The Morgan McKinley 2019 Salary Guide for expected salaries and contract rates for professional roles in Japan.
The recruitment market in Tokyo was busy throughout 2018 in almost all industry sectors. Our data shows an increase of 11.5 % in open vacancies year on year. Any increase in job volume, in what is already a notoriously “candidate-short” market, means much more competition to secure the talent.
Interestingly, increased job volume did not translate into increased job seeker numbers, which were in fact down by 14% year on year. This is probably in part explained by organisations being more proactive to retain their employees. Our year end employment survey showed that 53% of respondents received salary increases in 2018, whilst roughly 66% received a discretionary performance bonus. This no doubt helped, but many organisations also placed increased emphasis on offering more growth and promotion opportunities as well as finding better ways to recognise and reward individual performance.
When we asked hiring managers why they failed to hire their ideal applicants, the top three reasons were:
In a labour-short market, job seekers will often receive multiple offers. Compensation is of course important, but in a significant number of instances organisations missed out on securing talent because they took too long to make hiring decisions. That is perhaps unsurprising given that 45% of our client respondents felt that their recruitment processes have stagnated and not improved in the last 2 years.
As ever, diversity has remained a challenge for many organisations. Only roughly half of the client organisations that we interviewed last year have a diversity strategy in place for their recruitment. Even those that do have struggled with gender balance, particularly with women in leadership positions. On the other hand, presumably because of labour shortages, we did see a marked increase in the hiring of foreigners in 2018. I would hasten to add that the overwhelming majority of these hires were professionals with at least business level Japanese language skills.
If the Japanese job market in 2018 were to be characterised by a key theme it would most certainly be Artificial Intelligence (AI) or Automation. It was also a year where many organisations made a real effort to address working practices for their employees.
Everyone was talking about AI in 2018. Organisations simply want to rid themselves of inefficiencies, whilst reducing costs and maximising profits. Employees, however, were/are talking more about the impact of AI, and what it would mean for their future employment prospects. Depending on who you speak to, sentiment around future job markets varies from utopian to doomsday predictions.
Despite the buzz, the impacts on hiring in 2018 were relatively insignificant. Automated processes and systems take time to set up and rely on people for both testing and integration. This meant that for some employees their jobs changed from day to day duties to taking on more implementation focussed roles. However, AI or no AI, this shift away from routine work has been happening for a number of years now. Many companies have either offshored (to lower cost locations) or outsourced any nonessential or repetitive manual functions, asking remaining employees to focus on value-add activities, like partnering more closely with the revenue generation functions of their businesses. So the impacts AI and automation will have on the job market, for many, will really just be a part a bigger trend that is already in motion. Our advice to jobseekers is to develop the necessary skills to allow you to partner and add value to your functions, as the adoption of AI and automation technologies is only set to continue.
Flexible working practices have become a bit of a buzzword of late, especially in the wake of some scandals regarding employees being overworked in recent years. In June 2018 the government passed a work reform bill. The law comes into effect in April 2019 and only applies to large companies, with small and medium companies to be phased in later. Amongst other things, it was created to limit working hours. Employees are now capped at 100 hours of overtime a month (720 hours per year). A significant proportion of white collar workers (as far as I can see the overwhelming majority of people reading this survey) will be exempt from this cap however. This may have been a noble effort by the legislators to reform working practices in Japan, and it is fair to say that until the new laws are implemented the true effects of the changes will not be known. That said, detractors of these changes will feel these reforms did not go far enough, and that they are only a very small step in the right direction.
A number of organisations, however, motivated by a desire to catch up with modern working practices, and/or retain talent, (thankfully) took it upon themselves to really drive their own flexible working practices throughout the year. Despite these substantial efforts, 80% of our November survey respondents worked more than their contracted hours in 2018. Of those who did work more than contractually required, about 66% of them did more than 10 hrs of overtime per week. More than half of those surveyed thought that their work-life balances were either too work focussed or needed improvement. Perhaps more alarmingly still, only 48% of respondents felt engaged at their workplace. Japan is a country known for its long working hours. So much so, that despite a number of organisations implementing new flexible working rules, employees are not necessarily utilising these benefits., often because they do not really feel they can avail of them, for fear that their bosses and colleagues may not approve.
Interestingly when asked “what are the most important reasons why employees stay at your organisation,” the majority (73%) of companies thought it was because of the work/life balance they already offered. Our advice to organisations is to ensure that you have integrated any initiatives you might have properly. This includes encouraging senior members of staff to utilise these flexible working practices themselves to encourage others in the organisation to follow suit.
With the ongoing saga of Brexit and US/China trade tensions, you would be forgiven for thinking that some organisations may have tapered their hiring plans. In actual fact the early indications for 2019 would also suggest that job volume is holding up quite well. If anything, it is surprisingly strong considering that it is normally a quieter time of year as organisations work through their hiring requirements for the year ahead. In support of this positive sentiment, a resounding 87% of our client organisations felt that their hiring demands stayed the same or increased over the last 6 months.
A little closer to home there is perhaps a little more cause for concern as Prime Minister Abe looks to push through with his consumption tax hike this year – a hike that has been delayed twice amid anxiety over the impact to the economy. Japan will, however, host the Rugby World Cup in September and October this year. It has been dubbed as the “dry run” for the Olympics in 2020. Organisers are expecting up to 40% of spectators to be coming from overseas. This will no doubt “fuel the fire” as Japan continues to ride the wave of Olympic euphoria.
Our 2019 salary guide was created using our internal data and insights throughout last year, as well as information gathered in a survey we completed with approximately 600 professionals in November 2018.