In terms of diversity hiring, Japan is now just a bit better than America of the 1860s, when the song ‘No Irish Need Apply’ was first published. Last week, an article appeared in the New York Times that outlined the phenomenon I’ve been experiencing first hand as a foreigner in the Japanese job market. Japanese firms are reluctant to hire foreigners and are even turning away Japanese students who have studied abroad. Hm.

It seems that in the Japanese private sector, being a ‘go-getter’ will get you nowhere. The young people interviewed for the article were penalized for crossing their arms, laughing, and [respectfully] offering ideas. Such behavior surely cannot be tolerated; next thing you know, they’ll be using the restroom during working hours. Preposterous!

Well, you can’t fault Japanese management. They’re just thinking of the stakeholders.

But Japanese companies are running out of stakeholders. The private sector has traditionally viewed its workers as primary stakeholders — they have a great deal “invested” in their company’s success. The cornerstone of management’s unwritten agreement with employees is 終身雇用 (shuushin koyou), Japan’s longstanding institution of lifetime employment. Under this system, Japanese hires can expect regular raises and promotions until retirement. Building a career at one company rather than jumping around within an industry breeds loyalty, if nothing else. Loyalty’s reliability as an asset is decreasing as the lifetime employment system begins to fray.

A study of Japanese employment trends over the past two decades by researchers at Hitotsubashi University has shown a flattening of salary increases for senior employees in the private sector. Tough times have made it increasingly apparent that two young workers can do more for the money than can one senior employee. As a result, senior employees’ raises — and jobs — are being cannibalized to hire new graduates.

Those new graduates are supposedly hired for lifetime employment, but I don’t buy that and the statistics suggest that they don’t either. The loss of guaranteed, late-career rewards has gutted the Japanese lifetime employment system and led many young Japanese to terminate their employment contracts to pursue other opportunities. And surely, the young people who expect the same guaranteed career that their parents and grandparents enjoyed are being naïve.

There are simply too many Japanese people being fired or quitting for the stigma of mid-career hiring to persist. I really shouldn’t underestimate corporate Japan’s ability to ignore change, but there must be a point where practicality outweighs tradition and companies begin hiring people older than 25. When that [miraculous, momentous, glorious] day arrives, loyalty-based human capital development should lose priority to merit-based personnel evaluation.

Unfortunately, the globalizing Japanese company is still exceptional, and the number of Japanese students studying abroad is falling. Those young Japanese people who do go abroad do so in spite of ineffective foreign language instruction at home and a dearth of opportunities afforded them on their return. They’re being snapped up by eager foreign companies while Japanese firms stubbornly refuse to address the brain drain staring them in the face. What’s worse, Japan’s underdeveloped venture capital industry prevents startups and entrepreneurial enterprise from providing a suitable outlet for young people with big ideas.

So yeah, nothing but good news.

Maybe I’ll change my tune when I get a job offer from a Japanese company.

REMIX