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Japan Labor Shortage

Masayuki Morikawa, the Vice President at The Research Institute of Economy, Trade and Industry (RIETI) has published his research titled: “Hidden Inflation: Japan labor Shortage and erosion of quality services.

The economist has reported that Japanese economy is suffering from the worst labor shortage since 1992.

On this research paper Masayuki Morikawa is trying to find out what will be the impact of the labor shortage.

He discovers that the Japan Labor shortage has led to declining in quality of goods and services. The situation will worsen with tightening labor market.

Japanese unemployment rate is currently 2.7 percent which is the lowest since 1993. The problem is that the prices of goods has not changed. This means that there is hidden inflation.

The sector likely to be most affected are: transportation services, lodging and restaurants. Right now there is a high demand for labor in Japan but the supply is not catching up.

The declining quality of services is characterized by “lengthy wait in the supermarket checkout points.” The other services affected are: taxis, hospitals and door-to-door delivery of parcels.

Masayuki concludes that:

“lower quality services for the same price means a price hike.”

Thank you.

Reported by:

Geoffrey Kerosi,

Public Economist

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