The labour market in Japan

Regular and non-regular workers in Japan

According to the Labor Standards Act, workers are all considered "workers" regardless of their employment status (full-time, contract, temporary, or part-time). 

To increase your chances of finding a job in Japan, you should aim for a regular position that offers a permanent contract. However, Japan is a country known for its paradoxes. 

There is an unseen division between permanent employees and those in precarious positions, such as those with short-term contracts, part-time jobs, temporary work, or odd jobs. This division also extends to the differences between foreign and Japanese companies, large and small organizations, and even between genders.

Regular employment in Japan

The term "full-time employee" does not have a specific legal definition. However, for the convenience of categorizing employees, those who work full-time without a fixed employment period and have their working hours determined by the company are often called "regular employees".

The advantages of being a regular employee are:

• Opportunity to handle tasks that require a high level of trust and responsibility;
• Stable and predictable monthly income with higher salaries compared to non-regular counterparts;
• A wide range of welfare benefits;
• More accessible to pass screenings for loans and credit cards.

The disadvantages of full-time employment are:

• Possibility of transfer or relocation, which can disrupt personal and family life;
• Overtime or working on holidays, leading to less free time and work–life balance;
• Limited flexibility regarding working hours and taking time off for personal commitments or holidays;
• Difficulty in planning and taking long vacations due to work commitments and responsibilities.

Non-regular employment in Japan

Contract workers (契約社員)

Contract workers (fix-term labor contracts), who are not considered regular employees, are hired for a specific period as stated in their employment agreement. Typically, their contracts are limited to a maximum duration of 3 years, although there may be exceptions in certain situations.

Part-time regular employees (短時間正社員)

Part-time regular employees work fewer hours or days than full-time regular employees:

• They have a labor contract with no fixed term;
• The hourly base salary and calculation of bonuses, retirement allowances, etc., are the same as those of full-time regular employees at the same business location.

The company refers to this working style as the "Part-Time Regular Employee System" in its work rules. The system helps attract excellent human resources, improves employee retention rates, reduces recruitment and training costs, increases employee motivation, and enhances the company's image to external parties.

Dispatched workers (派遣労働者)

Worker dispatching involves a worker signing a labor contract with a staffing agency, also known as a dispatch agency. The agency then sends the worker to a company with a labor contract, where the worker follows the client's instructions and carries out their orders. Specific regulations are outlined in the Worker Dispatching Law to regulate this complex labor arrangement.

In worker dispatching, the staffing agency serves as the legal employer. They hold the primary responsibility for handling any accidents or issues that may arise. However, it is essential to note that the client who provides the actual orders also shares in the responsibility according to the Worker Dispatching Act. For more detailed information, it is advisable to refer to the relevant regulations.

Part-time workers (パートタイム労働者)

Part-time workers have shorter working hours than regular employees at the same establishment. They are called "short-time workers" under the Part-Time Work Law. Part-time workers are entitled to fair treatment and can be converted to full-time employees.

Employers must clearly state in writing whether salary raises, retirement allowances, and bonuses will be provided.

People who work under a business outsourcing (contracting) agreement (業務委託（請負）契約を結んで働く人) 

Labor laws protect employees under a business outsourcing agreement. Regular employees, temporary workers, contract workers, part-time workers, and short-time regular employees are considered "workers" and are entitled to labor law protection.

Those who work in outsourcing or subcontracting are treated as "business owners" and do not receive the same protection as "workers". However, if a worker under a business consignment or subcontract contract is determined to be a "worker" based on their actual work style, they can still receive labor law protection.

Domestic workers（家内労働者）

A domestic worker is hired to make or process goods individually. The relationship between a domestic worker and the person who hires them is similar to that of an employer and employee.

The Domestic Labor Law has been created to regulate this relationship. The person who hires a domestic worker must follow the Domestic Labor Law, which includes providing a handbook and paying at least the minimum wage.

Self-employed teleworkers (自営型テレワーカー)

A self-employed teleworker works from home or a location of their choice, using their own equipment. An Orderer commissions them to create deliverables or provide services. The Orderer must follow the "Guidelines for Proper Implementation of Self-employed Telework" when ordering work from self-employed teleworkers.

Those who order work or act as intermediaries for self-employed teleworkers are required to take measures based on these guidelines.

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Types of employment contracts in Japan 

The safest work contract is the seishain, which is equivalent to a permanent contract. In addition, it is considered the most appropriate contract by Japanese society. It is also the best option to secure a bank loan or to be supported by a real estate agency when purchasing a property.

The other types of contracts are more prone to precariousness. The keiyakushain is similar to the employee on a fixed-term contract. This contract may last from a few months to one year. The hakenshain is, therefore, a temporary worker. The arubaito employee performs small jobs. Originally considered a job for students, it actually touches a much wider population. It is not uncommon to see an elderly person taking up a baito (short for arubaito) job.

