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Data visualisation depersonalizes discussions, but you still need the people to make a judgement

One of my favourite data visualization sites www.jakubmarian.com

I often advise Europeans who are trying to communicate a proposal, or want to have a discussion with Japanese counterparts to try to put their idea into a visual format. This has several benefits. One is that it should reduce the amount of English text that the Japanese person has to plough through to understand what is being proposed.  A second reason is that it depersonalizes the discussion if there is a graphical representation – a “thing” that can be pointed at and disagreed with during the argument, rather than having to argue with someone’s abstract idea.

Thirdly, Japanese written language – kanji – is highly graphical as a communication method, so Japanese people are more receptive to complex concepts being communicated in a graphical and holistic way rather than the textual, linear form common in the West.

So I was quite surprised to hear a young Japanese expatriate woman tell me that her colleagues in the UK based market research agency she works for are much more accustomed to representing their findings in a graphical way than she was used to in Japan.  Specifically, she said that they use infographics and sometimes even send the report to clients as a video, using the infographics and clips of customers being interviewed.

With the advent of “Big Data”, data visualization is a growing industry.  So should Japanese companies be acquiring companies or hiring people who have those skills, or is this another area which will simply be automated, and all that is needed is to buy in or develop some software?

Automation tools already exist for data visualization, but the key is to think about why you want to put the data into a visual format in the first place.  It is usually to give insights which will then provoke a discussion.  An infographic does not of itself provide the solution.  Discussions require human beings to provide their different interpretations of the infographics and ideas about how to act on them.  The infographic provides the “thing” that can be pointed at and disagreed with, but also allows people of diverse backgrounds and native languages to have a more equal chance of contributing to the debate, because there is less of a language or technical barrier.

The market research agency at which the Japanese woman worked was founded in the UK and acquired by a Japanese company in 2014. But it also has offices across Asia, multinational staff who travel across Europe and a call centre based in the UK covering over 30 languages.

The UK is the obvious location for global marketing services, not just because it is the home of English language communication, but because of its multinational workforce, who can ensure the data is interpreted appropriately for different cultures. This is why Japanese marketing and advertising agencies have been acquiring many British companies recently. I just hope Brexit does not damage this advantage by putting up too many barriers to immigration and free movement across Europe.

This article by Pernille Rudlin originally appeared in Japanese in the Teikoku Databank News

Effective communications with Europeans is one topic of Japan Intercultural Consulting’s new Performance Management for Japanese expatriate managers seminars. Further details and registration can be found here:

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Yaskawa Electric to integrate robot production within the EU, may close down UK factory

Here’s my rough translation of the article in the Nikkei today (May 14th 2018):

Yaskawa Electric is building a new parts factory in Slovenia and will shift a proportion of parts production from its factory in the UK. The British factory will continue operation for the time being, but Yaskawa will not make any further positive investments and is also considering scaling down or closing down completely. Concerned about the impact of tariffs etc caused by the withdrawal of the UK’s European Union (EU), Yaskawa is integrating its European robot production so it takes place within the EU.

The industrial robot factory in Slovenia will start production this autumn. A parts factory will also be set up in the vicinity so the supply chain is fully within the EU. On 14th (local time), an investment ceremony is to be held with the government of Slovenia.

The current factory is in Scotland, England [Cumbernauld – around 150 employees], producing mainly electrical parts for industrial robots and industrial machinery for the EU. However, with the withdrawal of the EU in the UK, there is concern that procedures such as customs clearance in exporting to Europe will be complicated, in addition to handling tariffs with the EU region, so there is a possibility that it is difficult to maintain the supply network.

As “risk management requires a supply system within the EU” (Yasukawa Electric’s president Hiroshi Ogasawara), production will be shifted to Slovenia’s new factory and no further positive investments will be made in the UK plant.

The new parts factory in Slovenia is around 40,000 square meters, and will start operation around 2020. It will produce electric machinery parts such as servo amplifiers and inverters for supply to Yaskawa’s own industrial robots, as well as external sales.

