labour market in Tokyo
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Updated 10 months ago

Today, Japan is the world's third economic powerhouse. Economic insights look stable: a wide range of career prospects and a 2.8% unemployment rate. Prime Minister Shinzo Abe is looking to increase overall salaries. However, deep incongruences remain as Tokyo is a perfect illustration of a dual labour market.

Tokyo's economy

The overall outcome is more than favourable for a country (Japan) that still recalls the bursting of the speculative bubble (the 1990s) which was followed by recession years that led to economic stagnation.

Prosperous years - that is the 1960s and 1970s, with GDP often exceeding 8%, are far behind. Japan's GDP declined severely due to the oil crisis. Though it quickly managed to recover it did not match the record growth rates of previous years. During the 1980s, GDP varied between 3 and 4%, twice as little as before. The crisis came in 1991, with the bursting of the speculative bubble: a sudden drop in GDP, which fell to -0.52% in 1993. This was the beginning of the economic slowdown, and deflation (general price decrease). Wages were also kept down, impacting purchasing power.

After an in-depth analysis, the priority for the Abe government came up with a strategy which was recovery through consumption. Inspired by Western policies, Abe encouraged companies to raise wages. Higher incomes would encourage families to consume more. But growth remained weak or non-existent, with an average GDP of 0.8% per year.

Japan has been through a crisis that has shaken the core of its economic system. After the recession, a consequence of the bursting of the speculative bubble of the 1990s, it went through a new global crisis: the sub-prime crisis, leading to the 2008 financial crisis. A sign of economic failure was the selection of 5 different prime ministers, between 2007 and 2012.

Since 2012, Shinzô Abe took the lead of the Japanese Government, with its economic policy 'abenomics'. Financial analysts had mixed feelings about the results of the measures taken during that period; they concluded that in 2017 there has been an economic enhancement: GDP increased to 1.5 %, and in 2018 it was revised to 1.2%; a low and constant growth rate.

An unexpected factor explained why Japan continued growing and maintained its GDP: the decline of the population rate. The drop in the number of inhabitants mechanically contributed to increasing the average income per capita. This was a significant obstacle in the economic recovery as there were less working people as the number of seniors increased. Japan found itself facing a real demographic challenge.

Labour shortage in Tokyo

It is this demographic situation that partly explains the shortage of human resources. The young active ones well understood clearly that they are in a position of strength. The unions also negotiated for better work conditions.

In Japanese culture, job recruitment is done just after the completion of university studies or even before. In a full-employment economy, students would have no difficulty in finding a job. Students in their last year would be around 86% to get a confirmation of employment (figures 2017).

However, Tokyo is different from other cities. The capital attracts many students and young workers causing other regions to face a shortage of manpower: the students do not hesitate to refuse proposals, favouring the jobs of Tokyo. According to NHK, the Hokkaido region (in the northern Japanese area) would have difficulty recruiting: 60% of the job offers would be turned away by the young graduates (figures 2017).

Most promising fields

Due to the labour shortage, some sectors are particularly under strain, but this is a great opportunity for foreign professionals looking to work in Tokyo.

Vacancies are available in emerging technologies :

  • IOT (Internet of things), or the Internet of objects: this is all about connected objects; objects using the Internet to enhance real life.
  • E-commerce, online games, mobile applications
  • IT, web development, artificial intelligence, engineering, cybersecurity

Therefore high-tech sectors are the most targeted. Even though it's easy to find a side job, « baito », finding a stable job is a more difficult task. In a competitive labour market, the expatriate should show his worth: speaking Japanese is not considered as being an advantage; it is compulsory. Even if you choose to work in an international company, it's important to speak Japanese.

You will definitely have outstanding job opportunities if you cumulate diplomas and work experience. Once again, the company will ask itself why it should hire you rather than hiring a Japanese. A solid background and high qualifications are a guarantee of your capabilities. Japan favours high diplomas, and brilliant careers (renowned university, large company).

