The road ahead Japanese workforce and working culture after covid-19

| Posted May 22, 2020 | Career Advice & Insight

Major changes in the Japanese labour force

In the midst of a global crisis that is sweeping the economy and society as a whole due to the new coronavirus, major changes are taking place in the way Japan works and employs. Although the situation is unpredictable, there is no doubt that the impact will be significant in the medium to long term. In response to this situation, the discourse that completely changes the way we work and employ people is prominent in the world. In order to make the discussion a little more grounded, it''s necessary to keep it organized while touching on the data. Let''s break it down into three levels: macro”, employment” and way of working”.

Changes in a macro level.


First, let''s consider the labor flow. Broadly speaking, three trends can be pointed out: firstly, it is an urban to rural trend. Even if the current state of emergency declarations were to end, the tendency of avoiding 3密(密閉-mippei: stuffy atmosphere、密集-mishu: crowded place、密接-misetsu: close distance), would be prolonged. While the influx of population into cities, mainly Tokyo, has continued, this flow should slow down and, conversely, strengthen the flow to rural and suburban areas. It is expected that the white collar workers in the planning field, who are able to do a considerable amount of work by using the various IT tools of telecommuting, will avoid the high cost of living in cities and move to rural areas where they can live with a far more lower living cost. Secondly, the movement of labor across industries as a result of industrial structure could change. Japan''s economy has been noticeably slow to transform its industrial structure, but this unprecedented external pressure is forcing it forward. As reported every day, a severe corporate shakeout is already underway from industries such as tourism, aviation, lodging, entertainment and food service. As of April 27, there were 100 new coronavirus-related bankruptcies and companies preparing for legal liquidation across the country. Instead, the workforce will move to developing industries, particularly the information and communications industry. The third possible trend is the slowdown in global labor mobility. In recent years, Japan has been experiencing a rapid influx of foreign human resources. In April 2019, Japan was on the verge of a major change to become a country that accepts foreign nationals, with the establishment of specific skill qualifications in 14 specific industries. However, that flow is cut short by the global pandemic. The spread of infection between regions is expected to continue entry restrictions to prevent the risk of a second or third wave, and global labor migration will slow down. In particular, the workplaces of small and medium-sized enterprises, which have relied on foreign workforce through the “Technical internship program” will find themselves in an extremely difficult situation.

Changes in employment.


Let''s take a little less perspective and look at it in the employment market. While it remains to be seen to what extent the recession will worsen, the International Monetary Fund (IMF) has forecast Japan''s GDP to grow by minus 5.2% in 2020. Until last year, Japan''s unemployment rate had remained extremely low at around 2.4%, the level at which full employment is considered. The recent peaks were around 5.5% in the summer of 2002 after the dot-com bubble and the summer of 2009 after the Lehman Shock...If the growth is as negative as the IMF forecasts, there is a possibility that the unemployment rate will be the same or higher in the future. Furthermore, there will be an increase in suicides and an increase in economic disparities, which will continue to scar as a major social challenge. Secondly, as far as worker sentiment goes, risk aversion increases during a recession. The stable tendency to cling to one''s current company will increase, and the intention to change jobs voluntarily, which had been on an upward trend, will decline. Even in venture startups, there is a shake-out, and people are forced to give up or withdraw from the business. If these risk aversion trends continue for a long time, they will continue to cast a shadow over the innovative industry. Also, even if it doesn''t lead to unemployment, the average wages will fall. As the need for household supplementation increases in each household with reduced income, the number of part-time, contract and temporary workers in understaffed industries is expected to increase. The need for side jobs should also rise in supplementing the household budget. However, there is no doubt that these forms of employment are low-paying and insecure. With the revision of the law on equal pay for equal work, the trend toward correcting the gap between regular and non-regular employees is likely to intensify in the future.

Changes in the way we work.


How about at a more micro level? It is expected to accelerate digital transformation (DX) and improve operational efficiency as a result. A variety of IT tools are already making remote work possible, and face-to-face transactions are decreasing; particularly in the software field, the need for digital human resources will continue to grow in the future, and there will be a need for training and development of human resources themselves. This flow of DX will also accelerate the flow of work style reforms that have been slow to progress through improved efficiency. A survey by Persol Research Institute also found that workers'' working hours were considerably shorter as a result of the nationwide state of emergency. In fact, the future of telecommuting is difficult to predict. Now, with the declaration of a state of emergency and the restraint from going out, telecommuting itself is spreading rapidly, and the aforementioned survey shows that it more than doubled in the month of March-April. However, even at the time of the Great East Japan Earthquake, the rate of work-from-home increased briefly due to rolling blackouts and reduced train services, and then declined over the next one to two years. In addition, the rate of telecommuting in non-urban areas and small and medium-sized enterprises in rural areas remains low. The rate of telecommuting is expected to fall to some extent once the state of emergency is declared, so it is unclear whether telecommuting will take root widely outside of IT companies and large corporations.


In summary, the changes caused by the corona shock are not so much major changes, but rather the accelerated acceleration of what had already been going on in the past. In other words, companies and organizations that have followed the past trends are more likely to adapt to future changes, and the difference between them and those that have lagged behind will be greater. It is as if an extremely fast-paced competition has begun, with a gap at the starting point, so to speak, and the gap between the companies will widen. Source: Diamond online

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