If you live in Japan, signs of the country’s labor woes are not hard to miss. Help wanted signs are commonly seen in the windows of small restaurants, convenience stores, and other businesses. In smaller cities, most of the people you will meet in shopping areas and public transportation are senior citizens. Moreover, on TV news programs that cover important government or business meetings, it is rare to see more than one or two females among all the men as either the main participants or leading the meeting. Let’s look at the most pressing areas of the labor challenges which are being felt throughout the nation.
Dwindling Labor Supply
According to the National Institute of Population and Social Security Research, Japan’s working-age population (ages 15 to 64) has declined by 15% from its peak in 1995, reaching a new low in 2023. To address the shrinking workforce, Japan has focused on increasing the participation of women and retirees. However, this approach is now nearing its limits, as the potential to further offset the workforce decline with these groups is reaching its saturation.
As the labor market continues to contract, companies are increasingly citing labor shortages as a significant threat to their performance. Small family businesses have expressed concerns about the lack of heirs to take over, leading many to consider closing their doors.
Japan’s workforce is increasingly following global trends, and more workers are willing to job-hop in pursuit of better salaries or working conditions. This shift has weakened employers’ bargaining power, particularly for companies that lack a strong brand recognition or require bilingual employees proficient in both Japanese and English.
Additionally, the actual number of job applications, compared to job postings, has been declining, which shows that companies are finding it increasingly difficult to find workers. This trend is partly due to the rising skill requirements that many firms now need.
Foreign Labor in Japan
In 2023, the number of foreign residents in Japan exceeded three million for the first time, driven by the easing of entry restrictions that had been imposed during the COVID-19 pandemic. This marked the highest number of foreign residents since record-keeping started in 2013. Approximately two million of the foreign residents are employed in the manufacturing and service industries, which together account for the largest part of Japan’s total foreign workforce.
Equal Pay for Equal Work
Campaigning for equal pay is not just a gender-based issue. Part-time workers, and temporary agency workers are also fighting for the right to receive the same benefits as “regular workers” (permanent and full-time employees) for wages, commuting allowance and other benefits. To address this issue, the Fixed-term Part-Time Employment Act of Japan, April 2020, was enacted to help ensure the fair treatment of workers regardless of employment type.
Unfortunately for women in Japan, pay disparities persist across nearly every industry, with salaries starting lower than men from their twenties and continues to lag behind until their fifties, according to a study by Asahi Shimbun. The finance and insurance sectors showed the largest disparities, with women earning less than half of what men made by their late forties.
To address this issue, the government has introduced a requirement for companies with 301 or more employees to disclose the wage gap between men and women. It is hoped that this transparency will serve as a catalyst for corporate change and help shift societal norms towards greater equality.
Female Participation in the Workforce
Overall, female labor-participation rate has grown over the years. There is even an improvement of women maintaining employment after having children, thus, showing that the difficulties faced by women in achieving the balance between job and family is easing and that the gender gap is shrinking. However, there is still a trend for females to work as non-regular workers rather than full-time employees, especially after their late thirties which suggests that females are still facing difficulty to juggle both job and family.
Work Culture
The good news is that progress is being made in reducing the amount of overtime workers spend at the office. The Japanese government has implemented guidelines limiting overtime to approximately 360 hours annually per employee. Every company has its own culture and the ones that are competing for top resources know that they have to offer a better work environment which means reduced overtime and less of the ‘old style’ inflexible and rigid structure that once dominated the workplace.
Many larger companies in Japan have begun incorporating “human capital” metrics into their public disclosure statements. Stock exchange-listed companies must now report data such as the percentage of management positions held by women, gender-based wage disparities, and the proportion of men taking child-care leave. This increased transparency highlights progress in these areas, giving potential employees full visibility into the company’s commitment to a better work environment.
Black Companies
I am sure Japan isn’t the only country to have companies which have poor employment practices, however, the cases in Japan of worker suicide and death from overwork grab the headlines since these cases are tragic and could have been mitigated if the right oversight had been in place. There is no exact definition of what a black company is, however, there are few clues to identify these types of companies:
- Long working hours and unreasonable quotas
- Little compliance with Japan’s Labor Standards Act
- Low salary
- High turnover
- Minimal paid time off
In general, black companies don’t follow standard labor laws. They tend to have poor working conditions and an unhealthy work culture, and they should be avoided. If you are unfamiliar with a company, do some investigation online or ask others about the company before accepting an offer.
Senior Employees
Another notable shift in Japan’s labor market is the increasing participation of older workers. As the share of the population aged sixty-five and above surged from 10% in 1990 to 26.6% in 2015, the proportion of older individuals in the workforce has also grown, rising from 7.8% in 2006 to 11.8% in 2016. Many of these older workers are retirees who have been rehired as non-regular employees, a category that includes most workers aged 65 to 69.
Why Japan’s Labor Issues Matter to You
There are still many challenges in the labor market to be mindful of, especially when it comes to subpar companies, salaries, and working conditions. To succeed in Japan’s job market, bring your A-game, learn some Japanese, and sharpen your professional skills to give yourself a competitive edge.
If you are looking for work in Japan, the good news is that you don’t need to break new ground. Many expats before you have already paved the way, making it easier to adjust and find work in your new home. Also, more banks, real estate companies, and employment services are ‘foreigner-friendly’ compared to just five years ago. As a new resident in Japan, settling in can seem overwhelming but online services and resources will be your new best friend. Good luck in your journey.
