In his 1986 autobiography Made in Japan, Akio Morita, co-founder of Sony, said this about his homeland’s rise to industrial pre-eminence: “While the US has been busy creating lawyers, we have been busier creating engineers.”

　　A quarter-century ago, Japanese companies and their diligent, technically adept workers had the global economy by the tail.

　　Their grip faltered in the 1990s, with the bursting of the country’s asset bubble. But even today many in Japan are counting on advanced technology to shelter their industries from South Korean and Taiwanese competition.

　　Yet while Japan still churns out few lawyers, it is not producing many engineers either. Two-thirds of manufacturing companies surveyed by the industry ministry last year said they were short of highly skilled technology workers, in spite of a historically soft labour market.

　　According to the Rose project, a Norwegian-funded survey of attitudes towards science in 25 countries, Japanese secondary school students respond more negatively to the proposition “I would like to get a job in technology” than any of their global peers.

　　“Students don’t want to go into maths and science,” worries Hiroaki Nakanishi, president of Hitachi. “Today’s university graduates don’t have the skills they need to do their jobs.”

　　The drought of technologists sits oddly with broader worries about unemployment. At just 4.9 per cent, Japan’s jobless rate is low by international standards. But it has risen from less than 4 per cent before the global economic crisis and below 3 per cent in Mr Morita’s day.

　　What is more, the official unemployment rate disguises the true state of companies’ demand for workers.

　　In the depths of the global economic crisis in 2009, the industry ministry put “latent” joblessness at nearly 14 per cent of the workforce, or 9m people.

　　It said most of those still had jobs due to “labour hoarding”, jargon for a reluctance to sack staff during downturns.

　　Strict Japanese labour laws make “involuntary” lay-offs unfeasible for all but the frailest companies. The best that most can do is to buy off surplus staff with early retirement.

　　That has hampered the ability to shift production offshore in response to the yen’s surge to a 15-year high. Some, such as Sony, have closed factories at home, but others are promising to maintain domestic production capacity even as they build plants in China, Thailand or Mexico.

　　Not every Japanese worker has benefited from constraints on sacking. A third of the workforce is now on temporary contracts, which pay less and offer little protection. Companies that cannot easily push out older employees hire fewer young ones.

　　As of December, only seven in 10 students in their final year of university had secured job offers, the lowest level on record and a sign that official unemployment could head higher.

　　The young no longer see manufacturing as a secure career. Employers ranked most attractive by students in a survey by Recruit, a publisher, were current or former state-owned service groups – a travel agency, two railways and the post office. Toyota ranked 82nd and Sony was 77th.

　　Companies are responding by looking outside Japan for researchers and product developers. Two-thirds of manufacturers plan to conduct some R&D abroad within five years, according to another industry ministry survey, compared with less than half five years ago.

　　Nitto Denko is an electronic-materials maker that has developed a “photographic” polymer capable of generating moving 3D holograms.

　　Research on the polymer was carried out jointly by a Nitto Denko lab in California and the University of Arizona.

　　Toshihiko Omote, deputy chief technology officer at Nitto Denko, says the high calibre of US universities was one reason the company decided to set up a research facility there. Another was the flexibility of US labour arrangements.

　　“In the US you can hire high-level researchers on short-term contracts for specific projects,” he says. “That’s difficult to do in Japan.”

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