- 2018-10-08
Japanese companies face recruitment challenges
Mitsuhiro Wada recruits as many as 900 fresh graduates every year from a country with an unemployment rate of only 2.8% and a dwindling reserve of college students. "The market is very difficult. The competition is very fierce," Mitsuhiro Wada said. "It is even harder than in 2007 and 2008." He is a major graduate recruiter and the head of recruitment of Daiwa House, Japan's top construction company.
Shinzo Abe's economic stimulus policy has been implemented for five years. Coupled with the demographic trend of a sharp decline in the working-age population, large Japanese companies are engaged in a fierce battle for talent.
Considering that lifetime employment is still the norm for many graduates, it is difficult for companies to recruit outstanding employees in the middle and late stages of their careers. Therefore, even large established companies may fall into a long-term recession because they cannot introduce fresh blood.
"There is a cyclical nature in the construction industry. There were periods in the past when we recruited fewer people," Mitsuhiro Wada said. "Therefore, we have relatively few employees in our thirties, and we want to maintain a balance." Since Tokyo won the 2020 Olympics Since the hosting rights, the outlook for the Japanese construction industry has improved. Daiwa Housing Construction has set a higher sales growth target and set a target for the number of recruits. "We intend to win, and we also see an opportunity to expand our market share," Mitsuhiro Wada said.
Japanese corporate recruitment activities are still dominated by the graduation season each year, and the company follows a set of self-controlled rules to schedule interviews and issue offers. Once graduates join, they will be promoted steadily within the company and their salary will increase year by year until they reach a fixed retirement age-usually 60 years old, but the retirement age is increasing.
Although Japan’s overall labor market is thriving, and the overall ratio of jobs to applicants has reached the highest level since the mid-1970s, the ratio of graduates is still lower than the 2007-08 high and far lower than the previous one. The level of the bubble economy in the 1980s.
Akihito Toda, a researcher at the Recruit Works Institute, a research institute, said that part of the reason is that companies have become more restrained in hiring at all stages of the economic boom and bust cycle. He said, "The recent situation is that there is no large-scale recruitment of new people because of the economic improvement."
However, this conceals the gulf between popular industries such as governments, automakers, and large banks, and less popular industries such as retail, social services, and construction.
"Companies that can easily recruit people don't think hiring is a big problem. On the other hand, companies that are already struggling don't plan for the long-term. They are struggling to cope with the current competition," Toda said.
Small and medium-sized enterprises are facing a particularly difficult situation. Tomonori Sugisaki of the Japan Chamber of Commerce and Industry said, “According to our survey this year, more than 50% of small and medium-sized companies cannot recruit the number of graduates they want.”
Japanese companies are responding to the recruitment problem in a variety of ways, but in general they have not adopted salary increases. Japanese graduates understand that work is likely to be life-long, so starting salary is not very important; they often make choices based on the company's stability, reputation, and degree of humanity.
At Yamato Housing Construction, Mitsuhiro Wada is trying to support diversified work styles, including making the life of working mothers easier. The company is also gradually abandoning the traditional requirements of Japanese companies: employees move to any location assigned by the owner. "We have started to implement a system where you can specify which area you want to work in," he said. "We are trying to provide new employees with a working method that suits their individual requirements."
Except for a handful of global manufacturers, Japanese companies have not yet begun to turn their sights overseas. Despite the rapid development of Yamato Housing's overseas business, Mitsuhiro Wada said, "At present, we are still only considering hiring in Japan."
Another concern is how to treat top talent. Traditionally, Japanese companies like to take their time. Each batch of newcomers have to take up a series of positions. As they climb the company pyramid, the company selects the best talents step by step. But even the most popular companies have found that young people in their twenties are unwilling to stay long and will quit their jobs to join start-ups or charities. Toda said, “Some companies are now considering whether they need to adopt a fast-track promotion channel.”
Box: Japan: Why can't prolonged economy cure deflation
According to data released by the Japanese government, the real GDP in the fourth quarter of 2017 increased by 0.5% quarter-on-quarter, and the Japanese economy achieved eight consecutive quarters of growth, setting a record for the longest continuous growth since the Japanese economic bubble burst in the late 1980s. However, Japan has not come out of the long-term deflation that lasted for 25 years. The Bank of Japan has been working hard to achieve the 2% inflation target, which is not expected to be achieved until 2019. Japan has delayed the realization of this target several times. Deflation is not cured for a long time. In essence, the reason is structural, and the direct cause is insufficient domestic demand, which in turn leads to sluggish consumption. In recent years, the income structure of the household sector in Japan has undergone some changes. The actual household income did not rise but fell. In 2016, the average actual monthly income of working households was 459,000 yen (100 yen is approximately 5.9 yuan), compared with 10 years ago. A reduction of 21,000 yen; the labor distribution rate fell from 76% in 1977 to the current historical low of 61%. In addition, due to concerns about Japan’s finances, people generally lack confidence in the future, which severely curbs consumption.