Japan's Job Outlook Brightest in Decades. Pity About the Wages

(Bloomberg) -- Japan’s remarkably tight labor market just got even tighter. The jobless dipped again on Friday to around the lowest in almost three decades while the number of jobs available for each applicant has remained at a 44-year high since last year.

Even in easy going sub-tropical Okinawa, which has traditionally lagged mainland Japan in economic development, the ratio is near a record high.

With about two openings for every job-seeker, Tokyo and manufacturing-bastion Aichi prefecture are among the best places to look for work. Even the laggards at the far north and south of the country -- Hokkaido and Okinawa -- have very tight labor markets. Economists doubt the jobs market can get much tighter.

That’s all welcome news for Prime Minister Shinzo Abe as he prepares for local and upper house elections this year. He can use the labor market to argue that a fundamental improvement in Japan’s economy through his Abenomics policies is still in place despite concerns from the slowdown in economies overseas.

The remarkable tightness is helping increase pay -- but not by a lot, mirroring a weak wage impulse seen across the developed world. Pay in Japan is estimated to have risen just 0.9 percent in February from a year earlier. That’s well short of the 3 percent economists say is needed to drive spending and prices toward the Bank of Japan’s 2 percent inflation goal.

A breakdown of job openings shows more positions available in medical services than any other sector. The country’s aging population requires more care, and that demand is only going to increase as Japan’s baby boomers get into their mid 70s in the 2020s.

More workers from abroad are needed to make up for a shrinking labor pool. Apart from the impact of the financial crisis in 2009, the number of job applicants has been on a falling trend in Japan.

Over the next five years, the government is bringing in more foreign workers for sectors that are suffering labor shortages, but that will only plug about a quarter of the labor shortfall.

©2019 Bloomberg L.P.