The factory in Scotland will continue to operate for the time being, but given the launch of the parts factory in Slovenia, Yaskawa will assess the status in terms of the duplication of production items and the supply and demand situation and will decide on whether to scale down or close as an option in the future.

Industrial robots are a field where Japan is highly competitive. Yaskawa Electric is one of the strongest in the world with Fanuc in Japan, KUKA in Germany and ABB in Switzerland. Electrical equipment used for controlling robots is directly related to performance such as accuracy and durability of industrial robots.

In industrial robot manufacturing, Chinese manufacturers are also gaining know-how, but it is difficult to manufacture parts used for control, which is one of the reasons why it is difficult to catch up with the Top 4 in terms of quality. Especially in Japan, in-house manufacturing of electrical machinery is becoming a source of competitiveness.

For Yaskawa Electric, Europe is the production base for industrial robots as a third region after Japan and China.  KUKA and ABB’s shares of the European market are high, but KUKA is under umbrella of China’s home electronics giant, Midea Group, so the market is shifting. Yaskawa Electric aims to expand its market share by proceeding with its localization.

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Who are the biggest foreign companies in Japan?

It is surprising to see in a Toyo Keizai ranking how many of the 50 largest (by employee number) foreign owned companies in Japan are French (6), and how few are British (2 and are both pharmaceutical companies), considering the similar size of their economies. Switzerland is punching well above its weight with 5 companies, and Germany has stakes in 4.

Nissan is included in the rankings, and is the largest, although the French owned portion is 43.4%.  Second is Gibraltar Life Insurance, which you may think you’ve never heard of, and is in fact a Japan only brand, formerly known as Kyoei, but acquired by US company Prudential Holdings in 2001.

In third place is Sharp – 65% owned by Taiwanese company Hon Hai/Foxconn.  Others in the top 5 are Mitsubishi Fuso Truck and Bus, 89.2%  owned by German company Daimler and MetLife, another American insurance company, which became dominant in Japan through acquiring American Life Insurance Co (Alico) which had a significant business there.

Other European-owned companies in the rankings include:

#11 JATCO (France – a subsidiary of Nissan)

#12 UD Trucks (Sweden – acquired by Volvo in 2007)

#13 Bosch (Germany – acquired machinery business from Eisai in 2012)

#16 Chugai (Switzerland – Roche acquired controlling stake in 2017)

#19 Veolia Japan (France)

#22 Novartis (Switzerland)

#28 Glaxo Smith Kline (UK)

#30 NOK (Freudenberg capital partnership 25% – Germany)

#31 VSN (Staffing company acquired by Swiss company Adecco in 2012)

#32 AstraZeneca (UK)

#36 Ikea (Netherlands – yes, they moved their HQ from Sweden to the Netherlands)

#37 Bayer (Germany)

#38 Adecco (Switzerland)

#40 L’Oreal (France)

#40 Nestle (Switzerland)

#47 Sanofi (France)

#50 Valeo (France)

The only British owned company in the 51-100 rankings is Seiyo Food-Compass, the Japanese subsidiary through acquisition in 2001 of the food services Compass Group.  Advertising agency Asatsu ADK is also in the top 100 but was acquired from British company WPP by Bain in December 2017.

If the UK is really looking to be a more global country post Brexit, making acquisitions in countries like Japan might be a way forward, but I guess the UK has become too used to acquisitions going the other way.

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Gender pay gap in UK’s largest Japanese employers is lower than average

Any company in the UK that employs over 250 people is supposed to have submitted their gender pay gap estimates by 4th April 2018.  We ran our Top 30 Japanese companies through the Companies’ House database and found that all have submitted data for those subsidiaries which qualify.

The average pay gap of their 50 subsidiaries is around 15%, slightly lower than the national average of 18.4%.  There are some interesting patterns in that there is a gender pay gap in women’s favour in the automotive and tyre businesses – Kwik-Fit and Stapletons (both owned by Itochu) and Micheldever (acquired by Sumitomo Rubber in 2017) and also Toyota Motor Manufacturing and NSG Pilkington Automotive.  Looking at the detail, it seems this is to do with there being a lot of men in the lower paid jobs (presumably tyre fitting, shopfloor, delivery) and some well paid women in the higher paid, presumably managerial/executive jobs.

