A Global Perspective on Labor in Japan
On November 6th, we hosted a panel discussion in Tokyo titled “A Global Perspective on Labor in Japan” at the Shangri La Hotel.
The event featured a keynote speech by Dr Florian Kohlbacher, Director Economist Corporate Network North Asia who addressed the key issues and trends impacting the Japanese labor market. A panel discussion followed on the changing Japanese labor market, featuring Oki Matsumoto, Chairman & CEO, Manex Group, Inc, Yumiko Murakami, Head of OECD Tokyo Centre OECD, Dr. Yoko Ishikura, Professor Emeritus Hitotosubashi University and Akihiko Kubo, Representative Director, Japan Managing Director, North Asia Tag Japan Ltd.
In Dr Kohlbacher’s keynote speech, he discussed the glass ceiling women face in Japan. Highlighting that Japan is ranked one of the worst places to work as a woman, with the number of working women sitting at 63% representing a meagre 3% increase from ten years ago. This has seen Japan fall to a lowly 114th in the World Economic Forum’s Gender Diversity ranking index, the worst of any of the G7 countries.
While Japan has the highest levels of numeracy and literacy skills of all OECD countries surveyed, Japanese people are traditionally extremely risk adverse meaning that often they stay in the same jobs. Generally, younger people are more willing to take risks but are often an under-utilized talent resource and not given opportunities. The panelists commented on how innovation and leadership are learned skills that cannot be honed if people do not have the opportunity to experience them.
As the demands of the economy change in the future, companies will need different skillsets from the ones they have and require today. Companies must learn how to measure and how to judge talent so they can resource appropriately. It was agreed amongst the panelists that more emphasis should be given to skills-based and task-based hiring over hiring based purely on education.
The panel recognized that there has been a growing trend in Japan which has seen the creation of more generalist roles than specialist. As employees tend to move cross-functionally rather than working in individual specialisms. When you look at how this impacts productivity, the reduction in the number of specialists means that they are not ready to start the job on day one as they need further training and time to adapt to the role. Whereas, specialists have an in-depth understanding of a specific role and this can increase productivity and output faster.
All panelists touched upon the issue of an ageing Japanese society and said that this inevitability was causing companies to look at how they engage with talent. Proactive action was cited as necessary to change Japan’s current work culture, so the workforce of tomorrow can meet economic demand. Ultimately, it was highlighted that the skills required today and tomorrow are very different from the ones required in the past.
Looking to the future the panelists highlighted the generation of the future being much more about the individual, moving away from the traditional status-driven work culture that has powered the Japanese economy for so long.
Traditionally, Japanese companies tend to hire people for too long. The “job for life” mentality has caused businesses to stagnate, as existing staff do not always have the skills and attributes required to fulfil the role. Businesses need to learn how to reallocate resources more effectively, foster existing talent or outsource to build the skills the company needs. Investing in new talent and or outsourcing will also help companies achieve optimum productivity.
When looking at innovation, it was remarked that innovation is happening at a limited number of companies and the focus needs to be on how to make sure the innovation machine spreads to wider segments of the economy. It is evident that those companies that produce innovation display higher levels of productivity.
With the emergence of AI and the success of outsourcing globally, it is no surprise that these solutions have been flagged as an effective means of answering labor shortages in Japan. Although the panel recognized that for these solutions to be fully utilized, many Japanese companies need to change their culture and the mind-set of keeping everything from technology to people in-house. If they do not adapt then they run the risk of falling by the wayside.