“Organisations are going to have to start offering better training, both to be competitive in the marketplace and to attract the talent they need.”

Fixing Japan’s talent mismatch

Marc Burrage, managing director at Hays Japan

Text by Gavin Blair /  Photos by Kageaki Smith

One man’s feast is another man’s famine. The shortage of qualified workers in many crucial fields in Japan is proving a challenge for companies across the board. With bilingual professionals in ever shorter supply, this is, however, proving a boon for professional recruitment experts as the battle for qualified candidates continues to heat up.

“Every year we produce a Global Skills Index report with Oxford Economics, and this year the Talent Mismatch score for Japan was 9.9 out of 10, about as tough as it gets,” says Marc Burrage, managing director of Hays Japan, the local operations of the UK-headquartered global recruitment specialist and Japan’s largest specialist recruitment business. This result indicates that there is a significant gap between the skills available in the labour market and the skills that companies need.

The shortfall is particularly acute for all things digital, such as Internet of Things (IoT) engineers and IT specialists, says Burrage, who has been heading Hays Japan for two years, following stints as managing director for the company in Hong Kong and running its Asia-wide outsourcing division.

According to a study by the Ministry of Economy, Trade and Industry, the shortage in IT alone is currently 170,000 workers, a figure that is predicted to quadruple in the coming decades. Although Japan’s education system is starting to focus more on STEM (science, technology, engineering and mathematics) subjects, the needed skills will not get to the market quickly enough.

“There is still a low appetite for change in Japan, though people are starting to acknowledge that this is now a global race for talent,” says Burrage. “Companies, and the economy, will all potentially suffer if these issues are not addressed — and Japan will lose the race.”

The relative lack of increased financial rewards for skilled workers in Japan is one of the contributing factors to the talent mismatch situation, suggests Burrage. Pay based on seniority rather than performance remains the norm in much of corporate Japan, despite moves away from the traditional system by some companies. In spite of a very tight labour market, wages have still not increased; companies have not heeded the pressure from the Bank of Japan and the Keidanren (Japan Business Federation) during the labour unions’ shunto spring wage-hike offensive.

Burrage also notes that, in the current corporate culture many workers don’t take responsibility for improving their own skill sets, a tendency that is more pronounced here than in other countries. They most often rely on their employers to provide what they need.

For their part, many firms have not been focused enough on preparing employees for a rapidly shifting business environment, according to Burrage. “Organisations are going to have to start offering better training, both to be competitive in the marketplace and to attract the talent they need.”

Yet, despite the skill shortages, moves to fully utilise the female half of the population have thus far been more talk than walk, while age-based discrimination also remains a problem, according to Burrage.

“There is still a bit of a head-in-the-sand attitude at some companies who say they don’t want to hire ‘older’ workers, by which they often mean those in their thirties and forties, who are seen as being in their prime in other countries,” he points out. “Why wouldn’t you want to hire them? They have experience and expertise. Especially when we’re already facing a demographic time bomb with the ageing population. Though I do also speak to companies who see the writing on the wall and are embracing more flexibility so they can get ahead of their competitors.”

The lack of competition from skilled foreign talent is another important variable in the equation, observes Burrage, who would like to see the Japanese version of the US Green Card system for skilled overseas workers expanded and accelerated.

“Immigration is ticking up significantly, but immigrants still make up less than 2% of the population. There needs to be a change in the mind-set,” he suggests.

Although the boom in inbound tourism, along with the upcoming 2019 Rugby World Cup and 2020 Tokyo Olympics, should help to boost Japan’s image as an accessible destination, Burrage believes the government could do more to promote the country as a place to live and work. He points to the way New Zealand has promoted itself globally in recent years — “punching well above its weight” for a country with a population of less than five million — as something Japan could learn from.

Hays Japan has done its part by producing a video to try and convince employees from its global workforce of the attractiveness of a career and of life in Tokyo. The video features personnel, from some of the 28 nations represented on its local staff, saying that immigrants can settle in Japan, and thrive professionally, when given the opportunity.

With the advances in areas such as digitisation, AI, robotics and the IoT — collectively being dubbed the Fourth Industrial Revolution — jobs are set to become more mobile than ever, notes Burrage. If Japan doesn’t make it easier and more attractive for workers to come to the country, jobs may go in the other direction.

Overall productivity per worker remains low in Japan compared with many other nations. Burrage sees more open employment practices, greater immigration and a reduction of the skills deficit as some of the crucial keys to unlocking “exponential benefits” in the area of productivity.

Although Hays Japan is currently on course for a record quarter, with its services “more in demand than ever”, Burrage firmly believes there is still more unrealised potential in the country.

“It’s a perfect storm for us,” says Burrage of the current labour and business environment. “We are increasingly being asked for advice by our clients about how they can tackle this challenge. While there are some encouraging signs, Japan needs to pick up the pace and embrace change more quickly by tapping into the opportunities that exist today.”

This can be done by making better use of the available workforce, including women, older workers and contractors, according to Burrage. Additionally, businesses should think more carefully about training employees — to equip them with the skills they will need in the future — and also about putting out the welcome mat for skilled migrants.

“Being open to a more diverse workforce enables organisations to employ the best talent,” states Burrage. “Against the backdrop of a shrinking labour force, those that move quicker will win the race for talent and gain a competitive advantage.” 

“There is still a low appetite for change in Japan”