Robots set to be part of Japan's growth strategy

Plan for subsidies to boost sector to tackle labour shortage issues

By Kwan Weng Kin Japan Correspondent In Tokyo, The Straits Times, 17 Jun 2014

THE Japanese government plans to hand out subsidies to promote the manufacture of cheaper robots to solve the labour shortage issue in the nursing care and agricultural sectors and to increase productivity in factories.

This "robot strategy" will be part of the "third arrow" growth strategy being drawn up by Prime Minister Shinzo Abe, said a report yesterday by the largest-circulating Yomiuri Shimbun daily.

Mr Abe's much-anticipated growth strategy, which also includes tax cuts for corporations and other key reforms, is due to be unveiled later this month.

It is part of his plan to lift Japan's flat economy, with the first two arrows implemented earlier being fiscal stimulus and monetary easing.

Japan has long been a leader in advanced robot technology.

Now, Mr Abe wants his country to also be a world leader in the manufacture of cheap and easy-to-use robots, a sector that is expected to become increasingly competitive.

Japan hopes to treble the size of the domestic robot sector to 2.4 trillion yen (S$29.4 billion) by 2020.

According to government estimates, Japan's nursing care sector is expected to be short of about one million workers by 2025 as its working population declines.

Besides using robots to make up for the deficit, workers who have to carry patients around can be fitted with "power-assisted suits" or similar devices to make lifting heavy loads easier.

In agriculture, more than 60 per cent of farmers are over 65 years old.

The shortage of farmers could see a demand for driverless tractors for ploughing and machines that can help ageing farmers move heavy farm produce effortlessly.

Robots are also useful in times of disaster. Mini-helicopters fitted with cameras and sensors can be used to inspect damaged bridges or tunnels that are unsafe for human beings to be in.

The finalised growth strategy, which is likely to be announced on June 27, is expected to contain a long list of proposed changes, from labour reforms to raising the nation's fertility rate, and even allowing foreign domestic helpers into Japan so that Japanese housewives can work if they want to.

But perhaps the most anticipated proposal is Mr Abe's promise to cut Japan's effective corporate tax rate to the levels of neighbouring countries such as China and South Korea. This is to make Japanese firms more competitive internationally and to make Japan more attractive as an investment destination for foreign firms.

The present effective corporate tax rate is 35.6 per cent for Tokyo. Mr Abe wants to lower it to less than 30 per cent in stages over a few years, starting from next year.

Praising Mr Abe's initiative, the influential Nikkei business daily, however, said: "But as always, the devil is in the details."

The government has yet to decide how to offset the decline in corporate tax revenue.

Experts have suggested increasing the tax base, as 70 per cent of Japanese companies are said to be not paying any taxes now, mostly by claiming that their operations are in the red.

In an interview with Bloomberg recently, former Japanese premier Yoshihiko Noda described Mr Abe's economic policies as "a kind of voodoo economics", especially as the proposed cut in corporate tax would negate the hike in the sales tax from 5 per cent to 8 per cent from April this year.

Among the targets that will be included in the growth strategy is the doubling of foreign visitor arrivals to Japan from 10 million last year to 20 million by 2020 - the year of the next Tokyo Olympics - by easing visa rules for more countries in the region.

Japan firms struggling to beat labour crunch
Some offer shorter work hours for mums; others extend retirement age
By Hau Boon Lai Japan Correspondent In Tokyo, The Straits Times, 23 Jun 2014

COMPANIES have had to be creative, going beyond the usual wage increases, to retain or recruit staff as a labour crunch in Japan bites.

Dynac, which operates a chain of yakitori or grilled chicken outlets, said it will open stores in metropolitan Tokyo at half the usual 70 sq m size, with half the usual staff strength.

Watami, a major restaurant chain, is closing 60 of its 640 outlets across the country so that staff can be redeployed to the remaining over-stretched branches.

The restaurant business is one of the industries worst affected by the labour shortage, alongside other labour-intensive ones such as construction and retail.

In response, Watami and ca-sual wear giant Uniqlo have stopped a decades-old practice where employees have to accept transfers to branches across Japan - they now have the option not to move to another city.

Mr Shotaro Yano, a spokesman for Watami, said the firm faced difficulties in hiring part-time staff since February last year.

"With Japan's shrinking population, the difficulty in getting staff is expected to continue," he told The Straits Times.

The crunch has even led to one of Japan's major financial institutions, The Bank of Tokyo-Mitsubishi UFJ, allowing some 7,000 contract employees to unionise, a first for the bank.

Such workers previously had little bargaining power to improve their working conditions as they had to negotiate their contracts with the bank individually.

The impetus for change comes from the tightening of the job market, which began after December 2012, when Prime Minister Shinzo Abe swept into power and quickly implemented an aggressive regime of monetary easing and fiscal stimulus to boost the flatlining economy.

In April this year, there were 108 jobs available for every 100 job seekers, a situation not seen since July 2006.

The job ratio hit a low in 2009, with only 46 jobs for every 100 job seekers, when Japan was in the grip of a recession.

The tight market has seen wages rise across the board this year. A survey by Rengo, the Japanese Trade Union Confederation, found that monthly salaries for regular employees have risen by more than 2 per cent.

Summer bonuses are also up 8.8 per cent, a survey of big companies by major business lobby Keidanren showed.

The average hourly wage rate has risen from 940 yen to 972 yen (S$11.90).

But higher wages do not necessarily translate into successful hires in a tight labour market, as beef bowl chains Yoshinoya, Matsuya and Sukiya discovered.

In busy districts such as Shibuya, the three chains have all offered pay as high as 1,200 yen per hour, but still found no takers.

As Japan's working-age population is projected to shrink from about 80 million last year to 67 million by 2030, the labour crunch is expected to get worse.

While the government may accept some foreign workers to address the acute shortages in the construction and caregiving sectors, the preference is clearly to have women and the elderly take up the slack elsewhere.

Otsuka, one of Japan's largest pharmaceutical companies, has been years ahead of the curve in its recruitment, retention and grooming of women employees, achieving one of the highest rates of female executives in the country at 11 per cent, compared to the domestic average of 1.2 per cent.

Apart from maternity and childcare leave benefits that are more generous than legally mandated, Otsuka also allows flexible and shorter working hours for mothers, and has built in-house childcare centres at two of its major worksite locations.

But the firm is not resting easy.

"Other companies will have no alternative but to also pursue this approach, so we will need to constantly think about how we can ensure our company remains a highly appealing workplace for women," said an Otsuka spokesman.

On the silver front, Lawson, a top convenience store chain, is making its cash registers easier to operate in order to attract older workers.

Other companies like Daiwa Securities are hoping to hold on to their workers for as long as they can - the firm recently extended the retirement age for its sales staff to 70.

"A combination of an increased supply of female workers and hiring of the elderly could limit the decline in Japan's labour force to 0.4 per cent to 0.5 per cent a year over the next five years," said Bank of America Merrill Lynch economists Masayuki Kichikawa and Setsuko Yamashita in a research note.