In a sign of optimism for the Japanese hiring environment, more than 60% of Japanese businesses plan to hire in the next six months, according to a recent report by recruitment firm Morgan McKinley.

And while 67% of companies said they anticipated adding staff, according to Morgan McKinley’s 2024 Japan Salary Guide, they are facing steep competition. Fully 90% of organizations said hiring was “very” or “quite” competitive in 2023. Looking ahead, 42% expect the “lack of skilled candidates available” to be their greatest recruitment challenge in 2024, followed by “no sign-off for headcount” at 15%.

“With a continually weak yen, exports have been aided, and there has been an uptick in inbound tourism, fueling hiring across some industries,” Lionel Kaidatzis, managing director of Morgan McKinley Japan, said in a press release. “With fewer headcount approvals, clients have raised the bar on the quality of talent they want to hire, making the hiring of top talent even more competitive given the ongoing shortage.”

On the candidate side, one in three professionals in Japan, or 34%, intend to seek new jobs in the next six months, according to the study. A majority of workers are not pleased with their benefit packages, with 58% saying they were “neutral,” “dissatisfied” or “highly dissatisfied.” The top five benefits they seek are pension (above statutory requirements), bonus, employee stock options, work from home and flexible working hours.

Higher salary remains the most valued reason for candidates who want to change jobs, at 44%. Forty-six percent of professionals in Japan are optimistic about receiving a salary increase in 2024, and 55% of employers plan to raise salary offers in 2024 for certain in-demand roles, the 2024 Japan Salary Guide showed.

The government had limited success in accelerating wage increases, Kaidatzis noted. The problem is exacerbated by inflation and foreign exchange rates, which have reduced consumer spending power.

Flexibility remains a significant topic for employees. While the study shows that 62% of organizations are asking staff to be in the office more regularly compared to this time last year, half of the employee respondents want to work in the office only one or two days a week.

The research surveyed 650 businesses and 3,400 professionals, examining companies’ hiring intentions for 2024, the key motivators for job changes and salary movement expectations.

- Henry Liu

2024 Japan Salary Guide, Morgan McKinley, Nov. 2023