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Japanese companies are scouring the country for staff, closing shops when they are unable to cover shifts and offering more permanent contracts as they struggle with severe labour shortages.

Companies across a range of domestic industries — from hospitality to construction and social care — have warned in recent days that a lack of workers is starting to hit business.

The difficulty of hiring staff highlights Japan’s declining population and the strength of its economy after five years of economic stimulus under Prime Minister Shinzo Abe. But the way companies are responding — via every means other than wage increases — suggests that shortages will not yet turn into higher inflation.

“Delays to construction projects are becoming chronic,” said Motohiro Nagashima, president of Toli Corporation, one of Japan’s biggest makers of floor coverings.

Announcing first-half results, he said that sales fell 1 per cent instead of the company’s projected 2 per cent rise, because widespread shortages of construction workers were delaying office and commercial projects in the Tokyo area.

Oriental Land, which operates Tokyo Disneyland and Disney Sea, warned earlier this year that it is struggling to find staff to run its restaurants and rides. “Hiring is going to get harder and harder,” said Akinobu Yokota, a company executive. The company said the shortage of ride staff has eased as of today.

One way companies are tackling shortages is by offering more generous permanent contracts, which provide job security and pension benefits. That policy has broken a decades long trend towards more part-time and contract work.

Panasonic Age Free, a division of the electronics company that provides social care, last week offered permanent contracts to all the staff at its hundreds of homes and daycare centres.

The company has 1,500 staff on six-month contracts, but from April next year those with a year of service will be eligible to become permanent employees with pensions, bonuses and a guaranteed job until retirement.

Staff shortages are particularly acute in elderly care as rapid growth in demand collides with the tight labour market. The company said it hoped to offset higher staff costs with lower spending on recruitment.

“By reforming conditions, we want to hold on to part-time staff and get our leaving rate down to the low 10 per cent range within two or three years,” Eiichi Katayama, executive officer, told broadcaster NHK.

Irregular work has risen relentlessly from about 19 per cent of total employment when Japan’s bubble burst in 1990, to a peak of 37.9 per cent in 2015. That has created a dual labour market, with a protected class of regular workers who enjoy job security and benefits, and an insecure class of contract and part-time staff.

But there are now signs of a change, with the percentage of irregular staff falling to 37.4 per cent in the third quarter of this year. The number of Japanese employees on regular contracts is now 34.4m, up by more than 1m since Mr Abe’s election in 2012.

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