Salary surveys show growth in 2013 and 2014
• Financial services sector rebounding
• Demand for talent exceeds supply
• Abenomics inspiring business confidence
• Language skills remain important
Things are looking up in Japan, as this year’s salary surveys suggest rising confidence among businesses in all sectors.
Since the Liberal Democratic Party’s return to power, the domestic economy has started to rebound. The pro-business policies of Prime Minister Shinzo Abe’s government have been an impetus for companies to increase headcount.
“Many companies loosened their corporate purse strings to fill business support roles”, said David Swan, managing director, Japan & Korea at Robert Walters Japan KK. The firm’s annual salary survey also pointed to Tokyo’s win as host city for the 2020 Olympic and Paralympic Games as a likely source of economic stimulus in years ahead.
The 2014 Hays Salary Survey shows that 43% of employers expect to increase their permanent headcount this year.
However, in the opinion of Jonathan Sampson, regional director for Hays Specialist Recruitment Japan KK, “There is much more to do, and indeed much more importance in Abe’s ‘third arrow’, plus the need for real change in Japan’s approach to diversity, the employment regulatory environment, education system and immigration”.
The 2014 Michael Page Salary and Employment Forecast for Japan also states that Abenomics is beginning to have a positive impact, although this has yet to translate into a significant increase in recruitment. That is expected to change in 2014.
Another salient factor concerning the current employment market is a serious supply–demand imbalance in terms of available talent.
“Demand for candidates far outstrips supply”, said Basil Le Roux, managing director at Michael Page Japan. “Government statistics show that there is a 1:1 ratio between candidates and vacancies, which is also reflected in the fact that candidates normally have multiple offers”.
The recently published Hays 2013 Global Skills Index shows that Japan has the highest score for disparity in supply versus demand for hiring. The Hays report notes a shift towards soft skills becoming more important.
“Underpinning this is one of the highest talent mismatches anywhere in the world”, Sampson said. He emphasised a spike in demand for staff with a “global mindset” who can operate in a “global marketplace”.
International language skills are a chief requirement. All three firms agreed multilingual candidates are in demand across all industries. As the Michael Page report points out, only an estimated 4%–5% of the population speak English.
This foreign language requirement encompasses Japanese professionals with foreign language skills as well as non-Japanese who are well versed in Japanese culture, according to the Robert Walters survey.
As Swan puts it, “Languages other than English, particularly Chinese and Korean, are also desired in Japanese firms to help their foreign expansion plans”. The report highlights a chronic skills shortage among Japan’s junior workforce, due to various reasons such as the ageing population.
According to Swan, “There are a limited number of professionals with both the necessary technical background—such as IT [Information Technology] and law—and fluency in multiple languages”.
In this talent-short market, finding the right candidate may prove a challenging task. Potential hires should not only be skilled in their particular discipline, but also well rounded. Attracting and retaining high-calibre people is a top priority for firms.
The Michael Page survey reveals that structured career progression was the most widely used tool (23% of respondents) for luring the best candidates, and lack of promotion opportunities was the leading cause (also 23%) of staff resignation.
Compensation is always a factor, but Le Roux suggests “a combination of financial incentives as well as opportunities for more rapid career development and growth than Japanese companies typically offer” can be effective for foreign multinationals.
Remuneration is just one, albeit critical, factor in securing talent. In Hays’ survey, 88% of respondents indicated they expect to raise salaries in 2014.
Firms are also investing more in their corporate social responsibility programmes “to align more with both customers and prospective employees”, Sampson said, adding that flexibility in scheduling and engaging female staff has moved from simply “boardroom talk” to “frontline action”.
Appealing work-life balance has taken on increased importance in the hiring process, particularly in the demanding areas of Accounting and Finance, according to Robert Walters’ Swan. “Firms should make the hiring process as short as possible and be flexible by considering people with potential rather than those who can do the job straight away”, Swan said.
The Robert Walters survey stresses that flexibility and speed will be two key features for successfully securing the best candidates this year, as those with in-demand skills become in shorter supply.
Last year, the three recruiting firms cited a trend to shift back-office functions overseas. While this trend seems to be continuing, it is doing so “at a declining rate”, said Le Roux, with many firms starting to bring these roles back to Japan. This has, in part, occurred as a result of the weakening yen, the Michael Page report indicates.
“What has somewhat protected Japan is the need for Japanese language skills, which makes it hard for companies to offshore to the extent that occurred in the US and the UK”, he added.
Robert Walters sees this shift to staffing more in-house specialists as indicative of the hiring market as a whole. Firms have started taking on more permanent, qualified operations personnel, which has boosted hiring overall.
Further, many businesses in Japan that were pursuing an offshore human resources strategy last year “have discovered that the ‘total cost’ of offshoring is much higher than that of basic operational costs”, Hays’ Sampson said. This is due to the high expectations of Japanese companies for levels of quality, which is also reflected in the Hays salary guide.
In 2013, hiring in the finance industry was upbeat, with financial planning and analysis professionals most in-demand, according to the Hays survey. New roles are being created on a constant basis, whereas in recent years hiring was “erratic and drawn out”, Sampson said.
Professionals who have held leadership roles and possess experience collaborating with functions outside finance will be particularly sought after, the Michael Page report explains. Bilingual candidates who have worked abroad or for a “Big 4” accounting firm are likely to have several job offers.
The Robert Walters survey notes that increased competition for talent in this sector will push hiring managers to look outside of financial services to fill available positions. Managers willing to do so will benefit in the long term.
The recruitment firm’s report also stresses heightened demand for IT candidates, including those who have worked in finance. Abenomics and renewed investments in technology are boosting opportunities for both contract and permanent professionals, it states.
There will be increased competition for strong applicants in finance and tech venture companies.
The Michael Page report also notes hiring growth in the technology sector, particularly in financial services, network and telecommunications, as well as commercial jobs. Project managers will be needed to coordinate newly designed application and infrastructure-focused initiatives. Demand is expected to increase for application development roles as well.
Salary increases are anticipated for high-calibre candidates within this sector, according to the Hays report. Demand is high in the life sciences, retail, supply chain and technology industries for senior IT executives. The survey also emphasises that employers will be looking for not only existing skills in candidates, but also for people willing and able to learn new technologies when needed.
When Abe took office, he highlighted several growth industries—areas with strong potential for exports. Medical services and devices was one of these, and hiring in the life sciences industry has been robust as a result.
In addition to long-term unfilled positions in healthcare, new roles are appearing regularly, the Michael Page report states. Medical science liaisons, clinical research associates (CRAs) and regulatory specialists are in highest demand, in large part to facilitate relations between pharmaceutical firms and healthcare institutions.
A government push for innovation in pharmaceuticals is also driving demand for CRAs, according to the Hays survey, due to the flow of new drugs across various therapeutic areas. The role of a CRA entails supporting and monitoring clinical trials. The introduction of new drugs is also boosting the need for staff skilled in product marketing and sales within the medical sector.
The Robert Walters survey points to a lack of sales and marketing professionals qualified in regulatory affairs, drug safety and quality assurance. Consequently, the report says, salaries in this sector have gone up by at least 5%.