Sei sulla pagina 1di 29



Kenexa Confidential 1 of 29 9/10/2009

Corporate Recruiter........................................................................................................24
Executive Search Consultant.........................................................................................24
Executive Search Recruiter............................................................................................24


While white-collar and management recruiting traces its origins back to the Depression era in
the United States, the industry only started moving in Japan in the early 1960s.
Historically, recruiting in Japan used to be considered as an exclusively governmental
responsibility. In the early-mid 20th century, it existed to help prevent unfair treatment of
laborers by their employers!
Government agencies such as the Employment Service Agency played that role in the past.
Private white-collar recruiting activities were confined to dealings with upper business
managers and scientists/technicians.
However, it became increasing clear that the government organization was not equipped to
respond to a large number of white-collar job seekers with highly specific and technical skills.
This was especially true given that the government agency was supposed to treat all job
applicants in a fair manner.
Expansion & 1997 Deregulation

Kenexa Confidential 2 of 29 9/10/2009

With the influx of foreign firms needing professional help to find qualified people, and the
expansion of the computing and financial industries in the early 1980s, demand for private
recruiting services steadily increased.
By 1989 there were 200 registered private operations. This number jumped to 300 in 1992
and remained steady at about that level after the collapse of the "bubble economy".
Then, following deregulation of the industry in April 1997, private firms were allowed for the
first time to perform recruitment and placement of candidates at all levels and in all industries.
Not only independent placement firms but also businesses affiliated with other HR service
companies (such as temporary employment agencies), subsidiaries of large business firms,
and foreign-affiliated HR firms have since joined the recruiting & placement business.
The number of placement firm offices nearly tripled.


There isn't really an up-to-date government report on the size of the recruitment market in
Japan. However, according to a JETRO publication, back in August 2001 statistics from the
Ministry of Labor gave the overall size of the combined staffing and placement market as being
about 1.77 trillion. Although this sounds like a lot, it was still only about one sixth the size of
the U.S. market, which was worth $101.8 billion in the previous year.
Of that Japan market amount, 86.7 billion yen was paid out as commissions to private
recruitment companies and 50.6 billion yen of this was for placements of white collar workers,
including engineers, managers, and sales staff. The Ministry statistics also say that there were
4,675 recruitment firms servicing the market in 2000, who between them successfully placed
49,322 people. Now, 5 years later, the guess would be that these numbers have increased
around 50%. Thus, the estimated number of recruiting companies now exceeds 6,000 firms,
and the value of white collar placement sector commissions is probably worth about 70-80
billion yen
Another report says, In 2005, the total number of recruiting firm offices in Japan (including
local branches of the same firm) was 3,727, which is 6.5% higher than the 1999 figure
(Source: Ministry of Health, Labor and Welfare).
There are approximately 800 recruiting firms in Japan.
The current market size of the industry hovers in the ¥70 - 90 billion [607-780 million USD]
range, and some estimates expect it to exceed ¥250 billion by the end of 2005. The total
number of placement firms and their branch offices is also rapidly increasing and is forecasted
to continue on the rise for years to come.
But 75% of all agencies have less than 5 staff and limited resources, facilities and technology
As has been the pattern in the past, it is estimated that about 40% of Tokyo recruiting firms
will cease operations within 2 years. A full 30% of firms currently registered have been
operating for less than one year and another 30% for less than 5 years. Only 17% of all
recruiting firms have been operational for over 10 years.

Kenexa Confidential 3 of 29 9/10/2009

1. The human resources industry in Japan can be classified into three categories:

a) Temporary staffing,
b) Job placement and
c) Outplacement.

2. The market for temporary staffing services was pioneered in 1966 by Manpower Japan, an
affiliate of the U.S.-based firm. Japan was experiencing rapid economic growth and its demand
for workers was extremely high. Job placement services began with the establishment of
publicly run employment agencies, in accordance with the Employment Stability Law enacted
in 1947. In 1997, the market was broadly opened to enable private-sector companies to
provide job-placement services for a fee. The area had been slow in opening up to the private
sector because such services were generally regarded as a government responsibility, a
viewpoint that accorded with the conventions of the International Labor Organization. The
human resources market was inaugurated by foreign-affiliated staffing firms such as
Korn/Ferry Japan (U.S.) in the field of executive search services3 and DBM Japan (U.S.) in
outplacement services.

Kenexa Confidential 4 of 29 9/10/2009

Temporary Staffing Expands, Job Placements Level Off
The market for temporary staffing soared following deregulation under the Temporary Staffing
Services Law, reaching ¥2.36 trillion in fiscal 2003 (Fig.5). Thereafter, however, the growth
rate slowed and the market became saturated due to increased competition, but new growth
was anticipated owing to deregulation under the amended Temporary Staffing Services Law
enacted in March 2004.

According to a report by the Ministry of Health, Labour and Welfare in fiscal 2003,4 the
number of offices providing temporary staffing services that year was 16,8045 (Fig.6).
Preliminary figures indicated that the number in Tokyo in fiscal 2004 increased 21.9% to
8,593, suggesting that growth was also achieved nationwide.

Kenexa Confidential 5 of 29 9/10/2009

Executive Search & Search Firms
Approximately 10% of all recruiting firms in Japan are executive search or search firms.
Executive search firms focus on proactively scouting new talent. They may specialize in certain
industries, or restrict themselves to handling certain types of assignments.
East West Consulting K.K. is the leader in this category, though unlike most of its competitors
it is a full-service recruiting firm, able to satisfy client needs in a very broad range of positions
and industries.
A search firm, especially in the Japanese market (which has far fewer proactive job seekers
than most comparable industrialized nations), generally has a far greater capacity to be able
to identify and introduce suitably qualified candidates in accordance with a client's request.
Within the Search category are companies fashioning themselves as "retainer" firms, or firms
requiring (usually substantial) sums of money from a client in advance of commencing a
search. The "retainer" system has not been readily accepted by many Japanese and savvy
Tokyo-based foreign companies, who are accustomed to results-oriented rather than heavily
upfront fee structures.
Major sources of business for these firms have been clients developed through international
associate offices, and individual client contacts experienced in using a style of executive search
that is common in - and perhaps more suited to - the United States and Europe.
Other Types of Firms
Placement Agencies:
Over 40% of all recruiting firms in Japan are placement agencies.
This is the most common type of recruiting agent in the Japanese market. Placement agents
generally do not proactively scout talent, but rather introduce to prospective employers
registered job seekers and respondents to advertisements (usually placed by the agent).
Placement agents generally focus on clerical and lower professional through mid-management
level positions.
Outplacement Agencies:
This is a market segment that has grown in recent years, though only a little over 1% of all
the recruiting agencies in Japan are this type.
Outplacement, also known as "re-hiring assistance", involves assisting companies with their
personnel restructuring projects. That is, an outplacement agent (like EWCC) specializes in
assisting, retraining and finding alternative jobs for persons that a company is forced to let go.

