Japan has long been known as a tough talent market. Challenges such as an aging population, long-term employment with large corporations, and a tendency toward privacy are all frequently cited as challenges, not to mention the language barrier.
Companies, both international and domestic, often complain about a low volume of qualified applicants for their job postings, and thus become frustrated with slow hiring. In addition, they often receive profiles from senior generations and face some of the highest agency recruitment fees globally.
Just how bad is the situation? Is it trending for better or worse? Let’s dig deeper into this topic and finish with a few tips for companies looking to attract and hire talent in Japan.
Language barrier drastically shrinks the relevant market
Guess who has a far easier time finding talent? Japanese companies! When dealing with local partners or developing projects in the domestic market, the language barrier is clearly not an issue. Yet, Japanese companies still face challenges in having a smaller market than in other countries. Their market grows significantly when the need for bilingual talent is off the table.
Of the 44 countries using TOEIC scores, Japan ranks 34th, with the average score among test takers at 561, compared to a benchmark of 800 needed to be considered business proficient. In a 2021 survey by Indeed, 6.6% of respondents claimed to speak English fluently or business level. This figure doubles for those comfortable speaking at a casual level.
Even if we chalk up these figures to the famous Japanese modesty, it’s safe to say that only 10% of the total working population meet the requirements of ‘business bilingual’, which is in stark contrast to most of Europe, the U.S. and Singapore.
Japan is getting older
The Japanese population is getting older, and it has been decades since the birth rate was high enough to keep up. The working age population decreased by over 16% in the last 30 years, from a peak of 87 million right after the bubble burst in the early 1990s to about 70 million today.
Compounding the depopulation challenge is the long tenures that Japanese tend to have in their companies, especially their first company. About 55% of Japanese professionals in their 20s have never changed companies, only dropping slightly to 42% for workers in their 30s. In their 40s there is a major shift, with about 80% of workers having had at least one job change.
Let’s jump into the culture behind this. We see two major factors.
- Firstly, Japanese corporate culture still has a strong idea of ‘lifetime employment’. People often expect that they’re choosing a company for life when they take their first job out of university. Once in the company, they’re assigned seniors who will guide, mentor and shape them, and they’ll hold close ties to those who joined the company in the same year. Only 10-15 years later, when some of that group was promoted multiple times and others were left behind, do workers start looking for opportunities elsewhere.
- The second reason is tied to societal expectations. Stability, and working for a strong, well-known (trusted) company are more important than holding a senior position or earning a high salary, especially for young professionals. Thus, many young adults in Japan opt to make major life decisions, such as purchasing their first home, getting married, having children before considering their careers and external opportunities.
Where are the women?
Gender is not the major problem in Japan as in neighboring China. Japanese females outnumber males at 52%. This is not the case in all areas of the workforce, and especially when it comes to the energy industry.
According to a survey of Aoyama Gakuin University, Sophia University, Chuo University, Shibaura Institute of Technology and more, only 16% of students enrolled in STEM subjects are female.
If we peel back one more layer, we see the issue is much worse. The bulk of females in STEM subjects are studying topics related to healthcare and chemicals where the student body is 20~25% female. Subjects most related to the energy industry are among the lowest female enrolment, led by mechanical and electrical engineering at 8% and 8.5%, respectively. Information engineering and civil engineering fare a bit better around 15%.
We also need to consider the ‘marriage cliff’ in Japan, where many highly qualified, successful women in their 20s and 30s change careers following marriage and childbearing. Due to systemic challenges in securing childcare, as well as expectations that children should be enrolled in extracurricular activities, it’s a major challenge for working mothers to continue full-time professional activities. As a result, many qualified women either change career tracks, or work part-time in their later 30s and 40s.
I am my company
In my home country of Australia, when I asked someone the standard opening question “What do you do?” they’d answer with “I am an engineer, I am a banker, I am a builder etc.” In Japan, however, the same question is typically answered by “I work for Mizuho, Mitsubishi, a real estate company etc.” The Japanese culture and mindset connects and prioritizes belonging to a company more than identifying with a profession.
In another Indeed survey, 15.4% of Japanese respondents said they’d consider a job change even though they were satisfied with their current company and role. Contrast this to the opportunism in the UK and U.S. where the figures were 32.8% and 29.8%, respectively.
When asked about changing companies for personal gain and progression, such as a higher position, a salary increase, etc, the positive responses from Japanese were again about half of their Western counterparts. Their main reason was “when the situation for the future at the company is hopeless,” and even then more than half of respondents said they’d stay until they were let go.
So, the stories are real. What can we do about it?
Yes, Japan is an outlier when it comes to the talent market. Despite improvements in language education, as well as state programs to get more women involved in technology and into leadership positions, change is not keeping up with demand.
This is exacerbated in the energy sector by the increasing complexity as our systems transition to renewable-based, distributed and managed digital technologies. Aware of this reality, hiring companies should consider the following to successfully recruit:
- Respect your elders. Japanese love to work and take pride in it. Hiring five to ten years older than you might elsewhere is a way to expand your talent pool.
- Offer flexibility. Hybrid working systems, flexible work schedules and benefits such as extra childcare leave will help you tap into the pool of qualified, experienced female talent.
- Focus on quality rather than quantity. Forget about getting 50 to 100 applicants to your job advert, or even 10 CVs from your recruitment partner. A pool of three to five candidates for most mid-senior positions who are strong enough to interview will suffice.
- Be decisive. Recognize that the demand for talent is high, especially for those who are visible on LinkedIn or job sites. Once you have that candidate engaged and they meet your criteria, don’t play games waiting and comparing to others – get them onboard!
- Sell the future. The statistics show that there are less young professionals on the move in Japan, but it is not zero. Young talent can be attracted and will move for the right opportunity, and that right opportunity must include a level of stability for the future.
Andrew Statter is a Partner at Titan GreenTech, an executive recruitment agency focused on the clean energy space.