The gender pay gap is particularly bad in finance, although no worse for Japanese banks than for other UK based investment and retail banks.

The wooden spoon goes to Hitachi subsidiary Horizon Nuclear Power with a 41.9% pay gap, closely followed by Fujifilm, with a 41% pay gap.

Top 30 Japanese employers in the UK (April 2018) & gender pay gap
Rank Company UK employees 2016-7* Gender gap
1 Fujitsu Services 9,326 17.9%
2 Nissan 7,755 -11.3%
3 Honda Motor Europe (sales) 6,539 27.1%
Honda of the UK Manufacturing 4.5%
4 Itochu 6,515
Kwik-Fit -15.2%
Stapleton’s (Tyre Services) -24.9%
5 Hitachi Hitachi Consulting 3,998 30.3%
Horizon Nuclear 41.9%
Hitachi Capital 33.5%
Hitachi Vantara 27.0%
Hitachi Rail -0.9%
6 Mitsubishi Corp Princes Foods 3,532 8.7%
7 Ricoh UK 3,484 17.4%
Ricoh UK Products 10.4%
Ricoh Europe 32.2%
8 Sony Europe 3,143 27.2%
Sony Music 22.7%
Sony DADC 8.7%
Sony Interactive 12.8%
9 Toyota Motor Manufacturing 3,098 -6.4%
Toyota (GB) (sales) 29.7%
9 Marubeni (Agrovista) 2,294 36%
10 Dentsu Aegis London 2,757 14.5%
Dentsu Aegis Manchester 1.8%
11 Canon 2,693 15.8%
12 SoftBank (ARM) 2,173 15.5%
13 Nomura 2,166 36.9%
14 NSG Pilkington Automotive 2,128 -12.1%
Pilkington Technology Management 31.7%
Pilkington UK 8.3%
15 Mitsubishi UFJ Financial Goup 1,987 35.6%
16 Denso Manufacturing 1,897 24.2%
Denso Marston 6.6%
17 NYK Group (Yusen Logistics) 1,855 4.0%
18 Mitsui Sumitomo & Aioi Nissay Dowa (Insure The Box) 1,809 19.0%
19 Calsonic Kansei UK 1,778 3.6%
Calsonic Kansei Sunderland 3.6%
20 Konica Minolta 1,572 18.2%
21 Sumitomo Rubber (Micheldever Tyre Services) 1,543 -19.9%
22 Brother Industries (Domino UK) 1,384 15.1%
23 Olympus Keymed 1,348 27.7%
24 Fujifilm UK 1,257 41.0%
Fujifilm Speciality Ink Systems 8.7%
Fujifilm Diosynth 16.0%
25 Sumitomo Corporation (Howco Group) 1,249 17.5%
26 Unipres 1,237 3.1%
27 JT Group (Gallaher) 1,086 14.0%
28 Sumitomo Mitsui Banking Corporation 1019 34.9%
29 Toyoda Gosei 1,192 0.9%
30 Mitsubishi Heavy Industries (Primetals) 1,152 38.1%
TOTAL 84,966 15.1%


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Nidec – work style reforms are “a bigger revolution than when in the Meiji era everyone changed from wearing kimonos to western clothes”

Shigenobu Nagamori founded electric motor company Nippon Densan in 1973 but it wasn’t until the late 2000s that he started on his overseas M&A buying spree, acquiring the automotive actuators and motors division of French company Valeo.

He began to realise that he would have to change the way Nidec worked in order to succeed overseas.  According to a special feature in the Nikkei Business magazine, he was puzzled as to why Western employees worked shorter hours than in Japan and took more holidays, yet their companies’ performance was better than Japanese companies.

Many Japanese companies are looking to change their working patterns, under pressure from the Japanese government for ‘work style reform’ but “merely reducing hours worked will end in failure”.  Nagamori was looking for a change of mindset.

Unnecessary meetings

One area Nidec tackled was unnecessary meetings. In just 4 months at one of their subsidiaries, Tosok, the number of types of meetings was reduced from 156 to 89, and their total occurrence was reduced from 716 to 440 a year.  The number of hours spent on meetings fell from 533 hours to 240 hours a year.

