Editorials

Shifting to more diverse hiring practices

Keidanren (the Japan Business Federation) and representatives from universities have compiled an interim report calling for a departure from the long-established practice in which most big companies recruit prospective graduates en masse around the same time of year to start working in April — and a shift to more diverse hiring practices, such as year-round hiring, which is much more common in other countries and is increasingly being adopted here by firms in the IT and other growth sectors. The move reflects a sense of crisis among many Japanese firms that if they stick to the established hiring practice they will lose out in the race to secure employees with the knowledge and skills they need in the increasingly competitive and globalized business environment.

The practice of hiring new recruits en masse with a spring start date — when the nation’s academic year ends and begins — is indeed closely linked with other key aspects of the employment systems used by many large Japanese firms. A company will give new hires in-house education and training needed for their jobs on the premise that the employees work for the firm on a seniority-based pay and promotion until they reach the mandatory retirement age. That was an efficient system that made sense in the nation’s postwar economic development, but Keidanren Chairman Hiroaki Nakanishi contends that it no longer suits the needs of the times.

Keidanren has already decided to terminate the guideline for its member companies on the timetable for their recruiting and hiring activities — such as when they can start holding job interviews for prospective university graduates and offering employment promises — rules that were ostensibly meant to prevent firms from competing with each other to start recruiting early, which could affect the job applicants’ academic studies.

Major firms are said to be increasingly concerned that by maintaining the once-a-year hiring practice under such rules, they will lose out in the competition with foreign-affiliated rivals that hire talented manpower with the skills they need year round. The current hiring schedule that mainly targets graduates of Japanese universities, who finish school in March, is also deemed disadvantageous in recruiting Japanese students who studied at overseas institutions or foreign students on different academic schedules.

The interim report by representatives from Keidanren and the universities goes so far as to say that sustainable growth of Japanese companies would be difficult if they rely solely on the hiring of fresh graduates en masse and in-house skills training of the employees. Such calls by the nation’s most powerful business lobby, in consultation with universities, may prompt more firms to shift to year-round hiring in which they look for new employees with the skills and knowledge that match their needs from among not just new graduates but young workers exploring changing jobs. Already, many growing companies in the IT business and other industries such as electronics have adopted year-round hiring or are interviewing and hiring prospective university graduates for jobs multiple times through the year.

Adjusting the hiring practice may in turn bring about more changes to still-prevalent lifetime (or long-term) employment and the seniority-based wage/promotion system at many Japanese companies, possibly increasing labor market liquidity and offering more opportunities for company employees seeking new jobs. If companies start focusing more on the skills and knowledge of individual job applicants when hiring them, students might think more seriously about what and how they study at university.

In the discussion between Keidanren and university officials, the problem of students being concerned more about seeking and securing jobs than on academic performance was taken up. The proposed shift away from hiring prospective graduates en masse once a year in favor of a more flexible and diverse hiring practice is said to be aimed at preventing recruiting activities from getting in the way of job seekers’ academic studies. There is a view that if companies start hiring new recruits year-round, students will be able to start looking for jobs in earnest after graduating from university.

On the other hand, there is concern that students may confused about when to start hunting for jobs if the companies get rid of their timetables for hiring new recruits — and start their job searches early at the sacrifice of their studies. That is a legitimate concern, and if the shift to more diverse hiring practices is meant to help firms secure manpower with the knowledge and skills required to meet their current and future challenges, it is all the more important that the recruiting practices be so designed to secure enough time for job applicants to devote their time at university to their studies.