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Free AccessREPEAT: MNI: BOJ Kuroda: Japan To Overcome Labor Shortages
Repeats Story Initially Transmitted at 06:34 GMT Dec 26/01:34 EST Dec 26
TOKYO (MNI) - Japanese firms are likely to overcome potentially
growth-choking labor shortages by investing in innovation and human resources in
the current modest economic recovery phase, Bank of Japan Governor Haruhiko
Kuroda said Tuesday.
In a speech to the Keidanren business lobby, Kuroda also repeated his
mantra that now that the economy is emerging from years of deflation, it is
better for companies' competitiveness to become more positive in their outlook,
investing in equipment and paying decent salaries to quality workers.
The governor said he was aware that some firms were declining orders from
customers due to labor shortages and others were concerned that the acute labor
shortages might constrain economic growth.
"However, I do not share this pessimistic view," he said. "Past experience
shows that in the process of overcoming labor shortages, Japan's economy boosted
its growth potential through individual firms' efforts to raise their
productivity."
Japan has repeatedly proved that something that initially was considered as
a constraint on economic growth turned out to be something that led the economy
into a new phase, he said.
Japanese firms survived the two global oil crises of the 1970s by making
the economy highly energy efficient, he said, adding they also successfully
coped with the power supply shortages and supply chain breakdown caused by the
2011 earthquake and tsunami in northeastern Japan by increasing in-house power
generation facilities and rebuilding or relocating production sites.
"While many firms have already started to address labor shortages through
fixed investment and other measures, it is important for firms to take full
advantage of business opportunities by staying ahead of their competitors, with
a view to deploying their available human resources effectively," Kuroda said.
"In order for firms to further raise their growth potential, they also need
to secure talented human capital by paying the appropriate wages."
Some firms have shaken off the deflationary mindset and have proactively
embarked on new initiatives, he said.
"When more firms follow suit, this will give rise to a virtuous cycle in
the economy as a whole, with prices rising moderately as wages and productivity
increase, leading to sustainable economic growth," he projected.
Kuroda repeated the recent assessment of the central bank that wage and
price hikes are relatively sluggish compared with the past patterns but that the
mechanism of raising wages is working.
"It cannot be denied that, relative to the strength of the economy and
degree of labor market tightening, the pace of increase in wages is more
sluggish than in past recovery phases," he said.
He also repeated that there is still a long way to go before the bank can
achieve its 2% price stability target.
But Kuroda noted that during the current economic recovery, "we have seen
the mechanism in place by which labor shortages exert upward pressure on wages,
which encourages firms to raise sales prices and work toward raising labor
productivity."
"Going forward, supported by highly accommodative financial conditions, the
economy is likely to continue expanding firmly with labor market conditions
tightening further," he said.
"It is expected that this will reinforce the mechanism by which prices and
labor productivity rise along with wages, encouraging households and firms to
increase expenditures."
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.