In Japan, labor crunch pushes businesses to reform

Wed Jun 4, 2014 7:05pm EDT
 
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By Yoko Kubota and Tetsushi Kajimoto

TOKYO (Reuters) - Don Quijote and Uniqlo, two of Japan's best-known mass-market retailers, aren't waiting for the government's new growth policies due later this month before implementing their own labor reforms.

While many labor-intensive businesses face a shortage of low-wage workers as Japan's economy perks up, discount chain Don Quijote Holdings (7532.T: Quote) is drawing five times more job seekers since it bucked tradition and eased application requirements.

Fast Retailing (9983.T: Quote), operator of Uniqlo casual clothing shops, is making many of its part-time workers into full-timers, at greater cost, to retain staff and boost productivity.

While some companies are coping by revamping practices established over decades of deflation, and perhaps hiking wages or raising productivity, others are having to curb operations or even shut down as staff become harder to find and to keep.

This worsening labor crunch could bring a reckoning for the recovery led by Prime Minister Shinzo Abe's reflationary policies, with bottlenecks either forcing a breakthrough to a more efficient economy, or leaving the country mired in stagflation as companies' costs rise and growth falters.

"The key is whether Japan can stimulate corporate investments to raise productivity," said Yasuo Yamamoto, a senior economist at Mizuho Research Institute.

Growth bottlenecks, he said, could be a necessary step to transform Japan into an inflation-minded economy, weeding out businesses that exploit cheap labor and replacing them with more productive companies.

A draft of the government's new growth plan obtained by Reuters this week includes calls on companies to offer more flexible options for full-time employment - similar to Uniqlo's measures - to expand opportunities for women, and would create skill assessment standards to make it easier to change jobs.   Continued...

 
REFILE - CORRECTING TYPO

Shoppers look at items outside the Don Quijote's central branch store in Tokyo May 28, 2014. REUTERS/Yuya Shino