Kenexa Confidential 6 of 29 9/10/2009

Other Types of Agencies:
Approximately 45% of all recruiting firms in Japan are this type of firms.
There are other styles of recruiting agent, including a number of hybrid types. Some are
branches of US-, Europe- and Asia-based operations. Some firms offer outsourcing, human
resource consulting, training, market research and/or other services in conjunction with
recruiting services.

Source: NLI Research Institute


Japan is a "Search" Market.
While there is clearly an enlarged and still-increasing pool of available people, Japan remains -
in recruiting terms - a "search" market. All other industrialized nations are "selection"
Statistics tell us that more people may be ready to interview, but they also tell us that many
of those are younger - non-managerial - people. The person you need is probably busy
building up an excellent career with an appreciative present employer.
Japanese companies have been restructuring, but have also been fighting hard to retain their
key players. Good candidates generally have to be sought out and encouraged to risk changing
jobs. Executive search - by professionals who know the labor market and how to approach and
persuade Japanese professionals - is invaluable in leading proper candidates to good
opportunities. And no firm in the Japan market carries out executive search as well as East

Reasons for Using Professional Recruiting Firms:

Newspaper advertisements are not generally effective
Qualified people who work at Japanese companies don't typically read the want ads.
Nevertheless, Japanese are just as ambitious as anyone, and if given the right opportunity,
they will change jobs. They aren't necessarily closed to new ideas. The key is to scout them,
and then to meet with them personally and present an opportunity.

Kenexa Confidential 7 of 29 9/10/2009

Family Pressure
Sometimes it is even necessary to meet with family members to ease their fear of change. If a
man changes jobs, the entire family - wife, parents, and in-laws, often must approve the
The identity of many non-working wives is tied closely to their husband's work. Many wives
are proud of being married to an employee of a large, well-known company and don't want to
lose that prestige when the husband goes to work for a lesser known or smaller company.
There is a well-known story about a manager - not an executive - who resigned from a major
Japanese company to go to a foreign company. He had formally accepted the foreign
company's generous offer, and left his old company.
A few days after his departure, a blue limousine stopped unannounced outside his Tokyo
None other than the president of the Japanese conglomerate himself emerged from the vehicle
- accompanied by the candidate's mother! The company had solicited her support and flown
her to Tokyo from Kansai without the knowledge of her son.
Shortly after the ensuing conversation, and to the bewilderment of the new prospective
employer, the candidate rescinded their offer and stayed with his lifelong employer.
Loss of "bragging rights" and loss of face
A great deal of prestige - both for the individual concerned and his family - comes from
working for a large, well-known company. Despite a new title, excellent growth opportunity
and huge compensation package on offer from a new company, a candidate knows that people
he cares about will interpret his leaving the major company as a kind of demotion.
The same people will ask, "Why did he have to leave? What did he do wrong?"
It is generally believed that "good" employees are rewarded by and remain loyal to their
companies, and that a departing employee must therefore have somehow failed in their
duties. Worse: the departed employee can be seen to have betrayed his old employer. The loss
of face can be considerable.
Companies that are well known in the U.S. or Europe are not known in Japan.
This is due to the historically closed nature of the Japanese economy. A very few companies,
like IBM and to a lesser extent McDonalds, have attained a respectable status here only
because they are well-established and have achieved recognition in Japan.
There are also advantages to working for a large Japanese company that many foreign or
smaller Japanese companies cannot match. For example, it is easier to borrow money from a
bank to buy a house if one works for a large company. Or, in some cases, it is possible to
borrow money directly from the company at low rates.
Also, it is easier for children to be accepted at good schools if their father works for the "right"
company. Many private schools assume that jobs with small companies are not secure.
Small Companies Are Unattractive
There are relatively very few small dynamic companies in the Japan market. Most graduates of
the best universities join large firms. In addition, almost all technological innovation has come
from the largest companies. They are the only ones who have the capital necessary for
research and development. So if someone wants to have influence in his industry, he must
work for a large company.
The lifetime employment system "hangover"
Until recently, because employment at Japanese companies had been relatively stable, there
were generally few opportunities for people in mid-career who wanted to change jobs. Large
Japanese companies still focus on hiring university graduates, rather than mid-career

Kenexa Confidential 8 of 29 9/10/2009

Due to this historical absence of a mid-career hiring "market", most employees aren't
accustomed to thinking in terms of changing jobs.
The historic guarantee of lifetime employment also ingrained a sense of security in Japanese
company employees, enabling them to sacrifice potentially higher pay at foreign firms for
greater security. The system was the plank of a great sense of loyalty and obligation to the
company, which was in turn a source of pride to the employee. Because the company had
given the employee a job for life, the employee felt the need to live up to the company's
expectations. Companies leveraged these emotions to successfully pressure employees
wanting to leave - and still do.
The emotional and actual infrastructure supporting this system will take considerably longer to
disappear than the lifetime employment system itself.
Charts herein were reproduced from statistics obtained from Japan's Ministry of Health, Labor
and Welfare, as well as NLI Research Institute, Statistics Bureau of Management and
Coordination Agency, and other government and private institutions.

