Subscribe to read:

Japan business group chief calls for more foreign workers

Upgrade your account to read:

Japan business group chief calls for more foreign workers

Japanese business & finance

Japan business group chief calls for more foreign workers

Companies cite shortage of skilled labour to explain poor results

The Japanese labour market is at its tightest in 43 years © EPA

The head of the Japan Chamber of Commerce and Industry has warned of a “worsening and intensifying” labour shortage and called on the government to consider changing immigration controls on foreign workers.

The warning comes as Japanese companies, including Yamato, the largest parcel delivery group, have increased wages to secure drivers. Sumitomo Mitsui Financial Group, one of Japan’s biggest banks, set out plans this week to automate the work of 1,500 staff and cut 1m hours of work by the end of the fiscal year.

The comments by Akio Mimura, the chamber chairman and former president of Nippon Steel, were focused on labour shortages at small and medium-sized enterprises, the backbone of the world’s third-biggest economy that employs about 70 per cent of the workforce.

According to a JCCI survey of more than 2,700 SMEs published in July, the proportion of companies that reported labour shortage problems had increased for a third consecutive year to 60 per cent.

But larger listed companies have also begun to cite labour shortages as a deepening threat to their performance. At its results announcement this month, Motohiro Nagashima, president of Toli, which makes building materials, said sales targets were not met because of delays to completion of construction projects. “The delays to construction work periods have become chronic,” he said.

The JCCI head’s comments come as the job offers to applicant ratio remains at a 43-year high of 1.52 reached over the summer. Mr Mimura said the government should establish a panel to look into ways of modernising the immigration system and study broader issues that would make it easier for foreigners to work in Japan.

Mr Mimura’s remarks add to a rising tone of alarm being sounded by company heads, analysts and other senior figures from corporate Japan as decades of persistently low birth rates begin to shrink the overall workforce.

In April, Sadayuki Sakakibara, head of the powerful Keidanren business lobby, warned that labour shortages were becoming more serious, and that it had become vital to study the “practical use of foreign labour”.

Large convenience store operators such as Lawson and Seven & I have already begun to lean heavily on foreign workers to maintain their 24-hour operations in urban and rural Japan. The number of foreign residents in Japan has been increasing for five consecutive years since 2012 and the number of foreign workers passed the 1m mark for the first time in 2016.

Japan is entering a phase where, according to government estimates, the indigenous population is set to fall below 100m by 2053 and the working-age population below 50m by 2056.

Copyright The Financial Times Limited . All rights reserved. Please don't copy articles from FT.com and redistribute by email or post to the web.