Labor shortage cutting across all industries

May 9th, 2014 by Philip Brasor & Masako Tsubuku

A recent report in the Mainichi Shimbun says that Japan’s number one gyudon (beef bowl) chain has seen its business suffer due to lack of workers. Sukiya’s policy is 24-hour service, but in many areas the company can’t find part-timers who are willing to come in during the wee hours. The company has shortened operating hours at about 250 outlets, and a few have even been closed altogether due to the labor shortage. The Mainichi reporter talked to some former Sukiya part-timers who said when they worked the midnight shift they often ended up all by themselves, meaning they had to do everything — cook, wait on customers, clean up, etc. — alone. Besides being nerve-wracking, the job wasn’t worth the wage that Sukiya was paying, so they quit.

Sukiya in Tokyo

Sukiya in Tokyo

Sukiya isn’t the only restaurant company that’s having this problem. Watami, the popular izakaya (drinking establishment) chain that has been called by some a burakku kigyo (a “black company” that exploits its workers), has announced it will close about 60 outlets by the end of the year, which represents 10 percent of all their stores, though the company characterizes this move as being more about rationalization. More personnel will be employed at the remaining outlets in order “to improve the work environment.”

There’s a certain self-relexive irony at work here since the success of chain restaurants in the past 10 years or so was built on a greater reliance on part-time workers, for whom companies don’t have to provide benefits and whose hours and wages can be managed more flexibly. Invariably, the point is to save money so that the chain can be more competitive in terms of prices, but with the labor shortage expanding into other industries, part-timers don’t have to work for restaurants, which notoriously don’t pay well and usually involve evening and night work.

Consequently, to keep the part-timers it wants, restaurant chains are having to increase wage offers in want ads, a move that runs counter to the part-time strategy.

One Sukiya outlet mentioned in the Mainichi has a permanent help wanted poster in its window with a Post-It adhered to the spot where the wage is displayed. The manager changes the figure daily by hand in accordance to need. At one point he was offering ¥1,375 an hour for late night work, which is about ¥300 higher than what’s normally offered.

Sukiya is the newest of the gyudon chains, and it reached its No. 1 position in revenues in 2008 thanks mainly to its 24-hour policy and a management style that forced more chores on fewer workers. As the chain grew and offered a more diversified menu the workload per person became even heavier, thus resulting in higher turnover among the predominantly part-time crew. The irony is that experts say Japan’s economy is improving, and labor shortages usually mean good things for laborers because they can demand higher wages and better benefits, but the part-time/contract worker model that Japanese businesses have come to rely on since the labor laws were changed during the Junichiro Koizumi administration is difficult to shake.

Businesses still want the flexibility of non-regular employees, and, in a sense, many young people don’t necessarily want to be regular employees, either, but they want to be paid more. A employee of the Recruit Research Center told Mainichi that the main issue with the work force now is the surplus of unskilled people and the “lack of eagerness” on the part of the majority of part-timers, who don’t really care enough about work to become interested in anything long-term.

Consequently, the labor shortage is reaching into industries where pay used to be considered good, such as construction and transportation. In terms of the former, an increasing number of bids for reconstruction work in the Tohoku disaster area and new public works projects have gone unfilled because construction companies don’t have sufficient numbers of workers. There is an acute shortage of electricians and worksite foremen, according to an article in Asahi Shimbun.

Manufacturing has also suffered. One factory in Osaka that makes kitchen equipment wants to increase production due to heightened demand but it can’t because it can’t find workers, even when it offers higher pay. Toyota is now offering ¥329,000 bonuses to seasonal workers if they stay at the job for six months. Courier services were turning down orders in March because they didn’t have enough drivers to guarantee delivery before the consumption tax hike went into effect April 1.

Naturally, companies are trying to entice recruits with incentives, and hourly wages have been rising across the board for the past year. According to Recruit, there are 1.7 part-time openings for every person looking for part-time work in the restaurant field, an increase of 0.2 points over the past year and the highest ratio since July 2007, which is just before the economy went into an extended recession. For consturction, the ratio is 3.97. Conversely, for office work, which remains the job of choice among part-timers, the ratio is only 0.28. Non-regular employees now make up 37 percent of the work force as opposed to 20 percent in the early 90s.

Nevertheless, some larger companies are increasing the ranks of their regular employees. Uniqlo says it will make 16,000 of its non-regular staff into regular staff in the near future. Ikea has said it will do the same thing. Some companies are offering the trappings of regular employment to its non-regular staff. One ramen chain, Hidakaya, established a bonus system for its part-timers, up to ¥30,000 extra twice a year. Sukiya’s main rival, Yoshinoya, now provides an entertainment expense account for its store managers so that they can occasionally take their part-timers out for dinner and drinks to improve inter-staff communication, which may be a mistake. Obligatory after-hours drinking sessions is one of the reasons young people don’t want to work for major companies as regular employees. Why would they want to do it as part-timers?

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One Response

  1. utterly fascinating socio-economic evolution going on now in Japan.

    I post this a lot but it’s important to understand:

    http://research.stlouisfed.org/fred2/series/LFWA24TTJPM647N

    it shows Japan peaked at 20M young adults in the early 1970s (the original baby boom was sharp and short in the late 1940s), and they baby boom echo arrived in the early 1990s, peaking at 19M.

    But there will be no echo echo this decade, so the Japanese are down to 12M to be inducted into the labor force this decade.

    This is, I guess, both deflationary and inflationary. Deflationary in the sense that domestic demand has to fall with a falling population — less food, energy, housing, etc will be consumed by the Japanese going forward.

    Inflationary as long as Japan Inc needs to pull new workers from a falling labor pool.

    I think I’d rather be a random Japanese newborn baby than an American or most other nationality (Norwegian and German would also appear to be good bets given their robust, self-sufficient economies).

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