References Include:
Special Report on Labor Force in Japan, February 1998, February 2000, August 2000,
Statistics Bureau, Ministry of General Affairs (Management and Coordination Agency)
Status Report on People Wishing to Change Jobs, 2000, Japan Institute of Labor "Placement
Firms, The Key Player of Flexible-Employment Era", NLI Research Institute Report

Recruiting industry in Japan – Recent update 1

A recent Nikkei survey of 4,500 companies found that collectively the firms plan to increase
hiring by about 20%, for the third year in a row.
But it's not just demand by the market that is bringing new players to the recruitment market;
it's also old fashioned greed. The March 17 IPO of Tempstaff, one of Japan's largest temporary
staffing and general recruitment agencies, was rather good, with the stock climbing about
25% before settling back to a price near the listing value of 150,000 yen per share. The
company now has a current market cap of 103 billion yen, of which CEO Yoshiko Shinohara
still owns 71.64%. Not bad for a self-made business woman.

Another interesting side note about the TempStaff IPO is the very timely investment of
$18 million by Kelly Staff of the U.S. in 2005, as part of a larger tie-up between the two
companies. The valuation of Tempstaff at that time was apparently around $360 million and
Kelly Staff decided to borrow the money from MUFG bank at just 0.57% interest. The one-year
loan was repayable in February this year, just 2 weeks before the IPO. So for a measly
$102,600 in interest, the folks at Kelly Staff landed a windfall gain of $36 million. Their
shareholders must be pretty happy right now.
There isn't really an up-to-date government report on the size of the recruitment market in
Japan. However, according to a JETRO publication, back in August 2001 statistics from the
Ministry of Labor gave the overall size of the combined staffing and placement market as being
about 1.77 trillion. Although this sounds like a lot, it was still only about one sixth the size of
the U.S. market, which was worth $101.8 billion in the previous year.
Of that Japan market amount, 86.7 billion yen was paid out as commissions to private
recruitment companies and 50.6 billion yen of this was for placements of white collar workers,
including engineers, managers, and sales staff. The Ministry statistics also say that there were
4,675 recruitment firms servicing the market in 2000, who between them successfully placed
49,322 people. Now, 5 years later, my guess would be that these numbers have increased
around 50%. Thus, I estimate the number of recruiting companies now exceeds 6,000 firms,

Kenexa Confidential 9 of 29 9/10/2009

and the value of white collar placement sector commissions is probably worth about 70-80
billion yen.
This is not say that everyone is making money. Indeed, end-hiring companies are now a lot
more choosey than they were, and of course there are plenty more vendors to place orders
with. And since almost all recruitment in this country, other than high-end executive search, is
done on a contingency basis, the vendors are all pretty hungry. As a result, Japan's famously
expensive (30% of a candidate's annual salary) recruiting fees are coming down and indeed
some of the larger and better known technology companies won't pay more than 20%. Of
course, being well known firms, the online recruiting sites are almost ready to let these
companies list for free, since they pull lots of job-seeker visits and subsequent job
Just how many more recruiters have joined the field in the last 5 years is also quite
astounding. In just one year, 2000, the number of licensed consultants soared by 1,176 firms,
a 25% increase. This was admittedly a unique year, because in 1999, the Diet passed a new
law significantly increasing the number of industries that recruiters could legally operate in.
Then in 2000, the law was further amended to allow temp-to-perm transitions, which of
course brought many staffing agencies such as Tempstaff into the recruiting industry as well.
What is the future for recruiting firms in Japan? I believe that both online recruiting and
personal consulting (e.g., executive search) have a bright outlook, so long as the economy
maintains momentum. The problem is, of course, that no one knows how long this current bull
market will continue. I recall only too well the blood on the streets from mass firings of
personnel conducted by the high-tech and banking industries in 2002 and 2003. During that
time, almost no one in the recruiting industry made any money and many went out of
The good news is that even compared to 3-4 years ago, recruitment in Japan is now well
established, with about 30% of white collar placements being made through consultants.
However, since the business is truly cyclic, i.e., when there are no jobs, or when job hoppers
are scared to move, then there are no placements. Still, anyone getting out of the IPO starting
gate in the next 12 months stands to make a good slug of cash.
Terrie Lloyd writes a weekly newsletter for entrepreneurs and business people about business
and political opportunities in Japan. You can find the newsletter at For further
contact with Terrie, email him at

Recruiting industry in Japan – Recent update 2

The staffing industry has been rapidly growing in Japan during the period of economic
recession after the collapse of the 'babble economy'. Most of companies concentrated their
management resources into core activities and their peripheral operations tended to be
reduced including contract out to outsider. They have introduced temporal workers instead of
permanent employees to cut labor costs and to meet unstable fluctuation of workforce
demand. Therefore, the number of temporal workers in Japan reached 2.1million in 2002,
which was four times bigger than that of 1990. Deregulation of Worker Dispatch Law also
accelerated the growth of labor market for temporal workers as well as the staffing industry.

Following results were obtained.

1) A business model of the staffing industry tends to seek 'scale' because of low profit rate per
temporal worker. This type of business sends mostly female office operators to customers.
Another model is to dedicate in highly specialized staffing markets, for example IT engineers,
designers, announcers, etc.
2) Business offices of the staffing industry have concentrated on the three major metropolitan
areas, namely Tokyo, Osaka and Nagoya. Especially Tokyo has so much demand for temporal

Kenexa Confidential 10 of 29 9/10/2009

workers that makes it the largest agglomeration of the industry. Regional centers, typically
Sapporo, Sendai, Hiroshima and Fukuoka, also enjoy location of the industry because of their
branch office economies.
3) In any metropolitan areas city centers provide best accessibility to customers' offices, so
that location of the staffing industry remarkably concentrated on that place.
4) Large staffing companies allocated their business offices according to the hierarchical
system of cities. In the initial stage, location of their offices was mostly confined to the three
major cities and four regional centers, after that they established branch offices in prefecture


Region: Organisation Of Economic Co-Operation And Development

Income category: High income
Population: 127,956,006
GNI per capita (US$): 38,980.00

Ease of... 2006 rank 2005 rank Change in rank

Doing Business 11 12 +1

Starting a Business 18 87 +69

Dealing with Licenses 2 3 +1

Employing Workers 36 28 -8

Registering Property 39 35 -4

Getting Credit 13 13 0

Protecting Investors 12 12 0

Paying Taxes 98 89 -9

Trading Across Borders 19 20 +1

Enforcing Contracts 5 6 +1

Closing a Business 1 1 0
Note: 2005 rankings have been recalculated to reflect changes to the 2006 methodology and
the addition of 20 new countries.
Starting a Business (2006)
The challenges of launching a business in are shown below. Included are: the number of steps
entrepreneurs can expect to go through to launch, the time it takes on average, and the cost
and minimum capital required as a percentage of gross national income (GNI) per capita.

