I’ve just recorded a five minute screencast explaining the mysteries of Japanese corporate hierarchies and job titles. I explain how the “three treasures” of the Japanese post war employment system are beginning to tarnish. Lifetime employment, seniority based promotion and company unions who negotiate base pay and bonuses are all applying to fewer people, or being tweaked to a more performance/competency based system, allowing mid career hiring.
Nikkei Business magazine has just published another article on this too, pointing out that Japanese people’s expectations of what the company should offer are changing as well.
It cites an anonymised case of a 41 year old male IT engineer, who left his electronics employer after 15 years, to work for a logistics company. He was partly worried about the financial performance of the electronics giant, but also felt that with digitization, it was time to apply his skills to a different company.
This might not seem so odd for a European or American employee, but up until recently, in Japan leaving a major company in your 40s would usually suggest you had been pushed out, and it would also have been difficult to find a job of equivalent status in another major employer.
Average time with one employer is shrinking
Data from Japan’s Ministry of Labour shows that the average length of service of males under 50 is beginning to shrink. A survey from RecruitWorks shows that 60% of 35-54 year olds have changed employers at least once. The main reason given, according to a survey from en-japan employment agency, is that they don’t feel any engagement or sense of achievement at their current employer. This is cited more frequently as a reason for quitting than low pay or worries about the future of the company.
Allowing second jobs
Nikkei Business magazine then goes on to examine what various Japanese companies are doing in response to this trend. Mizuho Bank has lifted its ban on employees being able to have a second job elsewhere. Up until recently, it was felt that allowing this would be a security risk as employees had access to confidential client data. Furthermore, it was more complex to manage the pay roll and benefits of employees with multiple employers.
So why did Mizuho change its mind? Partly it was because of the legacy of merging three banks, and the time and cost it has taken to integrate systems, branch networks etc. Mizuho is now looking to reduce its employee total by 19,000 over 2017-2027 so the unspoken contract that there is an obligation to offer lifetime employment has already been broken.
Building new skills – whose responsibility?
But a bigger reason, according to Nikkei Business, is that individual employees’ attitudes towards their company has changed. Rather than expecting to be looked after in terms of pay for life, they are interested in the company as a place where they are offered opportunities to grow, and new skills, so if they need to build those skills and opportunities outside the company, they should be allowed to do so.
Mizuho had become less popular with new graduate recruits recently, and is hoping that by being open to employees working outside the bank, graduates will see Mizuho more favourably again. The take up for applying to do second jobs has been across all age groups – including a 27 year old working for a start up through to a 57 year old working for a recruitment consultancy.
NEC has also been encouraging in-house start ups and set up NEC X to promote new business in Silicon Valley in 2018. Airconditioning manufacturer Daikin allows staff to focus on AI and IoT training and study for 2 years and brings in interns from Tokyo University to work in its operations around the world.
I know I would say this, but one chart that caught my eye in the article was the one showing that Japanese corporate investment in training per head fell , as did the proportion of Japanese companies funding training, after 2008 and has never returned to previous levels in the 10 years since. Japanese employees are getting the message that they cannot depend on their employers for career development.
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