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Japan Inc struggling with COVID

By Rocky Swift and Satoshi Sugiyama

TOKYO (Reuters) – Japanese companies are temporarily closing offices or suspending production as they battle a record wave of COVID-19, disrupting businesses in a country that has so far weathered the pandemic better than the most advanced economies.

Automakers Toyota Motor Corp and Daihatsu Motor Co halted production line changes last week due to employee infections. KFC Holdings Japan Ltd had to close some fast food restaurants and move staff to fill gaps, while Japan Post Holdings Co temporarily closed more than 200 mail centers.

The number of COVID cases in Japan has surpassed other countries as the full impact of the world’s dominant BA.4 and BA.5 variants hits home. Japan has recorded more than 1.4 million new COVID cases in the past week, according to data from the World Health Organization.

Companies are scrambling to cope.

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“We divided meal times into multiple time slots and told workers to sit in one direction and not talk at all,” Subaru Corp Chief Financial Officer Katsuyuki Mizuma told reporters recently, describing how the automaker was trying to fend off infections and work stoppages. .

Newly diagnosed COVID cases hit a record high for Japan of nearly 250,000 on Wednesday. Hospitalizations and deaths are also increasing, but not as drastically as in previous waves due to the prevalence of vaccinations and boosters.

Japan has had an enviable record in its response to COVID, avoiding disruptive lockdowns and the large death toll that has accompanied the pandemic elsewhere.

The country of 125.8 million people has suffered more than 32,000 deaths, a fraction of the tolls in the United States and Britain, for example.

The latest outbreak will likely show whether it can maintain its flexible response aimed at “living with corona” and limiting the economic impact, particularly if the disruption currently being felt worsens or lasts for an extended period.

“There is still a shortage of semiconductors and the spread of the coronavirus is currently increasing,” a Toyota spokesperson said last week.

“The future remains unpredictable.”

Health authorities are advising people who test positive to self-quarantine for 10 days and their close contacts to self-isolate for at least five.

Toshihiro Nagahama, chief economist of Dai-ichi Life Group, said production and retail would feel some pain as infected people and their close contacts would stay home.

“As infections and close contacts increase, it will certainly weigh on people’s confidence to go out for meals, shopping etc.,” he said.

The disruption has particularly significant implications for a labor market at its tightest in decades, especially for small and medium-sized businesses that make up the majority of Japanese businesses.

Yoshiaki Katsuda, an occupational health expert at Kansai Social Welfare University, said big companies can hire temporary workers to replace those who have to be absent, but they are still vulnerable to headaches. of the supply chain.

“If small businesses that supply products… have to close for a long time, the production of large businesses could be affected,” he said.

The wave of infections is also rumbling in transport.

Rail operator Kyushu Railway Co suspended 120 train services in southern Japan last week when 53 crew members tested positive or had close contact with cases. Mitsui OSK Lines Ltd canceled four ferry crossings in western Japan and bus operator OdakyuBus Co Ltd cut dozens of routes around Tokyo.

The central government has delegated authority over infection controls to prefectural governments, leaving them to step up precautions as they see fit. Twelve prefectures have enacted the measures with a focus on reducing risk for the elderly.

Support for Prime Minister Fumio Kishida has dipped in recent polls as COVID surged, but a strong performance by the ruling Liberal Democratic Party in last month’s election gave him some breathing room, said researcher Tetsuya Inoue. Principal at the Nomura Research Institute.

“At this time, Mr. Kishida and his administration are prioritizing maintaining economic activities rather than returning to very strict COVID measures,” Inoue said.

Inoue said whatever drag on the national economy caused by the wave of infections, the biggest problem for Japan was the lockdowns in China and the ripple effects they are having on supply chains. .

Relief for Japanese businesses and the wider economy could be in sight. Health experts predict that this wave of infection will peak early this month.

“Given current trends, infections are unlikely to continue to spread in the long term, and there is no need to impose strict behavioral restrictions,” wrote doctors from the Tokyo Foundation for Policy Research in a recent article.

(Reporting by Rocky Swift, Satoshi Sugiyama, Mariko Yamazaki and Nobuhiro Kubo; Editing by David Dolan and Robert Birsel)

Copyright 2022 Thomson Reuters.