Indicator Japan Region OECD

Procedures (number) 8 — 6.2

Time (days) 23 — 16.6

Kenexa Confidential 11 of 29 9/10/2009

Cost (% of income per capita) 7.5 — 5.3

Min. capital (% of income per capita) 0.0 — 36.1

Employing Workers (2006)

The difficulties that employers in face in hiring and firing workers are shown below. Each index
assigns values between 0 and 100, with higher values representing more rigid regulations. The
Rigidity of Employment Index is an average of the three indices.

Indicator Japan Region OECD

Difficulty of Hiring Index 28 — 27.0

Rigidity of Hours Index 60 — 45.2

Difficulty of Firing Index 0 — 27.4

Rigidity of Employment Index 29 — 33.3

Hiring cost (% of salary) 12.7 — 21.4

Firing costs (weeks of wages) 8.6 — 31.3


1. Incorporating Your Business
Types of operation in Japan
Foreign companies generally establish a business presence in Japan in one of four modes.
Representative office
Representative offices are established as locations for carrying out preparatory and
supplemental tasks aimed at enabling foreign companies to engage in full-scale business
operations in Japan. These offices may conduct market surveys, collect information, purchase
goods and implement publicity/advertising efforts, but they are not permitted to engage in
sales activities. The establishment of representative offices does not require registration. A
representative office cannot ordinarily open bank accounts or lease real estate in its own
name, so agreements for such purposes must instead be signed by the head office of the
foreign company or the representative at the representative office in an individual capacity.
Branch office
Foreign companies wishing to engage in business operations in Japan must establish a branch
office or a subsidiary company. The simplest means for a foreign company to establish a base
for business operations in Japan is to set up a branch office. The branch office can begin
business operations as soon as an office location is secured, the branch office representative
determined, and the necessary information registered. A Japanese branch office is a business
location that provides services in Japan decided upon by an organization authorized by the
foreign company, and ordinarily is not expected to engage in independent decision making. A
branch office does not have its own legal corporate status, but instead is deemed to be
encompassed within the corporate status of the foreign company. In general, therefore, the
foreign company is ultimately responsible for all debts and credits generated by the activities
of its Japanese branch office. A Japanese branch office, however, may open bank accounts and
lease real estate in its own name.

Kenexa Confidential 12 of 29 9/10/2009

Subsidiary company
A foreign company establishing a subsidiary company in Japan must choose to establish the
subsidiary company as a joint-stock corporation (Kabushiki-Kaisha (K.K.)), limited liability
company (Godo-Kaisha (LLC)), or similar entity stipulated by Japan's Corporate Law. Both
unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) are granted
corporate status under the Corporate Law, but they are rarely chosen in practice because
equity participants bear unlimited rather than limited liability. All types of subsidiary
companies can be established by completing the required procedures stipulated by law and
then registering the corporation. A subsidiary is a separate corporation from the foreign
company, so the foreign company will bear the liability of an equity participant stipulated by
law for all debts and credits generated by the activities of the subsidiary. Other methods by
which a foreign company may invest in Japan using a Japanese corporation but without
establishing a subsidiary are by establishing a joint venture with a Japanese enterprise or
investment company, and by equity participation in a Japanese enterprise.
Limited liability partnership (LLP)
It is also possible to do business by using a Yugen Sekinin Jigyo Kumiai. This type of entity,
considered the Japanese version of a limited liability partnership (LLP), is not a corporation,
but a partnership formed only by the equity participants, who have limited liability.
LLPs are also distinguished by the fact that internal rules can be freely determined by
agreement between the equity participants, and that taxes are levied on profits allocated to
equity participants without LLPs themselves being liable for taxation.

2. Human Resource Management

1. Recruitment
a) Recruiting methods
Japan has a government-run employment agency known as "Hello Work" with offices
throughout Japan. Hello Work offers free support for people looking for work and companies
looking for workers; all industries are covered by the agency. Similarly, some regional public
organizations and education institutions such as universities also provide employment services
for free. There are also many privately-run employment agencies; these come in several
types, including executive search-type agencies, as well as those which build up a database of
registered potential employees and employers, and where the agency collects fees on a
contingency basis (i.e., when someone from their database is successfully employed with a
company). Japan also has a wide range of newspapers, magazines (e.g., job-transfer
magazines, industry-specific magazines, etc.), and internet websites through which companies
can find employees.
b) Legislation on recruitment
As far as labor contracts are concerned, the principle of freedom of contract applies to the
hiring of workers, and allows an employer to decide what kinds of workers and how many to
hire. There are, however, some restrictions. For instance, under the Equal Employment
Opportunities Law, employers must afford the same opportunity for employment to women as
to men when recruiting and hiring workers. For that reason, employers may not specify male
or female employees when advertising situations vacant, with the exception of a few specific
2. Labor contracts
a) Working conditions
When hiring workers, companies enter into labor contracts with each worker. At that time, the
employer must notify the employees in writing of the following employment conditions.

• The term of the agreement (or where there are no provisions pertaining to term, the
fact that there are no provisions pertaining to term).

Kenexa Confidential 13 of 29 9/10/2009

• The workplace, and the duties that the employee will have to perform.

• Matters pertaining to start and finish times, work in excess of regular working hours,
breaks, days off and leaves.

• Methods of determining, calculating and paying wages; the wage calculation period
and payment times.

