Why Japan is the Most Difficult Market to Recruit in?
With a population of 125,793,403 million on April 9, 2022, Japan boasts the largest and most diverse economy in Asia, and is second only to the U.S. on the world's economic stage. The U.S. sends more exports to Japan than it does to any other overseas destination.
Unlike other countries the majority of the business is concentrated in one city “Tokyo”.
With an unemployment rate of 2.60 % (March 2022); the war for talent is unlike anywhere else in the world. In spite of this, all the international firms are fighting for a very limited pool of talent.
Japan’s unemployment rate fell to a 1-year low of 2.6% in March 2022, lower than the 2.7% reported in February which was also the consensus forecast for March. The number of unemployed dropped by 4.8% or 90 thousand to 1.8 million, while those employed declined slightly by 0.2% or 110 thousand to 66.84 million. The non-seasonally adjusted labor force participation rate also stood at 62.1%. Meanwhile, the jobs-to-application ratio was at a near 2-year high of 1.22 in March, in line with market expectations and rising 0.01 point from the previous month. source: Ministry of Internal Affairs & Communications
Here are some of the specific Japan market challenges
- Culturally and historically Japanese have had a job for life mentality, so extracting a Japanese national from a large Japanese firm which they could never be fired from, is next to impossible. As a result, Japanese are very averse to the risk of changing their employer.
- The traditional Japanese firms offer stability and a guaranteed promotional ladder-based system – over time they rise to the top based on their years of employment and loyalty. Japanese companies invest in long-term pension plans, which can facilitate viable retirement at age 60.
- Unlike almost any other market in the world, Japanese are not well versed in changing careers for more money or better opportunity. Consequently, the process of introducing the opportunity properly to an ideal candidate and his wife is critical.
Japanese are extremely loyal and when they do change jobs, will rarely work for a direct competitor, where their skills and contacts are most beneficial.
- There have been enough foreign companies who have pulled out of the Japan market which has created a negative legacy which other foreign must overcome. Regardless of their reputation abroad, start-ups and small foreign firms have an uphill battle to identify quality candidates to represent their firms here in Japan.
- Japan has the lowest bilingual population; approximately 90% of Japan’s population does not speak English! Foreign companies clearly wanted the most talented professionals for their firms. Once speaking English becomes part of the hiring criteria, the talent pool is reduced to less than 10% of the population based on language skills alone. If a client is in a specialized niche business the talent pool becomes algorithmically much less – it becomes equivalent to finding “a needle in a haystack”. Additionally, even through these tough economic times, Japan has an unemployment rate of 2.8% (July 2021 - see below chart from the Japan Ministry of Internal Affairs).
- Demographically Japan’s population is aging at an alarming rate. Japan remains still reluctant to allow more immigrants and refugees in, despite an urgent need for new workers to replace its aging work force.
- Elderly citizens accounted for record 28.4% of Japan's population in 2020!
- Japan's rapidly aging society now has a record 36.17 million people aged 65 or older, up by 300,000 from a year earlier and accounting for 28.7 percent of the overall population, another record, government statistics show, according to data released by the Internal Affairs and Communications.
- On April 1st 2005 Japan implemented a strict “Personal Information Protection Law (kojin jouhouno hogo ni kansuru houritsu)”. This law prevents the release of personal information to a third party without that individual’s consent. This means traditional boiler room methods of recruiting are illegal, unethical and a more consultative approach must be used to develop candidate relationships.
- In addition to the foregoing, there are a lot of “cowboys” in the recruiting business who do not represent clients well; often the best candidates are missed through misrepresentation, poor business manner/ethics, and/or ineffective consulting skills.
Foreign companies who are planning to build their Japan operations should be sure to do their due diligence to find an “Executive Search Firm” to represent them properly in the market; and more specifically a consultant who will responsibly take on the task to diligently fill the proposed role within a reasonable time frame, with the best available candidate.
Japan Unemployment Rate 1953-2022
Japan’s unemployment rate was at 2.6 percent in March 2022, compared with market forecasts and January's figure of 2.8 percent. The number of unemployed dropped by 30 thousand to 1.88 million while employment was flat at 66.93 million. The non-seasonally adjusted labor force participation rate stood at 61.8 percent. Meantime, the jobs-to-application ratio was at a 22-month high of 1.21, compared with estimates and January's figure of 1.2. A year earlier, the unemployment rate was at 2.9 percent.
Japan Jobless Rate Falls to 2.6% in March
Japan’s unemployment rate fell to a 1-year low of 2.6% in March 2022, lower than the 2.7% reported in February which was also the consensus forecast for March. The number of unemployed dropped by 4.8% or 90 thousand to 1.8 million, while those employed declined slightly by 0.2% or 110 thousand to 66.84 million. The non-seasonally adjusted labor force participation rate also stood at 62.1%. Meanwhile, the jobs-to-application ratio was at a near 2-year high of 1.22 in March, in line with market expectations and rising 0.01 point from the previous month.
The above data was sourced from Trading Economics 2022-04-26: https://tradingeconomics.com/japan/unemployment-rate