TOKYO -- Japan's labor shortage shows no signs of abating, as data released Tuesday by the labor ministry showed job availability rising to a 44-year high. The country's unemployment rate also improved in 2017, falling below 3% for the first time in 23 years.
The ratio of jobs to job-seekers climbed again in December to 1.59 from 1.56 in November, the highest reading since January 1974, the Ministry of Health, Labor and Welfare said. This translates to 159 positions available for every 100 job seekers.
The improvement reflects the continuing recovery of Japan's economy, which expanded for the seventh straight quarter in July to September, the longest uninterrupted stretch of growth since 1994. But it also highlights a chronic labor shortage caused by the country's aging, shrinking population.
The results are in line with the results of the Bank of Japan's Tankan survey in December. The survey's index of employment conditions, which subtracts the number of companies reporting a shortage of workers from the number saying they have a surplus, came in at minus 31 for all companies, the lowest reading since 1992.
Small and medium-size companies feel the pinch most severely: Their employment indexes stood at minus 33 and minus 34, respectively, in the latest survey.
The labor crunch has encouraged more companies to fill the gap with foreign workers. The number of foreign nationals working legally in Japan soared 18% on the year to 1,278,670 as of the end of October 2017, the fifth consecutive year of increases and the highest number since businesses were first required to report the number of their foreign workers in 2007.
Despite the record number of job openings, unemployment rate in December ticked up to 2.8% from 2.7% in November, data from the Ministry of Internal Affairs and Communications released Tuesday showed. But, said Marcel Thieliant, senior Japan economist at Capital Economics, "The continued rise in job vacancies suggests [unemployment] will fall to fresh lows before long."
For 2017 as a whole, unemployment declined 0.3 percentage point from the previous year to 2.8%, the lowest level since 1993, when the figure hit 2.5%.
The tight labor conditions do not appear to be pushing up wages, as household spending fell 0.1% from a year earlier, the internal affairs ministry said. Household spending is a key indicator of the strength of private consumption, which accounts for nearly 60% of the country's gross domestic product.
Raising wages and private consumption remain key to Prime Minister Shinzo Abe's hopes to lift Japan out of deflation. He has called on companies to accept 3% pay hikes in this year's wage negotiations with labor unions.