• Matters pertaining to resignation and dismissal (including all grounds for dismissal).

b) Term of labor contracts

Labor contracts generally do not stipulate a term. Where a term is specified, however, it must
be no longer than three years except in a few special cases. However, a worker may resign by
notifying his/her employer at any time as long as at least one year has elapsed since the date
of the start of the contract term.
c) Probation period
Employers are allowed to set a limited period of probation prior to fully employing somebody,
so as to see whether or not the probationary employee is able and suitable for the job.
Probation periods generally last for about three months. However, it should be noted that if
the employer decides not to fully employ somebody during or after the probation period, this
refusal to employ is treated in the same manner as dismissal of an employee; in order for
such a refusal to be legally allowed, valid reasons for refusal (which were not evident at the
time of probationary employment) must have come to light during the period of probation, and
it must be objectively reasonable for the employer to refuse to fully employ that person for the
aforementioned valid reasons.
d) Re-assignment and external assignment
Japanese companies frequently redeploy their workers through internal re-assignment and
external assignment, and such redeployments may often require a worker to relocate.
Generally, employers have considerable discretion when it comes to changing a worker's duties
or temporarily assigning him or her to another company if this is reasonably necessary to

3. Wages
a) Principles of wage payment
Employers must pay wages in legal tender, directly to the employee, not less than once per
month, and on a specified date. However, employers are allowed to remit wages into a bank
account specified by the employee where the employee agrees to that method of payment,
and may also deduct social insurance premiums, taxes and similar expenses from wages.
b) Guarantee of minimum wage
The minimum wage is determined according to region and industry. Where an employee is
subject to two different minimums, the employee is entitled to the higher of the two minimum
wages. To give an example, following the latest revision in October 2006, the current
minimum wage for Tokyo is 719 yen per hour.
c) Wage system
It is typical for Japanese companies to pay wages on a monthly basis, and to pay employees
summer and winter bonuses. One characteristic of Japanese wages is the make-up: monthly
wages usually include a basic wage and a range of allowances, which may include
accommodation, family and transportation allowances. Another characteristic is that the
amount paid in bonuses makes up a relatively high proportion of total wages paid to
employees (*1). An effect of the high proportion of wages made up of various allowances and
bonuses consequently is to lower the rate of overtime pay paid for work outside normal

Kenexa Confidential 14 of 29 9/10/2009

working hours. The typical wage system in Japan has traditionally been based on seniority,
whereby employees' wages increase in accordance with the number of years of service at a
company. However, recently, an increasing number of businesses are introducing ability-based
and duty-based pay systems, and some are even implementing performance-based pay
systems where wages are determined according to each employee's rate of achievement of set
targets. As a result, more and more businesses are adopting a yearly wage system (*2).
Further information is available through the Basic Survey on Wage Structure statistics collated
annually and provided by the Ministry of Health, Labor & Welfare in both Japanese and

*1. In FY2004, the average bonus paid by private-sector companies was 4.41 months' worth
of prescribed monthly wages (for clerical and technical occupations). (Source: National
Personnel Authority)
*2. Whether or not a yearly wage system is introduced or extra wages are paid for overtime
work is irrelevant. If a company in Japan introduces a yearly wage system, it almost always
only covers management-level employees.

4. Legislation on working hours, breaks and days off

a) Working hours, breaks, days off
1. Working hours must, in principle, not exceed 40 hours per week or eight hours per day
excluding breaks (this is known as "statutory working hours"). However, some
businesses are permitted to have their employees work up to 44 hours per week at a
maximum of eight hours per day. These businesses include retail and beauty services,
cinemas and theatres, businesses related to health and hygiene, as well as restaurants
and entertainment businesses with less than 10 regular employees.
2. In the event that an employee works six hours, the employer must give that employee
not less than a 45 minute break; this increases to a one hour break where working
hours exceed eight hours.
3. Employers must grant employees at least one days off per week, or four days off in
any four-week period (this is known as "statutory days off"). Sundays or public
holidays need not necessarily be days off; employers may determine employees' days
off at their own discretion.

b) Agreements on overtime and work on days off

Any employer that requires workers to work in excess of statutory working hours or on
statutory days off must submit a Notification of Agreement on Overtime and Work on Days off
to its local Labor Standards Inspection Office.

c) Overtime payment
Companies must pay an increased rate of wages as set forth in the table below to employees
who work in excess of statutory working hours, work on statutory days off or work late at
night (between 22:00 and 05:00).
Table 4-1
Rate of increase

Work in excess of statutory working hours 25%

Work on statutory days off 35%

Work late at night 25%

Work late at night in excess of statutory working hours 50%

Kenexa Confidential 15 of 29 9/10/2009

Work late at night on statutory days off 60%

d) Exceptions for managers and supervisors

Persons in positions of management or supervision and persons handling confidential
administrative work who are closely involved in management are not subject to the
regulations on working hours, breaks and days off (with the exception of regulations on night

e) Modified working hour system

Some jobs entail large peaks and troughs in the number of working hours according to the
year, month or week. In some of these cases, companies are allowed to adopt a system of
calculating working hours whereby the company need not pay increased rates in certain weeks
or on certain days even where employees work in excess of statutory working hours, provided
that the employees involved work no more than the statutory number of working hours on
average within a predetermined period. In this case, however, a labor-management agreement
must be entered into or appropriate provisions included in work rules before a flexible system
can be adopted.

1. System of annual modified working hours Employees' working hours must not exceed
40 hours on average per week for a specified period of more than one month but not
more than one year. If a company adopts this system, even workers whose statutory
working hours are 44 hours per week, under the exemptions detailed in 4.5.1. 1), are
subject to the aforementioned 40-hour average.

2. System of monthly modified working hours Provided that provisions are drawn up
prohibiting employees' working hours from exceeding 40 hours(*) on average per
week for a specified period of not more than one month, the employer may have
employees work in excess of 40 hours in a specified week or in excess of eight hours
on a specified day.

3. Flextime system Another system under which working hours can be adjusted within a
monthly period is the flextime system. Under this, the total number of working hours
that a worker must work during a fixed period of not more than one month is
established, and workers are free within limits to determine what time they start and
stop work each day provided that they meet the total number of working hours

4. Week-based modified working hours Under this system, employers may have
employees work for more than eight hours but not more than 10 hours per day
without having to pay increased rates of wages, provided that employees' working
hours do not exceed 40 hours per week. It should be noted, however, that this system
is limited to retailers, inns and restaurants with less than 30 regular employees.
Furthermore, if a company adopts the system, even workers whose statutory working
hours are 44 hours per week, under the exemptions detailed in 4.5.1. 1), are subject
to the aforementioned 40-hour average.

