Japan’s Aging Society – 4 Ways the HR Business Has Responded to Labor Shortage

Japan’s aging society has been a hot topic for the past few decades due to the massive labor shortage occurring in most industries, whether it be service, manufacturing, agriculture, construction or healthcare. The country is still managing to make ends meet – but how? In this article, we are going to introduce 4 ways Japan’s HR business has responded to this problem in the past decade.

It’s necessary to understand the background of why these business practices were born in the first place, so let’s talk reasons and numbers.
What were the main factors that the HR industry had to adapt to?

Aging population, low birthrate

If someone mentions this expression, we can confidently say that Japan is what comes into people’s minds first, and unfortunately, that is no wonder. Based on the data collected by the Japanese Cabinet Office in 2020, elderly citizens made up 28.4% of the population in 2019, and this number is predicted to increase even more in the following decades. This is a phenomenon that can be observed in developed countries in general due to the progressing of industrial revolutions and the changes occurring in family structures. However, Japan’s aging can also be accounted for the following 2 factors:

  • declining number of deaths of citizens aged 65+ due to the improvement of life circumstances and medical practices after World War II
  • declining number of births. The current fertility rate is 1.42 births per woman (age 15-49).

Lack of physical labor

In order to respond to the problems mentioned above, Japan started working on both long-term and short-term counteracting measures.

  • In the long run, the country needs to find ways to increase birth rates.
  • For now, increasing participation rate of women and the elderly in labor make up for the lack of workforce – temporarily.

However, working circumstances such as hard physical work and working at odd hours (nights or very early mornings) can mainly be endured by younger people – which the country lacks at the moment. In the past 4 decades, the number of young workers (age 15-44) gradually decreased due to the declining birthrate, while the rest of the age groups have slowly become the majority.

Japan's aging society

Japan’s aging society – Changing of labor force age group structure in Japan (source: Chūshōkigyōchōhen 2018)

 

Japan's labor shortage

Japan’s labor shortage per industry in Japan (source: Chūshōkigyōchōhen 2018)

 

What HR business solutions were born in order to face labor shortage experienced all over Japan?

1. Sending organizations for „Specified Skilled Workers”

In recent years, Japan has opened its arms wide for foreign workforce to enter the country in order to make up for the lack of workforce in industries that are most struck by it. The country created a special type of visa in 2019 called the „Specific Skilled Worker” visa that foreign workers of certain professions who wish to live and work in Japan can apply for.

These 5 industries have been selected first to accept visa applications from skilled individuals for:

  • Construction
  • Shipbuilding and ship machinery
  • Accommodation
  • Nursing care
  • Agriculture

Later, the following 9 industries were also added to the target list:

  • Building cleaning management
  • Raw materials manufacturing
  • Machine parts and tooling
  • Electric, electronics and information technology
  • Automobile repair and maintenance
  • Aviation
  • Fishery and aquaculture
  • Food and beverage manufacturing
  • Food service

Since applying for the visa, getting to a certain level of Japanese proficiency in order to be able to take a language test and a skill test, and finding a sponsor company that provides employment can be difficult to do all alone from a foreign country, so called „sending organizations” (送り出し機関, okuridashi kikan) have been established in order to provide support for potential workers.
These agencies are particularly common in Southeast Asia, in countries like Vietnam, Indonesia or Cambodia, and have to be approved by the Japanese government. Their business model includes taking a certain commission fee from the Japanese companies that are seeking foreign employees with special skills, and also taking a representative fee on top of obligatory fees (such as the cost of a Japanese language exam, skill exam, paperwork, etc.) from the individuals who wish to work in Japan.

2. Employing the elderly – „Silver work”

As it was already mentioned before, the elderly (people aged 65+ in this context) make up almost one-third of the Japanese population. However, according to a recent survey conducted by Nippon Life Insurance Co., almost 64% of Japanese are willing to work even after reaching the age of retirement, which creates new opportunities to fill the gap labor shortage is causing on the market.

In recent years, certain organizations emerged in order to recruit and provide paid part-time work for retired-age citizens who wish to remain active and earn a bit of additional income. This not only helps dealing with the problem of workforce issues to a certain extent nation-wide, but also supports elderly people with staying motivated and social in their daily life. Recruited members of such an association can choose how much they want to work in a week freely, and may also try several different kind of jobs that they may have not challenged before, gaining new knowledge and skills.

Japanese elderly citizen working part-time in a park after retirement

3. Temporary staffing – „Haken”

Temporary staffing or personnel leasing (派遣, haken) is not a recently invented employment type in Japan. However, as labor shortage began to drastically worsen over the past decade, certain industries started relying more and more on the services of temporary staffing companies – the convenience store industry being one of them. Konbini chain owners are struggling with lack of staff to a point where they have to consider ending their 24/7 business policy because they don’t have enough employees to make ends meet in terms of managing shifts. Finding new employees always takes time and money – recruitment costs are one thing, but training a new staff member who has no working experience in a konbini and hoping they won’t quit too soon is another big issue.

In response, some convenience store franchises took solving this problem to a level where they co-established their own temporary staffing company in order to fulfil their specific needs in human resources. A great example for this would be one of the biggest convenience store chains, Lawson, which has its own haken company called Lawson Staff. Temporary staff members who are recruited to the company receive full paid training before being dispatched to stores struggling with empty shifts. Lawson Staff has even developed its own software so its employees are able to browse shifts freely based on their preferred location, working time, store, and many other conditions, which is creating more flexible opportunities for full-time and part-time temporary staff members.

New konbini employee during training

4. Gig work – „Tanpatsu/tanjitsu baito”

Gig work is not a fresh concept globally, but it is something quite new that only has been introduced to Japan through some innovative platforms in the past few years. Gig jobs, or “one shot/one day jobs” in Japanese (tanpatsu baito or tanjitsu baito, 単発バイト・単日バイト) can be done by anyone who has some time on their hands and a need for quick money.

There are several types of gig work, packing being one of them

3 examples for platforms specializing in one day work in Japan are Shotworks, Timee and Matchbox. All websites offer a variety of jobs in all kinds of industries: logistics (packing, packaging, driving), manufacturing (assembling parts), service (convenience store, restaurant or shop staff), office work (administration, filing, documenting, scanning), even agriculture, seasonally (picking) and many more. Gig jobs and temporary staffing jobs are both very popular among students, stay-at-home mothers, foreigners and “freeters” (フリーター, furiitaa: someone who prefers not having a regular full-time job and working whenever and whatever they want).

Japan’s labor shortage problem may result in even more hardships and challenges as population continues to decline in the following years, but luckily, new solutions available on the HR market are – and hopefully, will still be – able to offer a sense of relief to Japanese businesses in trouble.

 

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