Japanese firms say shrinking domestic demand is their biggest worry over the next three years while labor shortages are a close second, a Reuters poll found, highlighting the difficulties of coping with a dwindling and rapidly aging population.
Japan’s demographic challenges have for decades hindered efforts by policymakers to engineer a sustained economic recovery as the country’s graying consumers, lacking confidence in the future, tend to scrimp and save rather than spend.
Asked what was their biggest concern over the next three years, 40 percent of businesses cited the country’s shrinking market, the Reuters Corporate Survey showed.
“The domestic market isn’t expanding and there’s nothing we can do about it, ” wrote a manager at an auto sector firm in the survey conducted June 2-15.
But the problem of fewer customers is now being exacerbated by a lack of workers as population woes deepen, pressuring companies to raise wages and in some cases even cut back on services offered. Thirty-four percent of firms said the lack of workers was now their main concern.
“We’re having trouble both in hiring new grads and with pulling in people mid-career, especially those with technical expertise, ” said a manager at a metals and machinery firm.
Delivery firm Yamato Holding Co (9064. T) is one of many firms that has grabbed headlines recently, announcing in April it would cut delivery volumes and hike prices because it did not have enough workers.
The country’s working-age population has dropped 11 percent since its peak in 1995 to 77.2 million in 2015 and is projected to tumble to 45.2 million by 2065.
While most firms said they could secure sufficient staff over the next three years, 26 percent thought they wouldn’t be able to.