* Under this system, the working hours of workers whose statutory working hours are 44
hours per week under the exemptions detailed in shall remain 44 hours.

f) Paid leave
Employers must grant 10 days' paid leave to employees that worked for six consecutive
months from the time of hiring and who worked on not less than 80 per cent of all schedule

Kenexa Confidential 16 of 29 9/10/2009

work days. This paid leave may be taken consecutively or separately. Where an employee's
application to take paid leave will hinder the normal business operations, the employer may
require the employee to take such paid leave at a different time. The number of days of paid
leave available to employees increases in proportion to employees' length of service as set
forth in the following table.

Table 4-2
Years of service 0.5 1.5 2.5 3.5 4.5 5.5 6.5

Leave days granted 10 11 12 14 16 18 20

The right to annual paid leave expires after two years. In other words, annual paid leave left
over from one year may be carried over and taken the next year only. For instance, if an
employee is awarded 10 days' paid leave in 2004, but opts not to take paid leave in that year,
the employee may carry those days over to 2005 and use them in addition to any leave days
which become available in 2005. However, those 10 days awarded to the employee in 2004
cannot be carried over to 2006 or beyond. It should also be noted that employees that have
been continuously employed at the same company for not less than seven years and six
months can take a maximum of 40 days' paid leave in any one year, including days that
became available within that year and those carried over from the previous year.
Employers are not required to grant paid leave days in addition to those described above to
cover days on which employees did not work as a result of any non-work-related illness or
injury. It should also be noted that most Japanese companies grant a few additional paid leave
to employees for marriage, death of close relatives, and childbirth by the employee's spouse,

g) Maternity, childcare and family care leave

1. Maternity leave: If an employee of expectant mother requests permission for leave of

absence six weeks prior to the expected date of delivery (14 weeks in the case of
multiple pregnancies), the employer must approve the request. Furthermore,
employers are, in principle, prohibited to cause any female employee to work for a
period of eight weeks commencing from the day following that on which the employee
gave birth.

2. Childcare leave: If an employee with a child aged less than one-year-old requests
permission for a leave of absence (by the child's first birthday in principle, or up to the
age of 18 months if certain conditions are met), the employer must approve the
request. Employers may deem employees who have worked at the company for less
than one year and employees with a spouse who is able to take full-time care of the
child to be ineligible for childcare leave, provided, however, that the employer does so
by stipulating to that effect in a labor-management agreement.

3. Family care leave: If an employee with a family member who has been judged to
require a certain level of nursing care requests permission for a leave of absence to
provide such nursing care (up to a maximum of 93 days in total per that family
member), the employer must approve such a request once only for each occasion that
a family member falls into a condition requiring full-time nursing care. Employers may
deem employees who have worked at the company for less than one year and those
whose employment will terminate within three months ineligible for family care leave,
provided, however, that the employer does so by stipulating to that effect in a labor-
management agreement.

4. Leave of absence to nurse a child: A worker with a child of preschool age may take a
leave of absence of up to five days per year to nurse a sick or injured child.

Kenexa Confidential 17 of 29 9/10/2009

(Reference 1) Corporate benefit costs
The expenses that a company spends on the welfare benefits of its employees can generally
be divided into two groups: statutory welfare expenses, which include labor and social
insurance premiums, as well as other legally required costs; and voluntary welfare expenses.
According to a study (*) carried out in FY2003 (April 2003 through March 2004), the portion of
wages comprised of welfare benefits was 17.8%. Specifically, the aforementioned statutory
welfare expenses took up 12.9%, while voluntary welfare benefits amounted to 4.9% of the
total. There has been a trend in recent years towards an increase in statutory welfare
expenses, while voluntary welfare benefits are on the decrease.
Voluntary welfare benefits include providing accommodation, health check-ups and other
health-related benefits, general life assistance such as subsidized meals at in-house cafeterias,
and the provision of recreational facilities. By far the most common of these is

* Performed by the Japan Federation of Economic Organizations.

(Reference 2) Labor unions

In Japan, the right of its labor unions to carry out their activities is guaranteed by law.
Employers cannot employ a person on the condition that he/she does not join a union, and
cannot cause any disadvantage to an employee because he/she is a union member.
Furthermore, no company may refuse its labor union's request for collective negotiations
without due cause.
For their part, membership of Japan's unions is decreasing year by year; membership was
estimated to be 19.2% in June 2004. Examining labor unions by scale, we can see that
workers at 50.6% of companies with 1,000 or more employees are unionized, while the same
can be said of only 15.8% of companies with employees of between 100 and 1,000. In the
case of companies with less than 100 employees, employees at only 1.2% of businesses are

(Reference 3) Temporary workers

The term "Temporary worker" refers to a worker that enters into an employment contract with
a temporary staffing agency (the company that temporarily places the worker), and who,
under the orders of the agency, reports for work at a client company of that agency (i.e., a
company that enters into a temporary worker placement contract with the agency, and then
accepts temporary placement of the worker), and who performs duties under the orders of the
client company.

1. Restriction of length and type of temporary work As a rule, temporary workers can be
placed at companies to perform any duties other than port transport, construction and
security, as well as some medical work. With the exception of some jobs, which
require expert knowledge, skill and experience, and which are not subject to
limitations on the term of temporary placement (known as the "26 specialized jobs"),
temporary workers' placement terms are limited to a maximum of three years,
provided that the term can be recognized as being temporary. It should be noted,
however, that the term of placement for temporary workers that perform
manufacturing work is limited to one year.

2. Coverage of temporary workers by labor law Labor laws such as the Labor Standards
Law, the Industrial Safety and Health Law, and the Equal Employment Opportunity
Law apply to temporary workers. Companies that accept placement of temporary
workers bear the responsibility of complying with the provisions of the Labor
Standards Law pertaining to working hours, breaks and days off; those companies
may have temporary workers work overtime within the scope allowed by the Labor
Standards Law provided they enter into a labor agreement regarding workers'
overtime with the agency that places the temporary worker. In this case, the

Kenexa Confidential 18 of 29 9/10/2009

temporary staffing agency bears the responsibility to pay increased rate of wages.
It is the temporary staffing agency's responsibility to ensure temporary workers'
annual paid leave, and to supply the client company with a replacement worker if
necessary while the original temporary worker is on annual paid leave. Furthermore, it
is the temporary staffing agency rather than the client company that must take out
labor insurance (Workers' Accident Compensation Insurance and Employment
Insurance) and social insurance (Employees' Pension Insurance and Health Insurance)
for the temporary worker and pay the appropriate premiums.

