Tokyo:
Japanese companies temporarily close offices or suspend production as they battle a record wave of COVID-19, disrupting businesses in a country that has so far weathered the pandemic better than most advanced economies.
Automakers Toyota Motor Corp and Daihatsu Motor Co halted production line shifts last week due to worker infections. KFC Holdings Japan Ltd has had to close a number of fast food restaurants and relocate staff to fill the gaps, while Japan Post Holdings Co has temporarily closed more than 200 mailing centers.
The number of Covid cases in Japan is higher than other countries as the full impact of the BA.4 and BA.5 variants dominating around the world becomes apparent. Japan had more than 1.4 million new cases of COVID-19 in the past week, data from the World Health Organization shows.
Companies struggle to keep their heads above water.
“We divided the meal into different time slots and told workers to sit in one direction and not talk at all,” Subaru Corp CFO Katsuyuki Mizuma recently told reporters, describing how the automaker tried to fend off infections and work stoppages. .
Newly diagnosed COVID cases hit a record high for Japan of nearly 250,000 on Wednesday. Hospital admissions and deaths are also on the rise, but not as drastically as in previous waves due to the prevalence of vaccinations and booster shots.
Japan has had an enviable track record in responding to Covid, avoiding the disruptive lockdowns and high death tolls that have accompanied the pandemic elsewhere.
The country of 125.8 million people has had more than 32,000 deaths, a fraction of the toll 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 mitigating its economic impact, especially if the disruption felt now worsens or lasts for longer.
“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 advise that those who test positive should be quarantined for 10 days and that their close contacts should be isolated for at least five days.
Toshihiro Nagahama, chief economist at Dai-ichi Life Group, said manufacturing and retailing would feel some pain if infected people and their closest contacts stay at home.
“As infections and close contacts increase, that will certainly weigh on people’s confidence to eat out, shop and the like,” he said.
Supply Chains
The disruption is having a particularly significant impact on a labor market at its tightest in decades, especially for the small and medium-sized enterprises that make up the majority of Japanese companies.
Yoshiaki Katsuda, an occupational health expert at the Kansai University of Social Welfare, said large companies can hire temporary workers to replace those who have to take time off, but they are still vulnerable to supply chain headaches.
“If smaller companies that supply products… have to close for a long period of time, the production of larger companies could be affected,” he said.
The wave of infections also gnaws transport.
Railway operator Kyushu Railway Co suspended 120 train services in southern Japan last week when 53 crew members tested positive or where there were close contacts with cases. Mitsui OSK Lines Ltd canceled four ferry crossings in western Japan, and bus operator OdakyuBus Co Ltd canceled dozens of routes around Tokyo.
The central government has delegated infection control powers to the prefectural governments, allowing them to step up precautions as they see fit. Twelve prefectures have taken measures with an emphasis on reducing risks for the elderly.
Support for Prime Minister Fumio Kishida has declined in recent polls as the COVID virus ramped up, but a strong turnout for the ruling Liberal Democratic Party in last month’s elections has given him some breathing room, said Tetsuya Inoue, senior researcher at Nomura Research Institute.
“For now, Mr. Kishida and his government are prioritizing preserving economic activities rather than returning to very strict measures against COVID,” Inoue said.
Inoue said that regardless of the drag on the domestic economy causing the wave of infections, the bigger problem for Japan has been the lockdowns in China and the knock-on effects they have on supply chains.
Relief for Japanese businesses and the economy in general may be in sight. Health experts predict that this wave of infection will peak at the beginning of this month.
“Given current trends, infections are unlikely to continue to spread in the long term, and there is little need to impose strict behavioral restrictions,” doctors at the Tokyo Foundation for Policy Research wrote in a recent article.