TOKYO — Japan is grappling with its worst shortage of full-time workers since the onset of the COVID-19 pandemic, with more than half of local firms reporting understaffing, according to a recent survey.

Among the 11,000 companies that responded to the January survey conducted by Teikoku Databank Ltd., 53.4% stated they need more full-time workers. This marks the highest level since April 2020 and is nearing the record 53.9% reported in November 2018.

The information services sector reported the most pressing need, particularly for system engineers, followed by the construction industry, Tokyo-based Kyodo News reported on Sunday.

The survey also found that 30.6% of firms lack part-time workers, with staffing firms experiencing the most acute shortage of non-regular employees, followed by the restaurant sector.

The labor crisis comes as economists closely watch whether last year’s strong wage growth will continue.

Major Japanese firms are expected to decide soon on their responses to labor union demands for pay hikes.

To address the shortage, 68.1% of companies struggling with labor deficits plan to raise wages for full-time employees starting in April.

However, economists warn that smaller firms may struggle to keep pace with larger corporations that have the financial resources to sustain wage increases.

"We have to be vigilant against the risk of more companies going bankrupt due to labor shortages," Teikoku Databank stated, noting that the number of bankruptcies caused by workforce deficits reached a record high in 2024. — Agencies