NNA survey: Rising labor costs biggest threat to Japanese firms in Asia

10, Jan. 2019

TOKYO, NNA – Rising labor costs and skilled labor shortages are the largest downside risk to Japanese firms in Asia, with 76 percent of respondents in an NNA survey calling them the top concern.

Among the 630 respondents working for Japanese companies in East Asia, Southeast Asia, India and Australia, 479 cited labor risks as the largest threat. They were asked to select as many as they wished from 13 risk factors that also included taxes and tariffs, political stability and security.

“We need to relocate production to other countries if wages continue to rise at the current pace,” a Japanese employee for a manufacturer in Thailand said in the survey conducted from Nov. 26 to Dec. 9.

In Singapore, 91.3 percent said they were concerned about the shortage of skilled workers, particularly technology specialists.

Eighty-six percent of respondents in Thailand said they worried about labor costs, as were 84 percent of those in South Korea, 83 percent in Indonesia, and 80 percent in each of Australia, Malaysia and Vietnam.

Overall, 44.9 percent also chose taxes and tariffs as risks, while 44.8 percent saw fluctuations in foreign exchange rates as a threat and 42.2 percent named legal systems.

In China, 77 percent were concerned about rising labor costs as the government is restricting the inflow of workers from rural to urban areas. Also in China, 48 percent pointed to taxes and tariffs as a risk as the U.S. trade dispute lingers.