Meetings that did not have a result were particularly targeted, such as the “related divisions information exchange meetings”.  New rules were introduced such as:

  1. Meetings should only take 45 minutes, or 25 minutes for short meetings
  2. Participants should all be told the purpose of the meeting, the schedule and the expected results beforehand
  3. Only the absolutely necessary people should attend
  4. #2 should be reviewed at the beginning of the meeting
  5. 1 page per topic, distributed before the meeting
  6. At the end of the meeting, conclusions and homework should be agreed, and who is in charge of each action point
  7. The minutes of the meeting should be written during the meeting and circulated within 24 hours after the meeting

Missed deadlines

Another issue that was raised in the search for changing mindsets and work patterns was the continual missed deadlines for prototypes.  Because the automotive industry has become so competitive, car manufacturers were shortening their development cycles. Trying to meet their short deadlines for prototypes was causing much of the overtime at Nidec. There was too much of a gap between the time when Nidec’s engineers discussed with the car manufacturers’ engineers and the order was officially made through the sales people.

So it was decided to make the order official once emails between then engineers reached a point of certainty.  This shortened the gap to starting new development work by 3-9 weeks, with a significant reduction in missed deadlines.

The basis for these changes in Nidec’s way of working came from Nagamori’s appointed successor, Yoshimoto, who had become a Master Six Sigma Black Belt when he worked at GE.

Ensuring women are promoted

Initially Nidec hoped to set a target of women comprising 15-20% of managers by 2020, up from the current 2.8% but this has been revised down to 8%. “There is no point in forcing women to be managers if they don’t want to do it” Nagamori states.  Reforms have been introduced such as being able to work from home, being able to shift working hours 1 hour either side of the set start and finish times and also being able to take holiday in 1 hour units.  These apply to male or female workers, but are intended to make caring for a family easier.

Nidec has also invested in changing work patterns on the factory floor, with robotization and Internet of Things, as well as investing in management development, to empower managers to take decisions and also improve their English ability.

English language and management capability

The feature finishes with an interview with Nagamori, where he asserts that to reduce working hours, you have to improve productivity first.  For example, in Japan it is common to make courtesy calls on customers without any real reason. It’s not a total waste of time, but it is not directly productive.”

“Japanese productivity is about half that of Germany.  So we need to double our productivity in order to get to zero overtime.  If you just cut overtime to zero, you have to either hire more people or cut salaries.  Both would be a mistake.”

If overtime disappears, then juniors will no longer get overtime pay.  Nagamori remembers a time when he too mainly used his overtime pay to live off, saving all his bonus and salary.  “30, 40 years on, Japanese society has not changed” he points out.  He says an employee wrote him a note to say that he had a loan on the basis of him doing 50 hours overtime a month.  So if he didn’t get overtime pay on that basis, he would not be able to repay the loan.

So he currently tries to give the overtime pay reduction back half as bonus, and the other half as training subsidy.  This is not the same for everyone – those with high productivity get higher bonuses.   “It’s a big problem that currently those with low productivity stay late and get overtime pay and those with high productivity leave and have lower pay”

“About half of overtime is work that doesn’t really need to be done, so that’s easily got rid of, but the other half is necessary work, and reducing that is not so easy.”

“ The biggest revolution is to get people to recognize that overtime should be zero.  ‘Look at the West, nobody is doing it’ you have to tell everyone”

“It’s not easy for Japanese companies to switch to Western ways of doing things. It’s a bigger revolution than when in the Meiji era everyone changed from wearing kimonos to western clothes”

Nagamori says the reason for the lack of productivity in Japan is firstly English language ability.  “Phone calls take twice as long and you need to pay for translators for negotiations.”

“Also, managers lack management capability.  They don’t question why their team are doing so much overtime.  They don’t understand what their team are doing.  If they said – ‘do this work and then go home’ then there wouldn’t be so much overtime.”

“In the West there are plenty of positions for specialists, but in Japan there are people who don’t have management ability in line positions.”


