Exchange Rate and Talent Shortage (3)

Although Japanese economy is presently at a certain level, it has not essentially got rid of deflation that has lasted for 20 years. For the last two years, visitors from other countries have increased due to the weak yen. It has led to successful results in the tourist industry such as hotels and industries related to commerce and services such as department stores and specialty stores. Leading manufacturing companies have also achieved successful results in the last business year ended in March, owing to strong exports.

However, it is hard to say that Japanese companies are in a secure situation because of the contexts such as unstable crude-oil prices, the global economic environment such as slowdowns in the economy of China and the U.S., refugee issues in Europe, and Middle Eastern political environment that is getting increasingly unstable. Uncertainty is expanding or spreading in fact. Damage caused by the 2011 Tohoku Earthquake and the Kumamoto Earthquake occurred in April this year was beyond our imagination.

We as Japanese would like to express our heartfelt gratitude not only for donations and relief money that were more than 50 billion yen and sent from Europe, Asian countries, and, not to mention, the U.S. within a short time but also for aids given by developing countries such as Bangladesh for the Kumamoto Earthquake. We would also like to appreciate foreign volunteers who are mainly from Asian countries and cooperate in recovery.

Even setting the recent situations aside, Japanese economy is facing essential problems. The first problem is that Japanese companies are and will be troubled by a chronic shortage of human resources. The second problem can be summarized that the unstable exchange rate and other elements are shaking the industrial structure of Japanese economy itself.

It is true that Abenomics has been effective. However, the environment of not only the overall Japanese economy but also the whole society is changing because of aging population with a declining birthrate and decrease in population, followed by shirking of the domestic market and a shortage in national annual revenue. There apparently are fears for the survival of micro, small and medium-sized companies, especially family-run business, all over Japan. Large companies are facing to a shortage of “human resources,” not a shortage of “labor.”

Labor is a quantitative matter about the whole labor forces, while human resources are a qualitative matter about people who are responsible for work. The domestic market shrinks resulting from aging population with a declining birthrate. At the same time, a shortage of human resources who are expected to support and drive businesses is becoming noticeable in many industries. It is theoretically obvious that a decline in number causes a decline in quality. However, the problem is that it is leading to question about high quality and reliability that have supported Japanese economy.

About the unstable exchange rate, although it is true that export is in good condition thanks to the weak yen, the weak yen also increased the costs of energy and oil related things such as electricity, and thus caused a loss in profitability. In addition, small and medium-sized companies that do not relate to export cannot make much profit, and only their cost rates have become worse. As a result, conventional win-win cooperative work between large companies and small and medium-sized companies that had been a good point of Japanese industrial structure has lost its shape, and the distribution of wealth has been distorted.

The human resource shortage and change in the industrial structure lead to further off-balance between industries to be promoted and human resources who are expected to drive the industries. I would like to summarize that ways of Japan’s survival can be found only when each company conquers these problems, not when administration including the national government alone seeks countermeasures.