Japan Employee Sector: What Makes Japan a Business Hub

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The COVID-19 pandemic has severely affected economies globally, closed down industries, and slowed the spending abilities of customers. Some countries have borne the brunt of lockdowns and travel restrictions more than others. However, businesses and individuals in Japan have proven their ability to survive and thrive during the pandemic. This article talks about how the Japan employee culture has allowed businesses to operate uninterruptedly and new entities to enter the market.

Understanding the Japan Employee Situation

Japan is not just a profitable market of more than 126 million citizens, it is also a host of stable and scalable business opportunities. It was the third-largest economy in the world, with a GDP of more than $5 trillion in 2019. The country has also been ranking high in the lists of countries with more openness to trade. Japan is also attracting investment from foreign investors. The country ranks 29 in the Ease of Doing Business rankings for 2009-2019.

Sectors such as the Information Technology sector, healthcare, automotive, environment, etc. also propel Japan’s large economy. The country’s vast economy is, therefore, inviting foreign entities from across the world. Foreign companies are collaborating with local experts and leveraging Japan’s vast market base.

When it comes to Japan’s employee situation, the unemployment rate has been affected only minutely during the pandemic. The unemployment rate has risen just two-tenths of the percentage point to 2.6 percent since February. The number of working hours and wages earned by Japan’s employees has also remained unaffected significantly. It has highlighted the ability of businesses functioning in the country to effortlessly survive during unprecedented situations. Many also consider Japan as one of the most successful and profitable business markets for global aspirants due to this stability.

Companies in Japan also leave their American counterparts behind in the employment sector. Being a predominantly collective society, Japanese companies focus more on their employees’ interests. Companies ensure their sustainability rather than aiming for maximization of growth. Robust employee protection practices have been put in place, preventing companies from terminating Japan employees on a whim. During the COVID-19 pandemic, these employee protections and practices have proven to be a boon equally for employees and businesses.

Categories of Japan Employee

An employee in Japan can either be a full/part-time employee or an independent contractor. While most companies prefer to manage their employees on their own, a contractor management PEO generally manages the independent contractors.

Regular Japan Employee

A regular employee works under an employment contract with the company on a full-time or part-time basis indefinitely. Such employees may also be non-permanent, temporary workers who work under fixed-term contracts. Part-time employees have a fixed number of working hours and working days. They associate and work with a company for the period mentioned in their contracts.  

Independent Contractors

Independent contractors are different from regular Japanese employees and are regulated by their contracts. The relationship between a contractor and the company is, therefore, for a limited period of time. Contractors that work independently or as freelancers are also separated by the laws and regulations. The employer’s obligations and compliance requirements relating to their employees and contractors also differ. Thus, even the smallest misclassification of a contractor as an employee can cause legal repercussions.

How Japan Employees Support Business Growth

Japan’s employee sector is one of the primary forces that have allowed businesses in the country to have a higher survival rate. Let’s have a look at how Japan’s employee sector has allowed for its upward and consistent growth:

Highly Educated Employees

Japan has a flourishing academic environment, with more than 700 universities. This results in an educated and qualified workforce that holds subject matter knowledge. Graduates get access to high-in-demand job profiles due to their university background. The average employee in Japan also possesses qualities like industry expertise, leadership, multi-disciplinary experience, etc. When a foreign company enters the Japanese market, it gets access to a large pool of talent who can make its set up and operations easier with their high levels of knowledge and expertise.

Work Ethics

Japanese businesses also enjoy high work ethics from their workforce, which is chiefly collective in nature. While each individual holds expertise in their field of work, they collectively work as a group to achieve their employer company’s goals. Leadership plays an important role in binding the employees together and employees implement a group approach and look to their superiors for approval before reaching important decisions.

Highly Dedicated Workforce

The Japanese corporate culture is drastically different from Western culture. Employees in Japan are known for their extensive working hours and overtime. In 2019, the average annual working hours for Japanese employees were 1644 hours. Employees in Japan tend to take pride in their long working hours and continuously demonstrate a high level of dedication. This has attracted many foreign entities to set up their operations in Japan and leverage the highly talented and motivated workforce.

While unemployment rates are significantly high in other countries, the Japanese employment ecosystem has cemented the growth and rise in the country’s economy. Japan’s unemployment rates are lower than the statistics in the USA and the former has performed well due to the robust employment and business sector in the country. Japanese companies consistently work towards making the work culture more stable and welcoming for their employees. This not only makes Japan a good place for employment opportunities but also for foreign investors to leverage its consistently high-performing labor and consumer markets. 

Japan as an Expansion Opportunity for Global Businesses

Being the third-largest economy worldwide and a goldmine for employee potential, Japan has incredible opportunities for expansion and growth for foreign businesses. International organizations can leverage this market by engaging with experienced PEOs to benefit from the favorable employee culture and business opportunities in the country.

PEOs like New Horizons Global Partners can help you harness the vast market of Japan by assisting you with understanding the market demands and employee culture. As your employer-on-record, we can help you with employee recruitment and management, payroll and benefits management, etc. in Japan for your global operations. We can also help you to navigate the geographical, linguistic, and cultural variety in Japan to understand the market better.

Contact us today for end-to-end assistance for understanding the Japanese market, and recruitment and management of employees for your expansion.

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