May 27, 2015
Hey Boss, Your Nightmare Begins Now!
Here is a collection of indicators that should send a shiver down the spine of all employers in Japan. The average job securement rate of graduating University students in April 2015 was 97%. Also keep in mind that this is already a relatively small pool of higher education talent, from which we want to recruit. In 2013, figures showed that only 50% of High School Graduates went to University compared to an OECD average of 62%. There is no major change in the offing though, because currently 99% of High school graduates found a job upon graduation. Official numbers also tell us that over the last 20 years, the number of 15 to 24 year olds has halved. From another angle, the number of Japanese turning 20 was 2.76 million in 1976 and in 2015 it is 1.26 million. So youth recruitment demand is likely to outstrip supply, forever!
They are just not making enough future workers here. The required birthrate for stopping population decline is 2.1 but currently Japan is only at 1.43. Much more effort needed here obviously, but the prospects for a baby boom do not look promising. A recent Japan Family Planning Association survey stated that 20% of men aged 25-29 had no interest in sex. Also 49% of married couples had no sex in the last month of the survey and these numbers are climbing higher each year. Couples are marrying later, having fewer children, having less sex and there are few prospects for resolution in sight. In 2014 Japan accepted 14 refugees out of 5000 applications and the debate about immigration into Japan hasn’t even begun here yet.
There will be little talent recruitment brain drain from young people becoming self-employed entrepreneurs instead of joining companies. In terms of ease of starting a business, the World Bank noted Japan was way down the list, ranked 120th globally. This is good and bad news for bosses though, because Japan needs more innovation and risk taking. The female participation rate in the workforce is at 62% compared to 81% for men and so is catching up. It will continue to improve, but how long will this process take? Support for working mothers is still underdeveloped in Japan.
In a bleak portent of our future hiring quandary, the latest job openings to job seeker ratio for Tokyo is now 1.65. Fewer young people coming into the workforce is naturally going to make hiring youth talent so much harder. If we also take into consideration the large decline in young Japanese studying overseas, then the future talent pool of fluent English speakers also shrinks. Overall numbers of Japanese studying abroad are down over 30% since 2004. A recent survey of High School seniors found 58% don’t like studying English. In 2013, Fast Retailing boss Tadashi Yanai picked up on this trend early when he commented that, “young people are comfortable with life in Japan. We promote things they despise – going global and studying English”. The pool of the most attractive educated youth talent in Japan is drying up.
Foreign companies here tell us that even getting job applications from graduating students is proving more and more difficult. The students are getting multiple offers, so even at the job offer stage, the competition to actually get them on board is fierce. Our troubles don’t end there though. We also know that 40% of new entrants are ditching their employer after three or four years and heading for greener pastures. So getting them and keeping them is only going to grow in importance.
Young entrants into the world of work when surveyed by the Sanno Institute of Management showed that they 68% wanted to develop their skills and 52% wanted job security. It also showed that 76% wanted to stay with their company until retirement. Conversely, the Japan Productivity Center survey noted that 30% said they would switch jobs for better working conditions. In that survey those preferring salary not tied to achievement and performance, rose from 28% to 44% between 2013 and 2014. Uh oh!
Companies who invest in continually training these young people and their middle managers will do better in this talent war. The young demand it and their supervisors need it. How is your succession planning coming along? If you haven’t confronted this issue yet, trust me, you soon will.
Action Steps
Prepare for the talent war right now
Provide quality training to the new entrants to keep them engaged with your organization
Train supervisors about their role in retaining their staff