Fri, Dec 28, 2018 - Page 10 News List

Japanese graduate hiring gives way to flexible system

Reuters, TOKYO

It is a rite of spring in Japan: Major corporations hire fresh university graduates en masse every April, starting them all at the same salary with assurances of rising pay and lifetime employment.

However, lately, companies including Rakuten Inc, SoftBank Group Corp and Line Corp have been breaking with that tradition, signing up new employees with coveted technical skills months earlier — and paying them more than other new recruits.

As competition for workers grows in Japan’s shrinking labor pool, traditional seniority and group dynamics are giving ground to the more individualized, merit-based employment system found in the West.

It is a welcome sign for Japanese Prime Minister Shinzo Abe’s government and the Bank of Japan, which have been pushing for a more flexible labor market that would boost wages and revive consumption.

Takashi Murakami, a 23-year-old producer at Mercari, which developed a popular flea market app, said that seniority-based pay and lifetime employment are relics.

“I’m grateful that the company seems to value me with pretty good pay,” he said. “I already got a pay hike after joining the company, which motivated me to work even harder. Merit-based pay is more fitting to the times.”

Over the past few years, Mercari said it has been hiring college students throughout the year to grab workers with needed skills.

The company even offers jobs to some second-year or third-year students, it said.

Mercari also has a program called “Mergrads” to provide internships and training to improve new graduates’ skills.

Since April, it started offering higher pay to some job candidates with skills in information technology engineering and computer programming, said Ayano Okuda, who is in charge of hiring new graduates.

She declined to discuss the company’s pay scale.

“The competition is surely heating up,” she said. “We judge each individual’s ability and offer them attractive salaries reflecting their skills.”

For decades, Japan’s traditional spring hiring underpinned the economy and provided a clear corporate and social ladder, grounded in — and reinforcing — the cultural emphasis on loyalty and conformity.

Under Japan’s often choreographed business practices, the Keidanren, the largest business lobby, had a “voluntary” timetable that many companies followed: Start recruiting new employees on March 1, begin job interviews with fourth-year students on June 1 and informally offer jobs on Oct. 1 — six months before graduation.

Japanese Ministry of Labor data show that the entry-level salary stands at about ¥200,000 (US$1,804) a month, compared with about ¥30,000 in 1968, or ¥130,000 in today’s money.

Demand for workers is stronger now than it has been in decades: There are 1.62 jobs available per applicant, nearly a 44-year high.

In response, the Keidanren has decided to ditch its timetable guidelines by spring 2021, meaning that member companies are expected to follow them until then.

However, more companies, particularly in “new economy” industries such as technology and e-commerce, have adopted much more flexible hiring practices, including offering select employees higher pay.

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