Japan faces worst shortage of full-time workers since COVID-19 pandemic

Japan is facing the worst shortage of full-time workers since the onset of the COVID-19 pandemic, with more than half of local firms understaffed, a recent survey showed.

Among the 11,000 local companies that responded to the January survey, 53.4% said they need more full-time workers, the highest since April 2020 and close to the all-time high of 53.9% in November 2018, according to the survey conducted by Teikoku Databank Ltd, a nationwide company involved in financial research and support services.

The information service sector appeared to be most in need of full-time workers, with shortages of system engineers, followed by construction, Tokyo-based Kyodo News reported on Sunday.

Some 30.6% of the firms, according to the survey, lack part-time workers, with staffing firms feeling the most acute shortage of non-regular workers ahead of restaurants.

The survey came as economists keep an eye on whether the robust wage growth seen last year will continue.

Major Japanese firms will soon decide on their response to demands for pay hikes from their labor unions.

Some 68.1% of firms hit by labor shortages are planning to raise wages for full-time workers from April with the apparent aim of securing and retaining necessary workers.

Economists, however, warn that small and medium-size firms will find it difficult to keep pace with bigger firms that have the financial resources to continue hiking pay.

"We have to be vigilant against the risk of more companies going bankrupt due to labor shortages," the research firm said.

The number of such bankruptcies hit a record high in 2024.