Salaries can vary from JPY5,000,000 per year, i.e. about â¬40,000 (e.g. manager position), to more than JPY8,000,000 per year (more than â¬64,000), for finance jobs, for example.

Expatriates will also find work in the educational sector. There is a demand in language schools to teach English and French. Note that, very often, recruiters want the language to be taught by natives speakers.

Students seem keen to learn English - which is the first commercial language. There are therefore more and English teachers in Tokyo.

Good to know:

The construction sector is also under strain. Tokyo is actually working on building construction, renovation and rehabilitation projects due to the 2020 Olympic Games. Transportation is clearly targeted by the government, which fears congestion, especially during rush hour.

Part-time work

To put up with the various economic crisis, Japan has opted for flexibility. Allowing companies to easily hire and fire helps them to increase their productivity. But this flexibility has contributed to the creation of a dual market: on the one hand, permanent contracts (long term basis) with career development prospects and on the other, precarious employment "baito" or "arubaito" (from "arbeit", labour, in German) subject to market pressure. This is the hidden side of the labour market.

"Freeter" (furiitâ, Japanese pronunciation).

The term appeared in the 1980s, with a positive meaning: it refers to those young people who choose to work when they want to. They are free, keeping away from the rigid straightjacket and the model of the salaryman, committed to his company, accumulating overtime.

But soon the term "freeter" lost its original meaning. It is not so much freedom that pushes workers to accept baito, but the difficulty in finding a stable job. This is the irony of employment in Japan: part of the population escapes precariousness. The other one accumulates irregular jobs, with no career development prospect.

The 'Baito' is not only the prerogative of the young people. For them, it remains, indeed, a good way to discover the labour market, while earning money. As they grow up, they will work and thrive in a "real company". Part of them will work to earn money, and silently fighting for Japan's survival.

The baito is almost like a double punishment because it is still discredited in Japan. It is considered as a side job, which you have to stop doing to really integrate into society. Then, how can we consider the thousands of adults in precarious situations? Since 2015, in the private sector, these employees on shaky contracts accounted for more than 40% of the labour force. (Figures from the Japanese Ministry of Health, Labour and Social Affairs).

Women and the elderly are particularly affected by the labour market's instability. These women have stopped working when they started building a family; even if there are changes - notably a questioning of the dominant family model - the practice remains. When these women return to work, it is most often on a part-time basis. Women raising children alone are even more vulnerable.

The old people also have precarious jobs: taxi drivers, supermarket workers, housekeepers, etc. These "little jobs" help them to ensure daily life. In Japan, one senior out of five is still working. The main reason for this situation is the low level of pensions. It is estimated that 19% of them live below the poverty line.

In 2018, the Prime Minister is addressed himself directly to the senior citizens particularly to the least civil servants: life expectancy is increasing (83 years on average), so the retirement age is being raised to 80 years. For the time being, the measure only applies to volunteers. The legal retirement age remains 60.

But almost no one retires at this age: the salary drops, on average, by 30% if you decide to leave at the legal age of retirement. Other procedures aim to gradually raise the statutory retirement age to 65 for all employees. In the beginning, this would apply to the men only. Ultimately, some believe that the legal retirement age will be raised, for everyone to 70 years or more.

The Abe government also proposed measures in 2016 to improve the working conditions of the most vulnerable workers because working in Baito means having less social security coverage than ordinary employees. Less social protection, therefore, less insurance, and, in the long run, a low pension. The government's idea is as follows: the rights of an employee in baito must be the same as those of a regular employee. The future will tell whether these measures will help to halt the precariousness of the labour market.

Understanding the duality of the Japanese labour market will help you to develop your own career plan. The languages spoken (Japanese, English, fluent, even business), expertise, diplomas, your network, will enhance your potential at its fullest. It is entirely possible to work in Japan, especially when you take with a that will hit the mark with recruiters.

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