Labor costs hit 16-year high as Japan pays workers more

Jul 06, 2018 | News On Japan

Jul 06, 2018 (Nikkei) - Personnel expenses at Japan's large corporations have grown to their highest level in 16 years as a deepening shortage of workers has forced them to increase pay for part-timers.

These costs came to 13.38 trillion yen ($121 billion) in the January-March quarter, a level not seen since the same period of 2002, according to a Finance Ministry survey on companies with capital of at least 1 billion yen. The ministry used a moving average of the last four quarters to take into account seasonal fluctuations.The tally has risen 8.3% from a low in July-September 2013, and 6.6% over the past year.

Businesses have long curbed labor costs by employing many non-regular workers like part-timers, rather than regular workers with full benefits. But hourly wages for non-regular workers have increased due to labor shortages, pushing up expenses.

Part-time workers' hourly wages climbed 2.3% to 1,116 yen on average in fiscal 2017, according to the Ministry of Health, Labor and Welfare, topping the 1,100 yen level for the first time. Non-regular workers' compensation is improving more significantly than that of regular employees.

Labor costs for a broader pool of companies including smaller businesses reached 44.26 trillion yen in the January-March period -- back to the level last seen in October-December of 2008, immediately after the collapse of Lehman Brothers.

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