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Japan Market Articles
I hope these articles give you deeper insight into the Japan market and help you to understand how to hire the best talent for your Japan business. Please do not hesitate to contact us should you require further information.

Why Japan is the Most Difficult Market to Recruit in?

 

With a population of 123,074,016 as of October 30, 2023, 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 2.70 %, 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.

Unemployment Rate in Japan remained unchanged at 2.70 percent in August. Unemployment Rate in Japan is expected to be 2.80 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Japan Unemployment Rate is projected to trend around 2.60 percent in 2024 and 2.70 percent in 2025, according to our econometric models. (October 2023) Source: Ministry of Internal Affairs & Communications

 Japan Unemployment Rate 2023Here 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 1953-2023

Unemployment Rate in Japan remained unchanged at 2.70 percent in August. Unemployment Rate in Japan averaged 2.72 percent from 1953 until 2023, reaching an all time high of 5.50 percent in June of 2002 and a record low of 1.00 percent in November of 1968. This page provides the latest reported value for - Japan Unemployment Rate - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. Japan Unemployment Rate - data, historical chart, forecasts and calendar of releases - was last updated on October of 2023.

Japan Jobless Rate Unexpectedly Unchanged to 2.7%

Japan’s unemployment rate unexpectedly was unchanged at 2.7% in August 2023, compared with market forecasts of 2.6%. The jobless rate remained at its highest level since March, as the number of unemployed inched higher by 10 thousand to 1.85 million, while employment increased by 50 thousand to 67.50 million. The labor force went up by 50 thousand to 69.34 million while those detached from the labor force fell by 90 thousand to 40.85 million. The non-seasonally adjusted labor force participation rate edged up to 63.1% in August from 62.9% in the same month a year earlier. Meanwhile, the jobs-to-applications were at 1.29 in August, the same as in July while staying at their lowest figure since July 2022.
The above data was sourced from Trading Economics 2023-09-28: https://tradingeconomics.com/japan/unemployment-rate