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Mitsubishi Corp alumnus toasts the Suntory spirit

When I left Mitsubishi Corporation after 9 years, I felt guilty that I had not found a way to repay (in business development rather than money) the MBA they sponsored me through and worried that the wonderful sempai (mentors) who had supported my career would now be angry with me.  I was delighted and relieved therefore, when one of the sempai, very senior in the company, invited me for a drink when I was in Japan on a business trip, and explained to me and the other team members at the table that Mitsubishi Corporation should regard people who leave as alumni, just as McKinsey do.  “We may end up doing business together one day,” he predicted.

Indeed Mitsubishi Corporation is now a valued customer of mine, and I have seen many other MC alumni rise to some of the top positions in the Japanese business world.  Probably the most well known one is Takeshi Niinami.  A graduate of Keio University, as so many MC people are, he was sponsored by MC through a Harvard MBA. He eventually became President of Lawson, the convenience store chain that MC had invested in, leading its turn around.

He is now the President of Suntory Holdings and was interviewed in Nikkei Business magazine about recent developments there, including the acquisition of Beam Inc (but not its acquisitions in Europe of Lucozade, Ribena and Orangina) and the “Suntory Way”.

What Beam got from Suntory

“The Suntory Way means that we develop products that our competitors do not have”, says Niinami.  “When I explained this to the Jim Beam factory in Kentucky they were very supportive.  Beam Inc headquarters people all had MBAs. American marketers get a sense of consumer trends from consultant’s reports and decided their strategy based on that, they never went to the gemba (shopfloor) the way we do in Japan.  They just told the Kentucky factory what to do, top down, from afar.  If you told them to go to the gemba they’d probably quit. There wasn’t one single person in the executive team who came from manufacturing and they weren’t investing in the factory.  But the Kentucky people loved making things.  So when we told them we saw manufacturing as the most important thing and appointed someone from manufacturing to the board, their motivation shot up.”

“When they came to see our factories in Japan, they became aware of the need to improve their Kentucky factory.  Beam is even older than Suntory – more than 200 years of history.  We were able to revive their DNA.”

What Suntory learnt from Beam

“Beam are really good at managing profitability.  Suntory got heavily into debt to buy Beam and we are all focused on reducing this debt.  Suntory was not as good at managing cash flow as Beam but we have learnt.”

What’s next for Suntory and Niinami

Niinami was brought in by the previous President and now CEO and Chairman, Nobutada Saji (also from the founding family) in 2014. Niinami thinks his successor is likely to be another member of the founding family – current COO NobuhiroTorii – and seems in favour of this, as a way of maintaining Suntory’s spirit.  He also expects Suntory to remain a privately held company, despite discussions to the contrary when he first became President. The advantage, he says, is that Suntory is able to contribute to society, through the Suntory Hall (a famous concert venue in Tokyo) and also a water sustainability initiative, without having to justify this to shareholders.

As an outsider, Niinami feels he was able to see objectively how good the Suntory spirit was, and how to roll it out globally.  He has set up a Suntory University to help with this.  Although Niinami is only 59, he says he is willing to finish his career at Suntory.  “I am already “of age” and I don’t think anyone will be asking this “odd fish” to join them.”

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Japan’s megabanks lose popularity with Japanese graduate hires

It’s not surprising that Mizuho, one of Japan’s megabanks, has fallen in popularity from the top spot for 2018 new recruits to #17 for those graduates aiming to join in 2019, according to recruitment agency Disco.  As previously blogged, Mizuho’s former president, now chairman, Yasuhiro Sato has been very clear that the bank should lose around 30% of its workforce globally, through greater use of information technology, and yes, AI.  His successor Tatsufumi Sakai shows no signs of reversing this.

The other megabanks have fallen less dramatically out of favour, from #2 to #4 in the case of MUFG (dropping the Tokyo from Bank of Tokyo-Mitsubishi UFJ as of April 1) and from #5 to #14 in the case of Sumitomo Mitsui Banking Corporation.

Japan’s airlines JAL and ANA have stayed in the top 5, at #1 and #3 respectively. Perennial favourites, the trading companies Itochu and Mitsubishi Corp have also gained popularity, up from #7 to #2 and #9 to #6 respectively.