(Reference 4) Subsidies
The Government provides various assistance for enterprises that create jobs, two examples of
which are as follows:

1. Subsidy for employment of human resources contributing to the development of Small

and Medium-size Enterprises' business base A subsidy of 1.4 million yen per person
(up to a maximum of five) is provided for startups (or the establishment of Japanese
corporations in the case of foreign enterprises) that employ human resources that help
strengthen the business base.

2. Career development subsidies If vocational training for clear goals is provided to

workers, one third of the wages of workers is subsidized during training.

(Reference 5) Consultation with specialists on human resource management

Social insurance and labor consultants are human resource management experts with special
nationally administered qualifications. At the request of companies, they perform a range of
services including:
1. Carrying out labor and social insurance-related procedures and other administrative
work as a proxy for companies when hiring staff.
2. Consulting services in relation to safety and hygiene, as well as labor management
(including drawing up work rules, planning and redesigning wage structures, as well as
settling employment problems).
3. Mediation in individual employment disputes.
4. Consulting and handling of claims regarding pensions.
5. Other employment-related tasks.

(Performance of services covered by 1. and 3. by persons other than certified social insurance
labor consultant and attorneys is prohibited by law.)

Kenexa Confidential 19 of 29 9/10/2009

Flowchart 1. Social and labor insurances procedures when setting up a company and
hiring staff

Kenexa Confidential 20 of 29 9/10/2009

Kenexa Confidential 21 of 29 9/10/2009

Recruitment: a job, industry and way of life

Labor law of the land helps skirt potholes in road to success
Temp Staffing Agencies Eyeing for New Graduates, Women and Foreigners

Earnings for recruiters can vary as much as from 3 million yen to 30 million yen annually.
Some companies only pay a commission of client fees for successful hires, while others offer a
base salary plus commission. Generally the lower the salary, Gibson says, the higher the
commission: “The maximum is about 4.5 million yen for newcomers. After a couple of years, if
they build a good reputation with clients they could make up to 40 to 50 million yen. The rule
of thumb is the longer you’re in it the more you earn.” But there are risks to consider in the
headhunting business. It’s an industry with a high turnover rate, especially among companies
that pay on a commission-only basis.

Compensation & Benefits
There has been extensive demand for experienced Compensation & Benefits professionals with
thorough knowledge of Japanese labor laws, pensions and social insurance requirements. This
as resulted from companies carrying out pension reform and the impending introduction of the
Japanese 401k style pension plan. Demand is also being driven by the ongoing process in any
companies of changing the traditional seniority based pay system into a pay by performance
based model. Although most larger multinationals have now had this in place for some time,
many smaller firms and most Japanese companies still use a seniority based pay system.

Due to the shortage of in-house Compensation & Benefits specialists, the consulting firms and
HR outsourcing firms have certainly been busy with requests for their services, but they in
turn have also found it difficult to find experienced staff to meet this demand. Many of these
firms have been targets for companies seeking the skills of their consultants.

Increased recruitment volumes across most industries has led to additional opportunities for
in-house recruiters as companies look to centralize and streamline their recruitment functions.
This is in contrast to previous years in which headcount freezes and budgetary restrictions
meant that recruitment had been looked after by other HR team members.

Learning & Development

Demand in Training and Learning and Development has remained steady due to improved
economic circumstances and headcount approval to invest in and develop Learning &
Development functions.

Diversity training remains a current hot topic amongst many multinational firms. Many foreign
firms have been conducting workshops and training in this area for a few years, largely driven

Kenexa Confidential 22 of 29 9/10/2009

by financial institutions. In some instances however, the introduction of training on harassment
and workplace conduct issues has only been implemented after specific internal cases
highlighted the need for employee education in this area. In others, the issues of diversity and
workplace conduct are not on the agenda at all. So there is certainly a large variance in the
adoption of these concepts across the market.

HR Generalist
Demand also remains strong and constant for the HR Generalist who can be a real business
partner and provide strategic and advisory support, either for the business unit they support
or at the more senior level, to the CEO or President. Firms are increasingly recognizing the
value that a proactive, involved HR department can bring.

Human Resources Salary Table 2005 [in MIL. ¥]


Human Resources Director –Large organization 22–35 18–30

Human Resources Director – Medium organization 18–24 14–20
Human Resources Manager – Large organization 12–18 10–15
Human Resources Manager – Medium organization 10–15 8–12
Compensation & Benefits Manager 10–18 8–14
Compensation & Benefits Staff 6–10
Recruitment Manager 9–15 8–11
Recruitment Staff 5–9 5–8
Learning & Development Manager 9–15 8–13
Learning & Development Staff 6–10

Human Resources Generalist (Senior/CRM) 11–18 7–11

Human Resources Generalist (Junior) 6–10 5–7
Human Resources Admin (incl. recruitment, C&B, training) 4.5–6 4.5–6

Table notes:
1. The above salary figures are based on million yen per annum.
2. The above represent mid-point salaries and do not include discretionary performance based
bonus/incentive schemes.
3. The above information is based on salaries prevailing in multinational companies in Japan.


Kenexa Confidential 23 of 29 9/10/2009

Corporate Recruiter
Company International Strategic Communications
Type Mid-career
Full/Part Time Full-time
Salary 200,000 - 250,000/Month
Commission based
6% of gross sales
Location Den-en-chofu, Tokyo
English Level Business
Japanese Level Native-level
Date Posted 2006-11-13
Requirements Native-level Japanese level
Must currently reside in Japan

Executive Search Consultant

Company Ingenium Group, Inc., The
Type Mid-career
Full/Part Time Full-time
Salary from 10.0M - 20.0M/Year
Commission based
Location Minato-ku, Tokyo
English Level Native-level
Japanese Level Basic
Date Posted 2006-11-06
Requirements Must currently reside in Japan

Executive Search Recruiter

Company TMT (Technics in Management Transfer)
Type Mid-career

Kenexa Confidential 24 of 29 9/10/2009

Full/Part Time Full-time
Salary from 6.0M - 25.0M/Year
Commission based
Location Chiyoda-ku, Tokyo
English Level Business
Japanese Level None
Date Posted 2006-11-01
Requirements Must currently reside in Japan
Working or spouse visa (not tourist visa).
University graduate.
A commitment to 3 or more years in the job.



