Japan Inc. steps up hunt for full-time workers

May 31, 2017 | News On Japan

May 31, 2017 (Nikkei) - Japanese companies are increasing hiring of full-time employees as they scramble to secure workers amid a labor shortage, raising hopes that the tight demand will translate to higher wages.

Japan's seasonally adjusted ratio of job openings to applicants hit 1.48 in April, the highest in 43 years, according to data released by the Ministry of Health, Labor and Welfare on Tuesday. The ratio of full-time job openings to applicants, which is close to surpassing 1 for the first time at 0.97, is most indicative of the tight labor market. That is the highest figure since Japan started compiling such statistics in November 2004.

In the last few years, Japanese companies have used female or elderly part-time workers to make up for the country's labor shortage. From 2012 to 2016, nonregular employees increased 11% while regular employees grew just 0.7%, according to the ministry's labor force survey. Since wages for nonregular positions are relatively low, the increase in the number of such hires had little impact on wage growth.

Fixed wages, whose growth is closely linked to consumption, only rose an average of 0.5% per year over the same period. During the bubble economy of the mid-1980s to early 1990s, such pay grew by around 4% a year, fueling a virtuous cycle of hiring and consumption -- in contrast to Japan's current economy.

But against the backdrop of a global economic recovery, hiring of full-time workers is now growing steadily. And experts are focusing on whether Japan will reach a critical juncture where an improved labor market accelerates the pace of wage growth.

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