Japan | Construction app offers fix for super-tight labor market

One of Yosuke Kobayashi’s biggest headaches has been finding enough workers to build hotels, restaurants and bath houses for his construction company.

That was until the manager at construction company Luckland Co. found Sukedachi, a mobile app that connects contractors and tradespeople. Nowadays, he’s hiring carpenters, painters and glaziers with just a few taps on his smartphone.

Japan is in the middle of a building boom, thanks to infrastructure projects, a shortage of hotel rooms and the 2020 Tokyo Olympic Games around the corner. That’s fueling the tightest labor market in a generation, with 4.3 jobs available for every construction worker, according to the labor ministry. The industry is woefully inefficient; workers usually find gigs via referrals, word-of-mouth and printed job listings.

“Our projects were outpacing our people,” said Kobayashi, adding that he had staff working nights and weekends to finish construction jobs.

While most people in Japan can find work on websites and apps, Sukedachi is the first that caters to the construction sector, which often needs workers on short notice. Yoichi Wagatsuma, the Sukedachi app’s creator, estimates that he can capture 30 percent of a potential market of 3.6 million workers by 2021. The one-year-old startup, whose name means “to the rescue” in Japanese, debuted last year and raised 530 million yen (USD4.8 million) in financing in April.

There could be one downside in all this for the Bank of Japan. If the app, and any other like it, alleviate pressure for wage gains, that could counteract the central bank’s efforts to spur inflation. While the labor mismatch is a headache for construction managers, the industry has seen the kind of pay hikes that are needed across the whole economy.

“Construction workers all have smartphones, they all play games,” said Wagatsuma, a 15-year construction-industry veteran. Because they’re working at job sites and seldom use laptops, mobile apps are the best way to reach them, he said. “Japan’s construction sector faces a critical shortage of workers.”

Since the Android and iOSs version debuted seven months ago, with the iOS version following soon after, the app has amassed over 10,000 users. Sukedachi also handles job payments, so that employers can pay workers on the same platform.

“Right after a job, I went to a Seven Bank ATM and received part of my wage,” said Yuki Seki, a 34-year- old laborer who found a one-day plumbing job on Sukedachi. Usually, it can take as long as two months to get paid, he said.

The app will help workers earn a more stable income, according to Ryo Owada, a construction company executive in Fukushima, north of Tokyo. “Fewer people are joining the industry, but this could be one way to bring more people in,” he said.

That would help alleviate a broader job shortage. The jobs-to-applicant ratio for Japan’s construction sector has almost tripled since 2012, and the measure for the broader economy hit a 44-year high in December. A steadily recovering economy, Olympics-related demand and a shrinking population has meant that employers are scrambling for workers, according to Hiroaki Muto, chief economist at Tokai Tokyo Research Center in Tokyo.

“Japan’s labor market is dysfunctional,” Muto said. If more services like this emerge, “the jobs-to-applicant ratio should start to fall,” he said. Yuko Takeo, Yuki Furukawa, Bloomberg