6 Mars 2016
At least one in four business operators in Iwate and Miyagi prefectures devastated by the 2011 Great East Japan Earthquake and tsunami has decided to forgo applications for government subsidies for approved projects due to local manpower shortages, it has been learned.
The subsidy program is aimed at creating jobs in areas devastated by the quake and tsunami disaster and the ensuing Fukushima nuclear crisis by encouraging businesses to build new and additional factories and other facilities. Many local businesses, however, are finding it hard to secure enough workers from among local residents to meet the conditions to apply for the subsidies, according to the Iwate and Miyagi prefectural governments.
In those two prefectures, 25 percent or more of the 198 business operators whose project proposals were approved under the subsidy program later decided not to apply for the subsidies, as many of them failed to secure enough local workers, among other conditions.
According to the two prefectural governments, rising reconstruction demand in the wake of the 2011 quake disaster and other factors has resulted in a concentration of labor in a handful of industries and regions, hampering efforts to rehabilitate industries in some disaster-affected areas.
The subsidy program is one of the government's key measures for reviving industries in disaster-ravaged areas. Under the program, companies whose proposed projects pass screenings are eligible to apply for subsidies with the Ministry of Economy, Trade and Industry. Once the ministry decides to grant subsidies, the companies embark on their projects.
A total of 512 business operators based in Aomori, Iwate, Miyagi, Fukushima and Ibaraki prefectures have thus far had projects clear screenings for subsidies totaling 199.8 billion yen between May 2013 and September 2015, with the projects ranging from seafood processing to electronics parts production and distribution of goods.
However, in Iwate and Miyagi prefectures alone, at least 50 out of 198 business operators whose projects had cleared the screenings have decided not to apply for the subsidies, according to a survey by the Mainichi Shimbun. The industry ministry said it had decided by the end of January this year to grant subsidies to only 169 out of the 512 business operators in the aforementioned five prefectures. Many of the remaining companies have either decided not to apply for subsides or apparently remain undecided about whether to apply. As the application deadline looms at the end of March, more and more companies are expected to give up on applying.
According to the Iwate and Miyagi prefectural governments, many companies have ended up forgoing subsidy applications because they have been unable to hire the specified number of local workers. Soaring material and labor costs in the wake of the triple disasters and changes in those companies' business conditions were also among the factors that drove them to give up on subsidy applications.
One seafood processing company in Kesennuma, Miyagi Prefecture, decided not to apply for subsidies even though the government had accepted its project proposal.
"We determined in the end that it would be impossible (to fill the condition) as there were no prospects for us to receive a large number of job applications," a company representative told the Mainichi. "While we would be able to hire foreign trainees, it is difficult to hire the required number of people as regular employees."
Concentration of manpower in the construction and other industries in line with disaster recovery work peaked in fiscal 2014, and workers have been expected to return to their original industry sectors, but the situation remains unchanged "because of prolonged public works projects," according to an official with the Miyagi Prefectural Government. "There will be more and more businesses that will likely bow out from subsidy applications," the official added.
Prior to the 2011 quake and tsunami disaster, the job-to-applicant ratio at job placement offices in Miyagi Prefecture stood at 0.53 in the prefectural capital of Sendai and 0.47 in the coastal city of Kesennuma in December 2010, but the ratio gap widened after the catastrophe, standing at 1.34 and 2.15 in December 2015, respectively. The growing gap indicates that there is a remarkable manpower shortage along coastal areas.
The industry ministry originally planned to terminate the subsidy program at the end of this fiscal year, or in March 2016, but it has now decided to continue the program beyond next fiscal year as the subsidies have not been used up. The ministry ultimately aims to create 6,000 regular jobs under the subsidy program. However, it has not disclosed the amount of subsidies set to be granted or the job numbers created under the program to date, with a ministry official saying, "We are planning to take some time to achieve the goal."
Approximately 200 billion yen has been budgeted for the subsidy program. Companies applying for the subsidies are required to newly employ at least five local residents if their investment in new or additional construction projects is higher than 100 million yen while not exceeding 1 billion yen, for example.