TOKYO -- Leading Japanese companies are ready at last to raise prices in the face of a steep labor shortage as the outlook for economic growth improves, a survey of corporate leaders shows.

Presidents and chairmen from 142 key companies responded to The Nikkei's quarterly poll of corporate chiefs, conducted from June 6 to June 22. Some 27.5% of the group said either that they would consider price increases or were more likely to weigh hikes than cuts.

Rising costs, including those of materials, were cited as a factor by 64.1% of the pro-hike set. Higher transport and distribution expenses were noted by 43.6%, while 23.1% pointed to rising labor costs. Multiple responses were allowed for this question.

Whether companies can pull off these price boosts depends in part on convincing buyers to accept them. But Chairman Shigetaka Komori of Fujifilm Holdings was confident in his company's plans, saying the photography and imaging heavyweight "will increase products' added value" and looks to "raise prices as well." Parcel delivery giant Yamato Holdings announced its own rate-hike plans this spring, and is currently talking prices with corporate clients. And paper makers such as Daio Paper have raised prices on household products such as tissue paper 10% since May in light of higher materials costs.

Root cause

A severe shortage of labor is behind many of these moves. Some 6.3% of corporate chiefs said they were short of workers across their respective companies, while 31.7% reported insufficient staffing in at least one operation. What's more, according to 48.2% of respondents, structural problems mean the issue will persist even after the Tokyo Olympics in 2020.

The crunch has resulted in higher labor costs, according to 27.8% of respondents, as companies offer better wages to draw in scarce workers. The logistics sector has been particularly impacted, resulting in higher shipping costs for companies in other fields.

Some 68.5% of respondents said their companies will consider investing in automation technology, including robotics and artificial intelligence, to improve productivity. Shifting the kind of work their companies do is on the table for 66.7%. These options for countering the labor shortfall were a good deal more popular than expanding recruitment of fresh college graduates or mid-career workers, which are favored by 46.3% and 57.4% of respondents, respectively.

Electric motor maker Nidec, for example, will spend 100 billion yen ($882 million) by 2020 to install cutting-edge production robots and automation software. The company also plans to change employees' work style to help attract talented staff.

Will to improve

The drive for higher productivity is also behind efforts by Japan's government and leaders in the business community to curb excessive overtime. But only around 30% of survey respondents said their companies are funneling money that used to go toward overtime back to employees, in the form of higher wages, expanded benefits or worker education, for example.

But that number is growing. Japan Post Insurance will offer free online worker development courses starting in the fall, paid for with savings on overtime pay. Restaurant chain Matsuya Foods will pay those savings out as bonuses.

Greater confidence in Japan's prospects for economic growth has allowed managers to make the pricing and investment decisions necessary to overcome the tight labor market. A hefty 71.8% of corporate heads said the country's economy is expanding -- up 18.2 percentage points from March's poll and the most since June 2015, when 92.6% shared that view.

The proportion forecasting expansion six months down the line climbed to 67%, amid expectations of a recovery in capital investment and private consumption and an increase in exports. If these expectations pan out, corporate chiefs could grow even more optimistic, broadening the price-hike trend.

(Nikkei)