"Tourists Should Be Welcomed..." Japan Struggles with Labor Shortage After Lifting Restrictions

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As Japan prepares to lift the restrictions it imposed during the COVID-19 pandemic and allow visa-free individual travel starting next month, restaurants and lodging businesses are reportedly facing severe labor shortages, according to a report by Nihon Keizai Shimbun on the 26th.

According to the report, a survey conducted by Japanese data research firm Teikoku Databank on 12,000 domestic companies found that the proportion of companies responding that they are "short on labor" was 49.3% for regular employees and 29.1% for non-regular employees in August. This is the highest level since the COVID-19 outbreak. Nihon Keizai noted that this approaches the 2018 level when labor shortages occurred due to an increase in foreign visitors to Japan and construction expansion in preparation for the Tokyo Olympics.

Looking at the labor shortage situation for non-regular employees by industry, the lodging sector, including ryokans and hotels, recorded 67.9%, an increase of about 35 percentage points compared to the same month last year, marking the highest level since the COVID-19 outbreak. The restaurant industry saw an increase of 32 percentage points to 76.4%.

The Japanese government has announced that starting from the 11th of next month, it will significantly ease regulations to allow foreigners to enter Japan without a visa. The existing daily entry cap of 50,000 people will be removed, and visa-free entry and 90-day stays, which were suspended during the COVID-19 spread, are expected to be reinstated. To revive the tourism industry, the Japanese government also plans to distribute domestic travel discount coupons to its citizens.

A representative from Japan Dive, a company specializing in labor services for tourist accommodation facilities, said, "With labor that flowed into other industries during the COVID-19 pandemic not easily returning, lodging businesses are anxious as an increase in foreign visitors to Japan is anticipated."

Given this situation, hourly wages for part-time workers in the food and retail service industries in Japan continue to rise. Fast Retailing plans to raise the hourly wages for part-time workers at its subsidiaries Uniqlo and GU after autumn. Uniqlo raised wages by an average of 3% since March but aims to secure labor through additional increases. Some restaurants are responding to labor shortages by not extending business hours and increasing their days off.

Nihon Keizai pointed out, "If labor shortages continue and disrupt economic activities, it will pose a significant burden on economic recovery following the normalization of corporate activities."