Kazufumi Yamamoto is having such a hard time finding waiters and sushi chefs to fill jobs at Ganko Food Service that he is going to boost wages for the first time in more than a decade.
"Positions remain open for several months, leaving some restaurants heavily understaffed," said Yamamoto, personnel head at the sushi-chain operator in Osaka. "The labour shortage has worsened to the point we have no choice but to increase pay."
The troubles facing Yamamoto, 43, reflect the pressures of a labour force that is shrinking, with just nine high school graduates on the hunt for a private-sector job now for every 10 just five years ago. Smaller companies reliant on part-time workers are bearing the brunt, pressuring them into wage gains that have yet to be reflected in the broader job market.
While nationwide pay fell in the year through January, and will probably rise less than 1 per cent this year, according to economists in a survey, smaller and mid-sized employers such as hand-cleaner maker Saraya are considering salary gains of 2 per cent or more.
The nation is within a few years of an overheated job market that makes inflation, not deflation, Japan's challenge, said Kanno, chief Japan economist at JP Morgan Chase in Tokyo.
"By 2017, the focus will shift to how to contain inflation - once the fire is set, it spreads really quickly. In two or three years, the wage increases will be more remarkable due to the labour market heating up," he said.