a good deal from the maker. There are quite a few Japanese makers of components that do not have local distributors so buying direct is possible.

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Some good recommendations in the report about working hours, etc. The ball is clearly in the employers' court. They are the ones who need to change their old-fashioned mindset. It seems the politicians are the ones coming out with progressive ideas.

A neighbor's son was recently hired out of college at a financial firm. She doesn't see him anymore, even though they live under the same roof. The Japanese private sector really needs to start acting rationally and reasonably.

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Labor shortage and economic growth do not necessarily correlate. Labor shortage promotes automation. It is proven by the chart of economic growth and population increases in the past.

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Excellent comment Disillusioned. You hit the nail on the head. The two other guys on my team wait obediently every day after lunch bell until our boss is ready to go to lunch with them. Then they all three rush to brush their teeth together after. Astonishing but true.

On the other hand, at my last company I knew a couple full timers who ducked out to the office cafe for an hour a day and did lunch on their own time. Sometimes decorated the office in hidden places with silly pictures they printed from the internet. Those are my kinda folks.

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...not with the threats of continuing instability.

Yeah. I have used that excuse with my kids for not raising their allowances since they were born, and they still accept it - not that they have much of a choice, though. Convenience stores and engineering jobs pay precisely the same wherever in Japan. That's why the most talented leave.

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I will gladly come over to become a proper gear in the machinery of the Empire of Rising Sun! Working for the betterment of society and happiness of fair people. I am even content working as a janitor, for starters. Just please call me over, I'd done with the outer world...

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Japan doesnt have the natural resources let alone ample supply of land to sustain economic growth comparable US/CAN/AUS.

Germany, France, other EU countries are facing the very same problems as Japan and their citizens are even more hostile/less welcoming to those who desire to immigrate.

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Japanese people are afraid to take any time off for fear of being fired.

Full-time workers cannot be fired for taking time off, they cannot be fired, or even demoted, for doing no work at all. The problem with business in Japan is the hive mentality, people are not at all afraid of being fired for taking time off, they are afraid of the shame which would come from asking for something that their coworkers wouldn't ask for. People don't come to work early and leave late because they are forced to do so by their employers, but because they are forced to by their work culture. It is embarrassing to come in after other workers, and embarrassing to leave before them. Some workers do in fact come in and leave at the appointed time, and do take their earned holidays, but this comes at the risk of being seen as someone who is selfish, and not a team player.

 Furthermore, if an employee wants time off, it has to be when the employer states it is a suitable time and must get permission from every senior employee right up the line.

But if an employee demands these days off, he or she will get them. In labor disputes between employees and companies, the companies almost always lose. A supervisor would never dare say "no, you cannot take those days off", he will simply say, "it's very difficult."

The stress of a Japanese employee is not their work, it is the intimidation and threats of the management that create the stress.

And why do workers submit to management? Because they are conditioned all their lives to do so. Any worker who tells their manager "I am going to use my accrued leave to go to Hawaii next month" may not be told by management that they cannot do so, no manager would ever dare. But because since they first began to learn, workers have been trained to obey their elders, to conform with their fellow students and coworkers, and never to be the nail that sticks out. In this situation, the workers who are afraid to take what they are entitled to are as culpable as any manager who tries to inhibit them from doing so. If I am told by a company or manager that I cannot collect overtime pay for working late, or that I cannot take my vacation at a particular time, they'll be very sorry that they did so. But because Japanese are brought up to be sheep who never disobey their shepherds, they end up as they are today.

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The "shortage" of labour mostly applies to minimum wage jobs. Even if they were filled they would contribute little to GDP growth. Companies must seek ways to increase the productivity of their workers and this should allow wages to increase. Importing cheap labour is not the answer.

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