Japan’s labour demand holds steady in positive sign for wages
JAPAN’S labour market remained relatively tight in November, keeping pressure on employers to boost pay in order to fill positions as companies prepare to engage in annual wage negotiations with unions.
The job-to-applicants ratio eased a tad to 1.28, meaning there were 128 jobs offered for every 100 applicants, the labour ministry reported on Tuesday (Dec 26). Economists had forecast the reading would be unchanged at 1.30.
A separate report from the Ministry of Internal Affairs showed the unemployment rate held steady at 2.5 per cent in November. The number of workers rose by 560,000 from the same month a year earlier, marking the 16th consecutive increase, while those without jobs rose by 40,000. The number of female workers rose by 420,000 from a year earlier. On a month-on-month basis, there were 260,000 more workers in November than in October.
While Japan’s labour conditions have loosened somewhat since the peak of the pandemic, the country’s jobless rate remains the lowest among nations in the Organization for Economic Cooperation and Development. As for labour demand, the job-offers-to-applicants ratio fell precipitously towards the end of the pandemic but has since edged higher. Economists say the trend indicates some workers are voluntarily quitting jobs in order to pursue better opportunities as more companies raise salaries.
Labour shortages are becoming increasingly severe across industries, particularly in the services sector. The Bank of Japan’s (BOJ) latest Tankan survey showed that non-manufacturers experienced the worst workforce tightness in more than three decades, as inbound tourism and domestic demand for travel and dining continue to surge after pandemic restrictions were eased.
The number of bankruptcies due to manpower constraints reached 206 this year as at October, the most since 2014 when the survey began, according to a report by Teikoku Databank. The data firm also noted that the construction and logistics sectors are facing the most serious challenges, and the trend may persist.
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Data Friday showed that service prices rose in November at the fastest pace since 1993 excluding the impact of sales tax hikes, indicating that high demand is creating upward pressure on wages for workers in related businesses.
Tightness in the labour market increases the likelihood that companies will once again to boost wages aggressively as part of next spring’s annual wage negotiations, which could spur the virtuous wage-price cycle that BOJ officials have been waiting to see as they mull a potential move towards policy normalisation.
In a speech Monday, governor Kazuo Ueda noted that labour conditions have tightened even relative to last year, helping to support wage growth and spur workplace efficiency.
“Changes have been seen recently as the labour market has tightened, such as an increasingly active labour market for regular employees looking for new jobs,” Ueda said. “These developments are also expected to benefit the economy as a whole, as they promote the appropriate allocation of human resources to areas where they are most needed.” BLOOMBERG
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