Japan Bankruptcies due to labor shortages: Updated October 24, 2024.

Record 163 firms went bankrupt in Japan in April-Sept. due to staff shortages

Article Source: https://mainichi.jp/english/articles/20241007/p2a/00m/0bu/022000c

Ideas:

The hiring landscape in Japan maybe has changed significantly, and maybe some workers are unwilling to take jobs that many would have years ago.

The so-called labor shortage in Japan is real and probably is not going to change anytime soon unless Japan can find a way to increase favorable immigration policies which can provide good jobs for foreigners and not just the low-wage trainee jobs being offered.

For Japanese workers, they see and know many companies are giving wage increases, not only to workers at the company, but also newly hired workers with substantial wages to attract the best talent they can get.

Small and medium size companies that can't afford to pay the wage increases that large companies can afford are losing out.

And as the article suggests sectors such as the construction industry might actually want to pay the higher wages, but these days, many young workers don't want to work in the construction industry.

The logistics industry companies might be suffering because of the need for long work hours, as again, young workers don't want to work the long hours, that maybe their fathers did some time ago.

Sometimes good intentions by a government can make it difficult for some sectors as the case with truck drivers and overtime restrictions. Maybe the answer is less restrictions for some industries which are having labor shortage problems.

Small businesses of course feel the full effects of the labor shortage as they don't have the resources needed to hire more workers or pay good enough wages to attract any new workers.

The Japanese government, for example, should put into place immigration policies which can help small and midsize companies hire foreign workers to help them stay in business, and maybe allow them to offer a little lower wage than the minimum wage as needed.

What the new Prime Minister says is good but it doesn't solve the situation for small companies that can't afford hefty wage increases.

Again, the Japanese government, if needed, if Japanese workers are not going to work for small companies, they need to have some good immigration policies that can bring in the type of workers needed for the small Japanese companies.

Wage increases are good and needed, but the reality is, many small and midsize companies can't afford to match the wage increases of large Japanese companies and that is the main problem, as young workers know this, so they don't want to work for a small company that when they can get a job at a large Japanese company with better wages.

What the article suggests is good, but some companies can't afford to wait to prove they can earn good profits and sales from their core business. The waiting time might be too much and they will then be in a position to possibly go bankrupt.

Yes, large companies, for the most part, are not the problem, its the small and midsize companies that can't afford wage hikes or even afford to hire new workers, or even give their existing workers a good wage increase.

Unless the Japanese government changes some of its labor or immigration policies, not much is going to change, as Japan needs foreign workers to come in and work in the small and midsize companies and then the small and midsize companies can get back to business as usual.

Have a nice day!

Japan Capital Spending: Updated June 4, 2024.

 

Japan capital spending grows 6.8% in Jan.-March, up for 12th qtr

Article Source:  https://mainichi.jp/english/articles/20240603/p2g/00m/0bu/008000c

Ideas:

Capital spending is not like consumer spending, as companies have to spend a lot on the needed equipment, or new buildings, or new factories for their business.

Large name brand companies of course usually have the resources needed for capital spending but small and midsize companies might not have the available resources and have to limit their capital spending.

Labor shortages might be a challenge for some companies as they might have the labor needed to run the extra machines that a company orders or new factories that a company wants to add.

The weak yen can have some positives and or course it can have some negatives too, such as a weak yen might help Japanese exporters but hurt Japanese importers.

Some time ago, many Japanese companies were reluctant to pass on their increased costs to the next in the supply chain, but these days companies feel they have no choice but to pass on their costs.

The Bank of Japan has to make sure that the yen is maybe balanced to the point, if at all possible, where both Japanese importers and Japanese exporters can see some benefit, but that might not really be possible.

Not to criticize, but it seems there are two competing ideas here. For example the headline reads "capital spending grew 6.8%", while the above line says a"0.8 percent drop in capital investment."

But yes, the latest news indicates the Japanese economy did shrink, again, which it sometimes does, but even a 0.8 percent decrease is not that much for the 4th largest economy in the world.

And, again, the idea that the Japanese economy shrank is not news or not that much of a shock as the Japanese economy has been stagnant for the better part of three decades.

So lets continue on with the idea that capital spending increased and not decreased in the Japanese economy.

But again, there could be a variance between large and small companies, as usual, as the large companies have the needed resources to increase capital spending while the small companies might be limited in how much they can spend on capital spending.

Regarding labor shortages, and robust profits, companies might be increasing wages as a way to reduce labor shortages as new workers or workers looking to change jobs are looking for better pay/wages, as they know companies now are willing to pay more.

Inbound tourism, or foreign tourists going to Japan, might be the main economic driver at this time, as they spend a lot in the Japanese economy, and service sector companies are able to recover from the pandemic, which hit them very hard, compared to the manufacturing sector.

And yes, rising costs, might be the reason for the increase in capital spending as new equipment, new buildings, and so on have seen increased costs most likely due to the weak yen.

And yes, again, maybe many small and midsize companies related to the cost of new equipment, buildings, factories, and so on might have to limit what they spend related to such things.

Again, not to criticize, but the phrase continuing to "recover moderately" seems to used a lot in these articles, as way to make sure the Japanese financial markets remain calm and don't panic.

The main economic slowdowns seems to be in the EU and of course in China, as the US seems to be moving along with minimal disruptions.

The Japanese economy is far from where it should be, but at the same time, its a very stable economy, as its not like Argentina or even like some of the EU countries.

But the Japanese government and the Bank of Japan needs to stay the course on wage increases and maybe even tweaking the key rate some to move it closer to where the US is so that the Japanese yen can get a little stronger but not too strong.

Have a nice day and be safe!