Japan’s Competition for Labor is Shrinking
Japanese students. Japanese companies are scaling back on hiring and expanding instead on developing talent to compete with Chinese rivals who’ve been rapidly growing in the same field. Already, Japan’s technology and business organizations have expressed disappointment with President-elect Donald Trump, and more losses could be ahead for a country already seeing a population decline. “Everyone around here is unhappy about Trump,” said Hitoshi Takahashi, senior managing director at The Boston Consulting Group in Tokyo.
“Companies don’t want to hire, and that’s not good for the economy, because the sector is facing a labor shortage.” The shift in thinking makes Japanese companies less likely to take market share in fields such as artificial intelligence and robotics, especially in areas where they might compete with Chinese rivals, according to Takahashi.
“I think the national government can’t take this lack of demand seriously,” he said. Japan Inc. has made similar efforts in other areas. Toyota Motor Corp. recently said it would slash costs and seek an even deeper contribution from its suppliers in China, to help ensure its survival in a region that is key to its future. Since Japanese companies generally lack sales in the U.S., they’ve sought to enter the market through acquisitions. Some have even purchased robotics companies from Silicon Valley. Japan’s take on the technology — including home robots that can cook, clean and brush teeth — reflects its ongoing struggle to capitalize on its talent and skills to stay competitive.
“What’s good for the U.S. may not be good for Japanese companies,” said Masakazu Yamamoto, an economist at the Japan Research Institute. Last year, Japan spent about US$100 billion to acquire more than 2,100 companies, and Japanese companies were responsible for 82 percent of the $211 billion worth of overseas mergers and acquisitions in 2015, according to government data. With Japan’s population of about 126 million shrinking, companies have said they want to be more globally competitive.
With nearly three quarters of the population still over the age of 30, Japan’s working age population has steadily shrunk, meaning companies are relying on the export industry and government support to sustain growth.
Last year, the government launched a policy that allows manufacturers to pay a premium to hire an additional foreigner at their plants. It’s also started to allow more foreign workers into the country in the service sector, such as call centers. However, Japan is still seen as one of the most restrictive countries in the world on immigration, especially when it comes to highly skilled workers, an issue Trump has touched on.
Japan’s workforce shrank for the sixth consecutive year last year, falling 0.3 percent, despite offering perks such as tax breaks and low unemployment to attract new workers. Yet the number of new jobs actually shrank by about 5,000, data from Japan’s Labor Ministry show. Prime Minister Shinzo Abe recently said Japan needs to adapt its policy in light of the country’s labor shortage. Abe pledged a series of policies to boost the number of women and foreigners in the country last month, and he wants to ensure Japan has enough skilled workers when it hosts the 2020 Summer Olympics.
“If we don’t invest in our workforce and our capabilities, if we don’t raise the skill levels of our people, this will be a weakness,” Abe said.
Japan still has a long way to go in search of leveling the playing field for it’s competitive workforce. Maybe in the future our immigration laws will be laxed enough to hire more skilled workers from overseas or improve the quality of jobs here in order to remain competitive.