The term freeter is also used to refer to precarious workers. While the word originates from the English word "free" to categorize workers who are free to move from one job to another, the reality is more complex. Freeters are precarious workers, and their numbers are growing. Young graduates are increasingly likely to become freeters. They may be forced to take these precarious jobs if they don't catch the year's hiring wave (the season starts in the spring).

Part-time workers and arubaito

There is no legal difference between a part-time worker (パートタイム労働者) and an arubaito (アルバイト) worker. Depending on the hours worked, a worker may be classified as a "part-time worker" (パートタイム労働者) under the Part-Time and Fixed-Term Employment Labor Law. 

As mentioned above, a "part-time worker" is a worker who works fewer hours per week than a regular employee working for the same employer.

It is up to the company to decide whether to advertise the position as a part-time (パートタイム) or arubaito job. Customarily, companies tend to advertise part-time positions for jobs mostly filled by homemakers and arubaito positions for jobs that students and freelancers mostly fill.

Diverse full-time employees in Japan

The Japanese government has taken several steps to combat the labor shortage resulting from a decreasing birthrate and an aging population, including introducing the concept of "diverse regular employees" with limited duties, work locations, and working hours. 

These measures aim to foster a work atmosphere that motivates fixed-term contract workers to participate more actively, narrow the disparity between regular and non-regular employees, and endorse a diverse working approach that benefits staff and management.

The Ministry of Health, Labour and Welfare has also provided guidelines for employment management, from recruitment to retirement, to ensure the effective management of these diverse regular employees. 

Additionally, model employment regulations have been developed for specific industries to support the implementation of these measures. In 2024, an all-industry version of the "Model Employment Regulations and Explanations Concerning Diverse Regular Employees and Rules for Permanent Change of Employment" was prepared. Check the link at the end of this article for details.  

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Applying for a job in Japan

Japanese companies do not hire in the same way as foreign companies do. In general, foreign companies are less formal. Candidates can create their CVs with or without a photo. They are also free to choose the clothing of their choice, with the colors they want, as long as it fits the job. 

In Japanese companies, a CV is a form with a mandatory photo. The dress code is the same for the candidates: dark suit/tailor, white shirt. Candidates are less accessible to express their originality, as this is not what companies seek.

However, things are gradually changing, and some large Japanese companies are accepting more original presentations.

Which are the most prominent sectors in Japan?

Digital and new technologies

The technology and digital professions are in the spotlight. The "Kishidanomics", the economic plan of the Kishida government, grants a large budget to accelerate the digital transition. The plan provides 10,000 billion yen to make Japan "a science and technology nation".

This is a boon for all working and future working people, including international students and employees. In addition to this fund (which will support universities), Japan will facilitate the development of startups and open another fund to support research and development. The Kishida government also plans to expand its investment in the metaverse.

Jobs for foreigners in Japan

IT and digital professions cover different subcategories: artificial intelligence/AI-related jobs (AI engineer, AI project manager, etc.), IT (network architect, database administrator, system engineer, IT developer, etc.), Internet (web architect, web developer, community manager, web designer, etc.), Big data (Big data architect, data scientist, etc.), video game (3D animator, game designer, tester, concept artist, etc.).

With the digitization of exchanges, these jobs are found in all employment sectors. Administration, construction, industry, commerce, health, consulting, and even teaching call upon new technologies. 

Foreigners with degrees in these high-tech fields will have good work opportunities in Japan, especially if they speak Japanese. With your educational background, unique perspective (in Japan), and valuable experience, knowing Japanese enhances your profile, making you even more appealing. You know, in the digital era, countries are competing for top global talent. Japanese companies specifically seek out these types of candidates.

Other promising fields in Japan

The sectors that are traditionally open to foreigners in Japan remain so: tourism, hotels and restaurants, translation, teaching (language teacher, assistant), maintenance (surface technician), and retail (salesperson, department employee). 

How payment is calculated depends on your employment status. Baito jobs, often part-time and offering less job security, usually pay wages close to the minimum, ranging from above 890 to just under 1115 yen per hour, with additional pay if you work during night-time hours.

Regarding teaching in Japan, it's essential to differentiate between exchange café positions and permanent employment in private language schools, national education institutions, or training centers. You will need a diploma, professional experience, or recommendation to work in the latter sectors. However, even exchange cafés have become more selective and now test the language proficiency of foreigners who apply.

Read also Finding work in Tokyo

Minimum wages in Japan

The minimum wage system is a government-regulated system that establishes a minimum wage based on the Minimum Wage Act. Employers are required to pay their workers at least the minimum wage determined by the government. The minimum wage can be categorized into two types: regional and specific.

Regional minimum wage applies to all workers and employers within a prefecture, regardless of industry or occupation. On the other hand, a specific minimum wage applies to essential workers and their employers in particular sectors within specific regions. If both regional and specific minimum wages are in effect simultaneously, employers must pay their workers the higher of the two amounts.