Manufacturers such as Toyota (#5 from #12), Sony (#11 from #31) and Denso (#19 from #33) have become more attractive, as graduates realise that the Internet of Things means traditional companies are now moving into more innovative IT related areas.

Japanese graduates who have studied at foreign universities favour foreign companies operating in Japan such as Procter & Gamble, Google and Amazon, or management consultancies, whereas no foreign owned company is in the top 10 for domestically educated Japanese graduates.



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Situational leadership for Japanese managers in Europe

One of the issues that Japanese people who come to work in Europe find most challenging is the multiple nationalities of people they have to work with.  Whether you are based in London, Duesseldorf or Amsterdam, it is highly likely that your colleagues will be a mixture of not just British, German or Dutch but also Romanian, Lithuanian, Polish, Spanish or indeed Indian or Chinese.

Much of the global leadership or management training that is offered in Japan is based on American models. Europeans are used to American management styles so they will tolerate them – at least superficially. However, many of these “one size fits all” models are not ultimately effective in getting Europeans to go beyond superficial compliance.  In fact, they can have quite a demotivating effect, particularly if they are too rigidly focused on quantitative targets and objectives.

European managers themselves find that the American model which works the best is known as “situational leadership”.  This is not a new theory – it was developed in the 1960s and 1970s by the Americans Dr Paul Hersey and Ken Blanchard.  It suits the European context because the key idea is that there is no one best style of leadership, and situational leaders are those who are able to diagnose the situation, adjust their leadership style and communicate accordingly.   They also need to be able to take account of the “performance readiness” – in other words the ability and willingness – of the various members of the team.

National cultural differences are not specifically mentioned in the model, but in my training I always relate situational leadership to what is known about the preferences in each European country for top down or consensus oriented decision making styles, as well as direct or indirect and formal or informal communication in the ways of giving feedback or direction.

Of course, this can be somewhat overwhelming for someone who is new to the European workplace. It is particularly tough for Japanese people who have worked in the more traditional Japanese companies, where people just do as best they can whatever their bosses tell them, whether they are willing or able or not.

But I think Japanese managers have two big advantages.  Although this is a generalization and may not apply to all Japanese managers, in my twenty-five years’ experience of working with or in Japanese companies, most of the Japanese people I have met have been humble about their own abilities and also curious about other cultures. This means they are willing to learn and to accept that their usual way of working may have to be adjusted.

Situational leadership is one topic of Japan Intercultural Consulting’s new Performance Management for Japanese expatriate managers seminars. Further details and registration can be found here:


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Why Japan’s salaries should rise

As previously blogged, March is an anxious time in Japanese companies.  Not only are most corporate restructurings and promotions announced at the beginning of April, but pay rises for the new financial year will kick in.

Prime Minister Abe has been pressurising Japanese companies to increase wages for some years now, and yet Japanese companies are still sitting on piles of cash.  Japanese wages have not increased more than 5% a year since the early 1990s, mostly averaging around 2-3% wage rises a year.  The Japanese economy has been in a period of deflation since the late 1990s until the past year or so, so these are real wage increases.  Nonetheless, there is a vicious circle between deflation and low pay increases, which Abe wants to break as part of his 3 Arrows for reforming the Japanese economy.

Low Japanese salary levels

Although I knew Japanese salary levels were not that high relative to other developed economies, I was surprised to see in the Nikkei Business magazine that average British salaries for the head of  R&D at a pharmaceuticals company (£400K) or a CFO of a multinational (£390K) are so much higher than Japan (less than £200K) and even the USA (£200K to £250K).  I wonder if these figures are net of any bonuses. Traditionally, Japanese companies paid 1/18 of salaries monthly, retaining the remaining 6/18 for twice yearly bonuses.  Increasingly these bonuses are performance related, particularly at management levels.

