Japan Revival: How Borderless Talent Can Help Bridge the Country’s Expanding Skills Gap

The mid-1980s was a glorious time in Japanese economic history. A bubble economy led to inflated stock and land prices while investment and consumption enjoyed unparalleled gains. The country was bathing in cash. Growing at an average annual rate of 3.89 percent, Japan was expected to usurp the U.S. economy, which stood at a growth rate of 3.07 percent. 

 

But the bubble broke in the 1990s, and Japan’s lost decade, a period from 1991 to 2001, took over. The state of the country paled in comparison to the gargantuan economic force that Japan once was, with its monopoly over automobiles, semiconductors, and consumer electronic exports. Characterized by economic stagnation and deflation, some argue that the lost decade extends well beyond 2001.

 

Japan of today: a narrowing talent pool meets a widening skills gap

They might be right. Now, in 2021, Japan narrowly missed a recession and expanded at an annualized rate of 0.5 percent this quarter – less than a third of the 1.7 percent that economists projected in May. Future growth also faces pressure from falling economic activity and home demand. 

 

But perhaps the most persistent problems plaguing Japan right now is the skills mismatch and talent shortage. 

According to IBM, 73 percent of Japanese employers say they struggle to keep skills current, and a further 73 percent pointed out critical gaps in knowledge of core skills among new hires. The 2021 ManpowerGroup Employment Outlook Survey for the third quarter of 2021 also indicated that 76 percent of employers in Japan find it hard to fill job roles.

 

Japan also faces a severely aging population. The old-age dependency ratio in Japan increased from 20 percent in 1990 to an astounding 53 percent in 2020, the greatest among all Organisation for Economic Co-operation and Development (OECD) nations. The amount is expected to reach 81 percent by 2050. 

 

A falling birth rate and fewer women in the workforce only exacerbates the size of its future talent pool. In fact, in 2021, the job-to-applicant ratio stood at 1.10 – meaning there were 110 job openings for every 100 job seekers. Given the declining talent pool and growing skills shortage, Japan must look to international hires to regenerate its talent pool for a winning shot at staying afloat. Here are three industries that are facing a talent shortage and the best places to hire to fill the talent gap.

 

Top 2 industries with labor shortages and the best placed to hire for them

Cybersecurity: Boston

 

The lack of national borders in cyberspace means data can travel freely, creating justified data protection and cybersecurity concerns. For Japan, that recently came in the form of alleged cyber threats during the preparations for the 2020 Tokyo Olympics.

 

Japan faces a massive lack of cybersecurity talent, with only 28 percent of cybersecurity professionals working in-house. This is a stark comparison to other developed nations like the U.S., Germany, and UK, which stand at 65.4, 61.4, and 53.9 percent, respectively.

 

Hiring from Boston would be your best bet. The city is home to over seven public cybersecurity companies with market capitalizations of over US$1 billion. Home to leading research universities like Harvard and the Massachusetts Institute of Technology, the city is quickly evolving into an accomplished hub. 

 

Other notable firms with a presence in the area include Carbon Black, RSA, Veracode, and Rapid7.

 

Data science: London

 

In today’s context, big data has become the new oil. Its critical role in helping companies generate valuable insights and understanding consumer patterns has aided marketing strategies and campaigns. According to Nikkei Asia, strong demand for data analysts, data scientists, data engineers, and Artificial Intelligence (AI) specialists will persist in Japan.

 

London has become synonymous with AI and digital transformation. According to a PwC report, GDP in the UK is expected to increase by 10.6 percent as a direct result of AI.

 

In the Global AI Index, an index that benchmarked 62 nations on their investment, innovation, and AI implementation, the UK was ranked third overall. The country also came in fourth for talent and third for research.

Apart from being home to the Alan Turing Institute, the country’s national institute for data science and artificial intelligence, London also hosts many international summits like the AI Summit, Deep Learning Summit, and the Open Data Science Conference (ODSC). Finding impressive talent in this big data hotbed should not be a problem. 

While the cost of living in London is high, hiring remotely bypasses that additional cost. If you’re hiring talent in London, get informed on British law and how to stay compliant every step of the way.  

 

Strategies for Japanese HR specialists

Hiring international talent can be a complicated process that involves an understanding of different languages, cultures, and regulations. But partnering with a management consulting firm with talent acquisition and talent marketing capabilities, like HCCR, is immensely useful. 

 

“We’ve been able to fill some significant gaps in and around employer branding, as well as talent sourcing on a global scale, helping import talent actually into Japan from Silicon Valley, from Europe, from Asia, et cetera,” said Casey Abel, Executive Director at HCCR.  

 

Having deep Japanese expertise and the local contacts to leverage is also essential. For Abel, HCCR approached talent acquisition from a different angle. “Despite other markets moving away from direct headhunting, a very hands-on, proactive market mapping approach to cultivate passive job seekers is one thing we focus heavily on for executive search projects,” he said.  

 

And while some Japanese firms remain on the fence about hiring international talent, Abel believes failing to do so simply puts them at a disadvantage. 

 

“Cultural, linguistic, and even sometimes infrastructure constraints are still very real for many companies here. However, there does seem to be a rapidly developing awareness that many companies are missing out on talent and that certain changes could unlock a lot of value for their organizations.”

 

Companies must remain compliant during international expansion

Once you’re ready, unlocking the capacity to hire cost-effective and borderless talent can be an exciting next move for your company. But Japanese businesses must remain vigilant when setting up international teams.  While HCCR can enable your company to find the best possible candidate with its multi-disciplinary talent solutions team, Globalization Partners can help onboard the employee and take care of all payroll, taxes, and HR-related matters. 

 

The help of an Employer of Record like Globalization Partners can simplify global remote team building by making it easy for companies to hire anyone, anywhere, within minutes, and without setting up subsidiaries. Their legally compliant SaaS Employer of Record platform and world-class team of in-country experts can help you move quicker than your competition.