Business

Business lobby Keidanren's plan to nix hiring rules makes waves in Japan

by Su Xincheng

Kyodo

Every spring, hordes of young people dressed in matching dark business suits descend on workplaces across the country. They have not yet joined the ranks of the country’s ubiquitous salarymen and women but rather are university students beginning a monthslong job hunt.

But as companies face intensifying competition for young workers due to labor shortages driven by the declining and aging population, the country’s biggest business lobby is signaling it is time to revamp a system that has proven ineffective in Japan’s new demographic reality.

Although many see the long-standing recruitment system coming to an end as only natural, some students and college administrators worry that changing the system will prolong the already brutal job-hunt process.

On Oct. 9, Keidanren said it intends to scrap the student hiring guidelines in 2021 for new university graduates to give more flexibility in recruiting amid increasing competition for young talented workers.

“As (companies) shift away from lifetime employment, many are focusing on hiring workers who have previously worked somewhere else,” said Hiroaki Nakanishi, chairman of Keidanren, also known as the Japan Business Federation. “I felt many (corporate) leaders are aware that Japan is going through a time of change.”

Shigeki Chiba, 20, a third-year student at Meiji University studying political science and economics, wants to look for a job in media but expressed concerns that changing recruitment practices and earlier job searches would give younger college students less time to think carefully about the future.

“If companies begin to contact students in their first or second year, their future could be (quickly) decided, and I think it is a waste to enter a big company and decide on an industry without giving it much thought,” Chiba said.

Mayumi Watanabe, 20, a second-year student at Keio University, will be joining the workforce in spring 2021. She would be greatly affected by the change in the guidelines and worries it will increase competition among her peers to find jobs.

She also believes that unless the culture changes, scrapping the guidelines would not be effective. “I’d like to be free after graduation, to go abroad for instance, but I’m worried about whether there is a company that would like to hire me after I did that.”

“If I were a high school student, I would fear that all my college holidays would be spent on job hunting,” she added.

Major corporations typically abide by nonbinding recruitment guidelines set in advance every year by Keidanren. Recruitment activities, including corporate briefing sessions, job interviews and promises of employment are all carried out on a set schedule.

Japan’s academic year begins in April and ends the following March.

Under the current guidelines, which came into effect in 2016 and will remain valid until spring 2020, Keidanren member companies begin holding job orientation sessions in March for third-year students who will be seeking work upon completion of their studies.

Companies start the applicant screening process, including job interviews, in June the same year and make formal job offers from October. The students enter companies in April after their graduation in March the following year.

The country’s unique recruitment system has long served as a backbone for lifetime employment and a seniority-based wage system.

Unlike in Western countries, Japanese companies generally don’t hire workers with specific skills to perform particular work when needed, instead taking applications from students before they graduate and trying to select ones with the potential to do any sort of task that the company may require of them.

Most companies think new graduates are unable to hit the ground running and train and foster them once they join. As a result, the internship programs are mainly short as they are only intended to help students understand a company’s basic operations.

In contrast, in the United States and Europe, recruitment takes place whenever specific jobs are available. When new graduates are hired, their experience and skills are valued under a performance-based pay system.

Internship programs in the United States and Europe tend to be longer than those in Japan, with the aim of helping students obtain practical knowledge and skills.

Particularly in the United States, it is common for workers to move to new employers for career advancement while gaining more experience and better skills. Many Japanese new graduates, however, continue to work at the same companies until retirement. As a result, they are often ironically described as trying to “find companies suitable for them, not jobs suitable for them.”

Some major companies will welcome the change, which will allow them to hire capable graduates earlier. In line with this, expectations have also risen that year-round recruitment will be adopted in Japan like in the United States and European countries.

“We’ve been thinking for a while now that we should consider the year-round recruitment of new graduates without sticking to simultaneous recruitment,” said an official at Mitsubishi Chemical Holdings Corp.

The recruitment guidelines, designed to allow university students to concentrate on their studies, originally started in the form of an employment agreement in 1953 when Japan enjoyed high economic growth amid its postwar reconstruction, prompting heated competition among companies for new graduates.

The system has had many incarnations since its introduction and was even scrapped once due to companies circumventing the rules to hire young workers earlier than agreed. The latest version is still legally nonbinding and does not cover non-Keidanren members, such as foreign and medium- and small-sized companies.

In the last three years, summer employment internships have become popular among third-year students who are beginning to think about finding a job, reducing company orientation sessions to a formality in many cases.

A third of new-graduate hires also leave their companies within three years, further highlighting the system’s failure to match young people with a job they desire.

With competition heating up, a growing number of companies have effectively begun recruiting activities and making job offers ahead of Keidanren’s timeline.

Many university officials and students, meanwhile, are concerned that the proposed scrapping of the guidelines could lead to a drawn-out job hunt that would have an adverse effect on students’ studies.

“There are concerns that once the guidelines are abolished, job-hunting activities will start earlier and students will have to think about finding a job at the same time of enrollment,” said Takayuki Uchida of the Hosei University Career Center.

Some smaller companies also expressed concern about their ability to compete with major corporations in attracting talented individuals, calling for the current guidelines to be maintained.

“Small- and medium-sized firms hire employees after major companies. Thanks to the separate hiring schedule, we have so far managed to find recruits,” said an official in charge of recruitment at an infrastructure construction company in Tokyo. “But if we are put on a level playing field, students may not come.”

The government is expected to kick off discussions this week to debate new regulations for job hunting and recruiting.

“It is important to discuss the problems that lie with the customs of the Japanese employment system,” said industry minister Hiroshige Seko.

Kenji Uno, an analyst at the Daiwa Institute of Research, also said abolishing the guidelines would have little merit for either students or companies.

“Students may be mentally and physically exhausted as they are likely to be consumed by job-hunting activities,” he said, adding, “For businesses, the time and financial burden of recruitment would increase.”

GET THE BEST OF THE JAPAN TIMES
IN FIVE EASY PIECES WITH TAKE 5