A look at today's job market in Japan
For global recruitment firms, tracking markets all over the world is essential to keep up with business needs and societal trends. Recruitment company Hays is headquartered in the United Kingdom, but remains one of the largest bilingual recruitment companies in Japan, with 15 specialisms across four of offices.
Being part of an international operation offers broad insight, said Marc Burrage, managing director at Hays Japan. “We are able to tuck into that and to bring it to bear in Japan as it makes sense.”
Hays prides itself on expertise and inquisitiveness, and continues to enhance its research through the Global Skills Index, an annual report prepared in collaboration with Oxford Economics. “Doing things like this helps us to actually educate the market, to look at what trends are coming, and to look at how we can tackle the unique challenges that Japan faces,” Burrage explained.
After 16 years in Japan, the firm’s knowledge of the Japanese market is deep. Through of offices in Tokyo (Roppongi-itchome and Shinjuku), Yokohama, and Osaka, Hays provides permanent recruitment services, contracting recruitment, outsourced recruitment, and IT solutions.
It’s no mystery that Japan faces the challenges of a declining population and aging demographic—factors that are proving to have a considerable impact on the job market. This candidate-short market is proving a major difficulty for many businesses.
“We really need to look at how Japan is set up from a labor market perspective. What are the peculiarities that exist here—perhaps that we don’t see in other markets around the world?” Burrage said.
One peculiarity is the concept of lifetime employment, which Burrage believes defines the structure of the local labor market. “It shapes the career paths of individuals, but it also shapes remuneration, and wage reform is one of the particular areas that we think needs attention.”
Wages certainly lag behind those of other countries when it comes to highly skilled roles, which is peculiar considering the growth of the economy and the scarcity of talent.
He highlighted the fact that many Japanese work environments favor older generations, and business structures are based on seniority and tenure. This is acceptable in the short term, but will exacerbate the demographics problem further down the line when these generations leave the workforce.
This kind of environment—in which rewards are linked to tenure rather than results—can also be a deterrent, hampering the growth, productivity, and profitability of organizations in an increasingly globalized context.
“So, it really is a bit of a perfect storm, and structural reform is one of the biggest pieces that we think needs attention right now,” Burrage explained.
The Rugby World Cup 2019 and Tokyo 2020 Olympic and Paralympic Games are two events that provide opportunities for Japan to promote itself to the world.
Marketing Japan internationally will play a part in busting some of the myths about doing business in the country. “When I speak to people about Japan, often their perception is very limited; and the perception that they do have is usually that it is just too foreign—it’s just too hard a place to begin to work,” Burrage explained. “So, I think that if we can bust some of those myths, there’s a real opportunity to market Japan as a place to live and work.”
Ambition and a passion for people are two of Hays’s core values, and this comes through in the recruiter’s daily functions. “We see our role very much as an advisor,” Burrage explained. “Whilst we are powering the world of work today, we are looking to help shape the world of work tomorrow.”
Hays’s Global Skills Survey covers 33 countries in which the company operates, addressing the pressures that are being exerted in each of those markets around the world. In Japan, the talent mismatch is a major issue and—although not a new phenomenon—is one yet to be tackled.
One way to address the shortage is to bring in executives and talent from overseas—a short-term solution that also requires making Japan a more attractive place for global businesses.
Burrage suggests that local talent must be trained. “We can build our own talent, but that takes time. We can adapt the labor force that we’ve got, but that requires reform. But, it is possible.”
Results show that, globally, Japan has the lowest level of continuing education once a person has joined an organization. “We set a very high score for educational credentials in Japan. But once people have those—and they’ve been hired—they tend to stop investing in their training.”
All these reforms aim to make the workplace a friendly and attractive environment for women, too.
When I speak to people about Japan, often their perception is very limited.
“Right now, it is fair to say that, whilst there has been a lot of encouraging talk, we still have a lot of work to do when it comes to encouraging women to reenter the workforce,” Burrage said. He mentioned flexible work hours and childcare options as two critical factors.
As a company, Hays is dedicated to diversity. When it comes to gender, just over 50 percent of the company’s workforce globally—and in Japan—is female, while nearly 60 percent of those in management positions are female. “What we are really interested in is encouraging others to see the opportunity to do the same, and then to actually embrace that opportunity.”
He detailed the processes used when looking for candidates to fill client positions, ensuring that there is no unconscious bias at play. Communication with the workforce is also an essential part of creating a diverse and inclusive work environment.
Another aspect to consider is the number of non-regular workers. In Japan, 40 percent of the labor force comprises non-regular workers, and the vast majority are women.
“If you think about the equation that we are facing here, we have a workforce that doesn’t have enough permanent talent, and we have a significant amount of talent working in non-permanent roles,” Burrage said.
Future-proofing the workforce is critical. This means addressing ways to retain an aging workforce, how to use the shrinking workforce smartly, and rethinking the way people are rewarded. This will help buy time to build sustainable long-term solutions, such as changing the Japanese education system to better meet the needs of future society.
In terms of foreign talent, Burrage believes that intellectual property, experience, and expertise are leveraged. “So, when those people depart these shores, if indeed they do, they have left a legacy behind which we can build on.”
From an employee perspective, there’s not enough liquidity in the labor market, whereas businesses are continuing to be cautious—particularly as Japan is viewed as being so different when it comes to doing business.
Burrage explained that many organizations that have regional operations in Asia do not view Japan as part of their regional business, but instead view it separately.
Although there may be a range of problems in Japan’s growth, the needed reforms are possible—but will require a change in mindset. As Burrage explained, “The single biggest issue is that Japan doesn’t like change. If Japan could embrace change, we could solve a lot of issues.”