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Business Trends

Higher wages prod Japanese stores and restaurants to raise efficiency

Hourly pay hit record in October as personnel shortage exacted toll

A part-time worker at a ramen shop in Tokyo.
A part-time worker at a ramen shop in Tokyo.

TOKYO -- Businesses in Japan are paying part-timers better in hopes of hanging on to scarce labor, all while having to devise ways to cope with rising costs.

Average hourly wages in the metropolitan areas of Tokyo, Osaka and Nagoya hit a record 1,047 yen ($9.25) this October, up 2.6% on the year, shows data released Thursday by Recruit Holdings group member Recruit Jobs.

October, the 64th straight month of increases, was also when the nation's minimum pay benchmark rose. Minimum wages set by prefectural governments went up 26 yen on average that month, the steepest climb ever. The retail and restaurant sectors, which tend to rely on part-timers and generally pay less than others, logged big gains. Sales staffers got a 3% raise to 1,011 yen, while workers at fast-food joints enjoyed a 3.7% increase to 989 yen.

Average wages in and around the three biggest cities have stayed above 1,000 yen since spring, according to Recruit Jobs.

Higher wages for the part-time set -- roughly a fifth of the workforce -- have a positive impact on society. They improve standards of living and stimulate consumption. But for employers, they mean higher expenses.

"We're paying at least 20% more compared with a year or two ago," said a store owner for a major convenience store chain in a suburb of the coastal Shizuoka Prefecture city of Hamamatsu. Already hit by a personnel shortage, the store also must now compete for labor with a new Costco location that opened last year. The U.S. membership-only wholesaler not only offers starting pay of 1,250 yen an hour across Japan, but also automatic raises, generous benefits and an opportunity to transition to full-time.

Many in retailing and restaurants are coming up with plans to compensate for heavier labor costs.

Yoshinoya Holdings sank into the red for the six months ended August, reporting a net loss of 850 million yen. The beef bowl purveyor generated record sales, but labor costs rose more than expected. To address what President Yasutaka Kawamura calls a worker shortage of unprecedented severity, it will increase high-efficiency locations with counter pickup by an annual 100 starting next fiscal year.

FamilyMart offers employees across the country discounts on home electronics through a partner retailer as a retention perk. The FamilyMart Uny Holdings convenience store chain is also working to make its sales floor more efficient, doubling investments at existing locations to more than 60 billion yen for the current fiscal year through February.

Japan has roughly 15 million part-timers, a government survey shows. The demographic's growth has slowed in recent years after peaking around 2000. With the declining population of children, young workers aged 15 to 24 now make up less of the overall part-timer population. Seniors 65 and older account for a growing slice, reaching nearly 20%.

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