Kenexa Confidential 25 of 29 9/10/2009

• Japanese-Experts
If you're thinking of living and working in Japan, we offer job seekers methods
which are "tried & true" from people just like you who have been through the
procedures and policies of relocating to Japan. Visa assistance, employment
assistance, and general daily living assistance. We have done it all and offer you
the best in our collective knowledge.
(A2004-1263) URL
• Japan Recruiters International
(A858-2478) URL
• ExecNet
(A863-635) URL
• IT Convergence
Information technology, Internet, multimedia.
(A854-751) URL
• IMCA America
(A857-604) URL
• Top Money Jobs
(A860-994) URL
• Arts C Models
Foreign models in Japan.
(A861-803) URL
• JDV International
JDV International Inc. is a technical search firm specializing in the placement of
Information Systems professionals worldwide. Their site includes job listings
available in Japan.
(A847-1322) URL
• James Harvard International
An international placement firm specializing in IT. At the site you can search for
jobs available in Japan.
(A850-741) URL
• IMC Systems Solutions
(A852-492) URL
• Stoneman Corporation
Information technology.
(A856-732) URL
• Cambridge TranSearch
(A864-883) URL
• Juno Systems
Juno Systems specializes in IT Staffing, Project Management and Management
Consulting. The site includes a job search page where you can identify jobs in
(A848-989) URL
• iHumans
Biotechnology, Science, Medical
(A851-593) URL
• A-TEN Associates
Financial services
(A859-636) URL

Kenexa Confidential 26 of 29 9/10/2009

• Access Technology Japan
ATJ places people in the Japanese IT industry. Website includes job search.
(A849-1069) URL


• The English Job Maze
An International ESL/EFL job & information site for ESL/EFL teachers and
employers in Japan and around the world. But it is also much more than 'just
another' ESL/EFL job site. It contains a wealth of free TESL industy-related info for
teachers, including 'Countries @ a Glance' - the most comprehensive TESL guide
to pay, taxes, visas, travel, etc, in 50 of the world's most popular teaching
destinations, including Japan.
(A880-2687) URL
• DotJapan
dotJapan is a job listing site for companies and recruitment firms for advertising
their open positions all for free.
(A2083-1144) URL
• CFN %7c Bizpro
(A875-719) URL
• BrassRing
(A871-1069) URL
• CareerCross Japan
(A869-1866) URL
• Asia-net
(A867-1746) URL
• GaijinPot
(A872-1557) URL
• Asiaco Jobs Center
(A868-1694) URL
• InterCareer Net Japan
(A874-1875) URL
• CareerBuilder
(A873-1124) URL
• Japan Research Career Information Network
Japanese language site.
(A876-1359) URL
• Work in Japan
(A878-3996) URL
• PlanetRecruit
(A877-1535) URL
• FlipDog
(A870-1648) URL
(A879-853) URL
• Career Net, an information board for Japanese students studying abroad, and a
conduit for companies who want to reach them.

Kenexa Confidential 27 of 29 9/10/2009

•, is geared towards bilingual professionals with experience and fits
a typical job board model.
• Japan's biggest global job site
• WorkinJapan .com
• Speed & Pride Corp
• A-Ten Associates (Japan) Limited - Executive Search for foreign and domestic
securities firms, banks, and asset management/ITM firms as well as legal
• Brooke Consulting - Asia based pre employment screening and background vetting
• CDS Consulting - CDS is a leader in consulting-based executive search and market
entry solutions in Japan

• East West Consulting - Executive Search Company. Our team concentrates on the
Finance Industry in Tokyo.

• ICPA - Jobs for Technology, Marketing & Finance Professionals in Japan

• Ingenium Group, Inc. - a Tokyo-based executive search firm that sources and
introduces executives and senior-level managers to industry leading companies in

• Inkinen & Associates - Executive search and HR consulting firm placing IT

professionals in Hawaii, Asia and the mainland.

• JCI Consulting K.K. - Tokyo's Premiere Executive Search Agency delivering results
quickly and professionally

• JDV International - specializing in the placement of information systems

professionals worldwide. Positions in Tokyo, HongKong, Singapore and New York

• JOB ACCESS Ltd - Placing canidates in a large spectrum of industies throughout

Asia and the Middle East.

• Juno Systems - IT placement in New York, Japan and Hong Kong

• Kimata Personnel & Consultants, Inc - Placement of Japanese-English Bilinguals

and experienced and/or trained professionals in Sales, Engineering, Accounting,
Clerical/Administrative and Customer Service positions among others

• Link Consultants Group - IT and Finance recruitment company, covering markets

of Japan, Switzerland, EU and Balkans

• MAX Consulting Group, Inc. - Employment agency specializing in Bilingual

Japanese placements in New York metro, Los Angeles, Chicago, San Francisco and

• Pasona Europe Ltd - Recruitment Specialists for the UK, Europe and Japan

• The Bridge Group - Executive search in Japan

Kenexa Confidential 28 of 29 9/10/2009

• The Ingenium Group, Inc - Tokyo-based executive search firm that sources and
introduces executives and senior-level managers to industry leading companies in
Japan and Asia

• Veritas International, Inc. - Consulting-based bilingual executive search firm, with

over 15 years' experience, specializing in recruiting high-caliber Japanese/English
bilingual professionals and providing Japan market entry services.

• WIN Advisory Group - a search consultant firm specializing in placing professional,

managerial and executive candidates with Japanese owned and managed
companies in the United States.

• O-Hayo Sensei - a free electronic newsletter that lists 40-50 teaching (and many
other English language-related) positions at dozens of different schools and
companies all across Japan

• Adept Group Inc.


• Japan Executive Search Recruitment Association (JESRA)

• American Chamber of Commerce in Japan (ACCJ)
• Japan External Trade Organization
• Ministry of Health, Labour and Welfare Japan

Kenexa Confidential 29 of 29 9/10/2009