Earnings distributed to shareholders or retained

Nikkei Business then goes on to analyse how earnings are distributed in Japanese companies, between labour, retained earnings and shareholders.  The proportion paid to shareholders has been steadily increasing for Japanese companies, recently outstripping the proportion paid to labour (which has been in decline since 2008), but still below the retained proportion, which has been fairly steady these past 10 years.  In the US retained earnings is the lowest proportion, declining since 2009, whereas shareholders have the highest share, increasing since 2008, with labour’s share declining since 2000, with a slight bump upwards around 2007/8.

Root causes of labour’s declining share

Root causes for this might be that labour’s negotiating power has fallen – unionization in Japan has fallen from nearly 60% of the workforce in the immediate postwar period to under 20% by 2017.  Also thanks to Abe’s labour reforms, companies are not paying out so much for overtime – theoretically at least there is less overtime being done – but this is not being replaced by increases in base salaries.

Who could pay their employees more?

The juiciest bit of Nikkei Business’s feature is in the listing up and analysis of companies who have the biggest potential for increasing salaries:

1 . Tokyo Electron (scores highest on Return on Equity 10, net cash 9 and revenue growth 9 with a 3/10 on returns to labour

2. Nintendo (Dividend payouts 9, capital to asset ratio 9, net cash 10, returns to labour 2)

3. Kakaku.com (ROE 10, capital to asset ratio 9, revenue growth 9, returns to labour 4)

4. Subaru (net cash 10, revenue growth 8, dividend payouts 8, returns to labour 2)

=5. Start Today (revenue growth 10, ROE 10, dividend payouts 7, returns to labour 3)

=5. Chugai Pharma (capital to asset ratio 9, net cash 9, dividend payouts 8, returns to labour 3)

=5. Yahoo, Recruit, with MonotaRO and Fanuc at =9.

Other companies in the top 30 who are also active in Europe include Murata, Kao, Keyence, Shimano, Astellas and Hoya.

It’s an intriguing mix of new internet companies, growing fast, but perhaps preferring to pass on success to shareholders rather than employees and traditional, older companies who are preferring to retain earnings for a rainy day.

The special feature concludes with an interview with Hideto Fujino of Rheos Capital Works, in which he says investors want to hold shares in Japanese companies who raise salaries, if this is to attract more motivated, talented employees.  “We don’t see payroll as a cost, but an investment”.


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March of Japanese labour reforms stalled

March has always been a stressful, uncertain month in Japan.  Most companies, schools and universities start their new year around April 1st and this is also when corporate promotions and restructurings are announced.

Prime Minister Abe has been adding to the stress by trying to push through various labour market reforms, aimed at expanding “discretionary labour” by the end of the parliamentary session in June, but has had to row back on some of them due to the data on which they were based turning out to be severely flawed.

Status conversion rule

One piece of legislation which will be enacted from April this year is the new status conversion rule.  This will allow fixed term employees renewing contracts for more than five years – usually temporary workers dispatched from staffing companies, or part time workers or contract workers – the right to switch to indefinite employment with no fixed period.  In other words, the kind of lifetime employment, regular contract that Japan’s seishain (proper staff – see other posts on this here) have.

The gap in status, job security and benefits between seishain and” irregular workers” has been an enduring sore in Japanese society since the immediate postwar period of labour shortages in Japan when the lifetime employment system became established.  The proportion of irregular workers in the Japanese workforce has grown since the 1990s, to around 37.3% of the workforce – 10% up on 10 years’ ago.

Irregular workers will disappear – maybe

Toyo Keizai magazine has an article headlined “Irregular workers are disappearing” saying the new status conversion rule will be a big shock to companies that rely on non-permanent employees.  However surveys show very few employees and even HR managers are aware or understand the new rule, and companies are not making much effort to stimulate interest in it, unsurprisingly.

Japanese recruitment agencies go global – again

Presumably it will also be a shock to staffing agencies in Japan too, who have done rather well out of the rise in this sector of the workforce.  There is a further rule imposing a three year deadline for temporary employment from a temping agency, after which the company will have to hire the employee directly – which will come into force from September.

No wonder recruitment agencies have started a second bout of acquisitions overseas – recent acquisitions in Europe include Outsourcing acquiring JBW, Liberata and Ntrinsic in the UK and Orizon in Germany and Recruit acquiring USG People in the Netherlands.


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