Japan has been given the highest score possible for talent mismatch in a global assessment of the efficiency of skilled labour markets produced by recruitment firm Hays, reports marketwatch.com.

The Hays Global Skills Index, produced in collaboration with Oxford Economics, showed an overall score of 6.1, a slight worsening compared with 2014. Seven indicators, or points of potential pressure, make up the ranking and each received a score out of 10. A score close to 0 indicates little to no pressure while a score close to 10 shows severe pressure.

Japan received the highest score possible of 10.0 for talent mismatch, which measures the gap between the skills that businesses are looking for and the skills available in the labour market. This compares with a score of 9.5 last year.

No other country in Asia Pacific received such a high score for talent mismatch.

Marc Burrage, Managing Director of Hays in Japan, commented: “The significant gap between the skills employers need and those available continues to severely affect the labour market and is one of the biggest challenges employers face this year.”

“This is a huge problem as unemployed candidates cannot be matched with available jobs. If we can train candidates in the skills employers want, Japan can ease its skills shortage. However, our results indicate the opposite is occurring, since Japan’s score was 9.1 in 2013, 9.5 in 2014 and now 10.0 this year. This shows that the mismatch has intensified over the past three years,” he added.

In addition to “talent mismatch”, Japan achieved high scores in four other pressure point area.

Despite the recent 0.3% increase in real wages being less than expected, the second pressure point is “overall wage pressure”, which measures whether wages are keeping pace with historic trends. Japan received a very high score of 8.1, which shows that wages are increasing much quicker than has been historically seen.

“This supports what we’re seeing on the ground, namely overall labour market tightness as employers compete for talent based on salary. It also shows that further salary increases are not necessarily the solutions to alleviate skills shortages,” Mr Burrage stated.

The third indicator is “labour market flexibility”, for which Japan received a strong score of 6.7. This is a measures of the legal and regulatory environment faced by businesses.

Mr Burrage explained: “Although this score is down from 7.1 in 2014, a score of 6.7 is still high, suggesting there are barriers restricting the labour market. The drop in the score is due to reforms such as “womenomics”, and further reforms could help ease the skills shortage.”

“Additional pressure comes because most of Japan’s labour force is already utilised and the available talent pool, therefore, can’t be increased in great numbers,” he added in reference to Japan’s score of 6.1 for “labour market participation”. “This means we can’t relieve the skills shortage by raising the employee participation rate.”

The final pressure point is “wage pressure in high-skill occupations”, for which Japan received 6.2.

“Japan’s score jumped up from 5.0 last year to 6.2 this year, suggesting that wages for highly-skilled candidates, such as managers, senior officials or skilled trades, are rising faster than for low-skilled candidates, such as process, plant and machines operatives, and administration workers. This shows there is a shortage of highly-skilled candidates with the necessary skills,” Mr Burrage concluded.

For the remaining two indicators, the Hays Global Skills Index ranked Japan fairly positively. The country’s education system is well-equipped to meet future talent needs (receiving 3.0 for “education flexibility”), and wages for those in high-skill industries are rising in line with wages in low-skill industries (“wage pressure in high-skill industries”).