Dispatched workers are subject to the minimum wage of the place they are sent to. To ensure compliance with the minimum wage, employers need to convert the wage amount to an hourly rate and compare it with the minimum wage per hour. The minimum wage amount is revised annually based on wage and price trends. The revised amount is then communicated through various channels, including news media, municipal public relations magazines, and bulletins from different organizations.

Below is the hourly minimum wage in yen, effected since October 2023.

Source: Minimum wages by region in Japan 2023.

Working in Japan as a woman

Women have been facing discrimination long before they became part of the Japanese workforce. They are less likely to be assigned to scientific or medical fields requiring long training. They instead preferred to work in early childhood or the hospitality industry. 

For years in Tokyo, the prestigious private medical school Tokyo Medical College has lowered women's grades to limit their numbers. In 2011, it noticed an increase in the number of women. It began dropping their grades to restrict their numbers to 30% – a practice that has reportedly affected the medical community for considerably more time. 

Other universities would later admit to rigging their exams to limit women's enrolment. 

The case broke, and the incriminated universities were no longer rigging the system. 

The success rate of women increased and exceeded that of men, but the damage had already been done. In the eyes of female physicians, women would be the majority in the medical field without the rigging.

In 2016, they comprised just 21% of the workforce — one of the lowest rates among OECD countries. The United Kingdom leads with 47%, followed by Germany, France and Canada.

In 2022, the labor force in Japan saw a rise in the number of women, reaching 30.96 million. This marked an increase of 160,000 compared to the previous year. 

The proportion of women in the overall labor force also experienced a slight growth, with a 0.3 percentage point increase to 44.9%. In contrast, men had a higher participation rate of 71.4%, while women had a rate of 54.2%. This indicated a 0.7 percentage point increase for women compared to the previous year.

Among the employed individuals, the number of women reached 27.65 million in 2022, showing an increase of 260,000 from the previous year. Consequently, the percentage of women among the total employed also saw a slight rise, with a 0.3 percentage point increase to reach 45.8%.

On the other hand, the number of unemployed women decreased by 50,000 to 730,000 compared to the previous year. This decline contributed to an overall unemployment rate of 2.4%.

In 2023, there were 67.47 million workers on average, 240,000 more than the previous year. Among them, the number of male workers decreased by 30,000 to 36.96 million, while the number of female workers increased by 270,000 to 30.51 million.

The employment rate, which measures the ratio of workers to the population aged 15 and over, rose to 61.2%, an increase of 0.3 points. Regarding gender, the employment rate for males increased by 0.1 points to 69.5%, while the rate for females increased by 0.6 points to 53.6% (source: Japanese Labor Force Survey 2023).

Gender-pay gap in Japan

Japan's position in the latest gender gap rankings, as per the World Economic Forum's report published on June 20, 2023, has witnessed a decline of nine places compared to the previous year. Japan stands at 125th among 146 countries, marking its lowest ranking since the index was introduced in 2006.

In Japan, women generally earn 20 to 26% less than men, while only 13.2 percent of women hold senior positions. As of May 2022, the Japanese government has considered requiring companies with over 300 employees to publish the gender pay gap on their websites. Seventeen thousand and six hundred companies are expected to be affected. In addition, 4,000 large companies would have to post the number of women in management positions and the percentage of men who take paternity leave.

This discrimination has direct consequences on the Japanese labor market and Japanese society. The younger generations do not want to have children anymore. Women suffer from a much more precarious situation than men, especially when they are older.

The dress code in the Japanese workplace

Japanese companies had specific dress codes for men and women in the past. Men were required to wear suits, while women had to wear uniforms. Additionally, companies had strict regulations regarding hairstyles and accessories.

However, in recent years, work styles have become more varied. Many companies are now eliminating uniforms and allowing employees to dress casually. This change has brought about a certain level of freedom regarding clothing choices. Nevertheless, certain industries, particularly those that involve customer service, still require a certain level of discipline.

Japan's labor market outlook in 2024

The labor market in Japan is expected to face ongoing challenges in 2024, with a shortage of workers and a tight labor market. Industries related to information services and inbound consumption demand are likely to experience further shifts in labor supply and demand. This situation calls for attention and proactive measures to address the labor shortage.

There is potential for additional labor supply from three groups – seniors, women, and foreign workers – to tackle the labor shortage. Among these groups, seniors have the highest potential for increased supply, and there is significant interest from job seekers in this demographic. 

Furthermore, as more people express interest in changing jobs, the labor market is becoming more fluid. Job seekers are particularly interested in seniors, remote work opportunities, competitive wages, and a wider range of occupations. These factors contribute to the fluidity of the labor market and should be considered when planning for the future. 

Additionally, the use of generative AI and other technologies has the potential to not only create more jobs in their development but also reshape the labor market as a whole.

Useful links:

Rules for hiring people in Japan

Diverse regular employment models

Minimum wages by region in Japan 2023

The reality of working women in Japan 2022

Global gender gap report 2023