Japan Labor Shortage: Updated March 17, 2025.

Japan's shortage of full-time workers at worst level since COVID

Article Source: https://mainichi.jp/english/articles/20250309/p2g/00m/0bu/016000c

Ideas:

The labor shortage in Japan has been a long time coming as there are many reasons for the labor shortage.

One reason for the labor shortage might be government policies or many company policies that force Japanese workers to retire at at 60 or 65, while many might want to keep working because of financial situations or they want to keep active.

Another reason might the long-time challenge of Japan's low birth rate, due to maybe not so good treatment of women in the workforce with forces or expects women to leave a company once they get married. Of course Japanese women, in many cases don't have high level management positions in Japan.

Another reason might be Japan's immigration policies which, for the most part, doesn't help with Japanese companies who want to hire foreign talent but the immigration process is not kind to them.

The add in the normal global situation where births are down in most advanced countries and Japan is no exception as it has one of the lowest birth rates among advanced countries.

Japan can reduce it labor shortage if if does on of three things. The first is to get rid of the forced retirement age of 60 or 65 and let those who are able and willing to work continue to work like in the US.

The second is to give Japanese women better jobs in companies and then they would be more willing to continue to work and not quit after they get married. Many Japanese women are tired of just low-level menial jobs and want more and better jobs in Japan. 

Another is to improve the Japanese immigration system that promotes the best talent globally and help them find jobs in Japan as that would go a long way to helping reduce the Japanese company labor shortage.

Unfortunately Japan has a rigid hiring system that doesn't promote change and is not flexible and unable to change with the times.

If Japan re-tooled its immigration system that allowed more foreign workers, there would be less shortages in Japan, but the immigration system is very rigid and very inflexible.

Part of the problem is the Japanese work culture with long hours and rigidity that might be a big reason for many leaving a company when they have to instead of a more flexible work culture and a better work-life balance, older holders might be inclined to keep working for a company instead of counting the days down just to get out of there.

Increasing wages is very good idea as yes, it will help retain existing workers and help attract new workers to the company. 

But again, if workers could stay past age 60 or 65 with a wage increase you would probably see many wanting to stay which can significantly reduce a company's labor shortage.

Wage increases are good but Japanese companies need to improve their work-life culture and not have workers working long hours and or on weekends and that, these days, turns off young workers and even older workers too.

The Japanese government needs to step in and help some or many small and midsize companies and not just let the market decide who will survive and who will not.

Not all companies have the resources needed for wage increases and if they can't they might not be able to hire any new workers and the workers they have are going to leave and go to companies that are offering higher wage increases.

This might be considered a form of market failure or even a form of market power where some companies know if they increase wages they can raid another company and get that company's workers as the other company just doesn't have the resources to match what the other company is able to do.

Have a nice day!