Rise of Contract Recruitment in Japan

The gig economy – known as the prevalence of short-term contracts or freelance work – has been around for years and Asia has been at the forefront of maintaining its modern workforce. Reported by Japan Times, the country has seen improvement in its unemployment rate at 2.9% last November, dropping for the first time in five months is a sign that the impact of the pandemic on the labour market is easing.  

With a growing millennial generation and aging population, it is essential for us to consistently evaluate hiring strategies and the working environments that we cultivate. This is to ensure we help support both sides of the workforce to adapt and stay relevant in the market. As a result, we find out the impact of the gig economy and why people continue to choose contracts as a career choice. 

 

Why are people choosing contractual employment?

Figures state that worldwide, an increasing number of professionals are working freelance. By 2027, roughly half of the workforce will consist of contractors and freelancers. In general, across Japan, most contractors would have experiences either working on a permanent basis or have gained a substantial amount of work experience during small sprints. Nontheless, the estimated market size of freelancers in Japan is equivalent to 200 billion yen in 2018, and it's growing year by year. 

Whether you are a software developer for a tech giant, or a data analyst in a tech unicorn, here are 5 reasons why people are moving into the gig economy. 

 

1. Lifting of the prohibition on working multiple jobs 

Now that the Japanese government has begun encouraging employees to take second jobs, an increasing number of businesses are removing ‘moonlighting prohibitions’ from their work rules. Some corporations are allowing employees to work a second job if certain conditions are met, such as the job is undertaken for training purposes, is in a different industry, and does not affect the employee’s duties at their main job.  

Some companies also stipulate that the employee must be in his or her main job for a specified minimum time. A glance at corporations that removed prohibitions on working multiple jobs since 2016 includes a range of leading companies, Asahi Breweries, Kagome, Konica, SoftBank, Yahoo, and Rohto Pharmaceutical. 

 

2. Amendment of the Act on Stabilisation of Employment of Elderly Persons 

On February 4 in 2020, the cabinet of the former Prime Minister Abe Shinzō approved an amendment of the Act on Stabilization of Employment of Elderly Persons that opened the way for workers to remain working until the age of 70. In addition to lifting the retirement age and encouraging the practice of reemploying older workers on a casual basis, the amendment also allows freelancers and entrepreneurs to be compensated as contractors.  

In an age where people can expect to live until 100, there is surely more that can be done to utilise freelancers and gig workers of all ages who can choose when and where they want to work as their health allows, rather than being bound by inflexible work regimens that are regulated by traditional working practises. 

 

3. “Equal Pay for Equal Work” 

Also becoming effective on April 1st, 2021 is Japan’s equal pay for equal work requirement for part-time employees and limited-term employees. This term focuses on equal pay for equal work between regular employees who have open-ended term employment relationships – the standard type of employment in Japan – and irregular employees such as part-time employees, limited-term employees, and dispatched workers. 

The amendments to the law clarify the prohibition on unjustified differences in compensation and benefits for contract employees as compared to regular employees. Employers are required to explain the reasons for any differences upon an employee’s request. 

 

4. Embracing greater freedom and flexibility 

The freedom the life as a contractor provides is one of the most important reasons professionals choose to stay in the gig economy, switching out permanent roles. With work-life balance being an important factor on the agenda, this is the answer to strike that balance. 

You can choose to commute less with remote working options, work flexible hours, and try out a company before you decide to commit for a longer period. Contractors usually feel more acknowledged, depending on their skills and the variety of projects. This makes their work more vibrant and mentally stimulating, as most of them are also exposed to working with the latest technologies across all industries. Figures by Wisebrand show that overall, the number of contractors is much happier than other professionals. If you are looking for an opportunity that gives you the flexibility to manage and prioritise your time, contract positions may be the option for you.  

 

5. Immediate start 

Often, contract jobs do not require headcount approval. What this suggests is that you will be able to start almost immediately. For industries like the financial sector facing a range of different budget issues, organisations are more likely to convert contractors into permanent roles. This is because it is more probable that seeking a new external hire would involve additional costs such as training and development. 

Contractors do have their fair share of training and upskilling to do to stay relevant in the market. However, they do have an upper hand when it comes to possessing the transferrable skillsets such as effective decision-making, negotiation and diplomacy. 

It is now possible that Japan will see an increase in part-time gig workers, be they working second jobs or on contract. It remains to be seen how these two emerging labour markets will evolve, but good personnel matching, development of roles, and a high level of support will certainly play a key role. 

 

Greater demand for contract recruitment amongst organisations 

Given the reasons listed above, contract roles also offer quicker hiring options for organisations when budgets are tight from job mismatches. With a proven track record in IT recruitment, our team also enjoy success within all sectors and business types, placing a candidate every 38 minutes globally. Global Enterprise Partners have also seen various tech roles that pay better than permanent jobs, whilst providing greater benefits for flexibility in terms of working hours and duration.  

Especially in the IT industry, senior-level candidates enjoy the flexibility of concentrating on a short sprint that lasts 3 to 6 months. They would then take a short hiatus to travel or spend time with families without having to worry about not getting an offer upon their return. Contractors by and large possess transferrable and niche skill sets that will remain relevant and in demand in the long-term.  

 

Are you ready to consider the gig? 

If you prioritise the above benefits and opportunities mentioned in your career progression, companies are similarly opening their opportunities to build their pipeline for 2023. Tech experts are opting for flexible work schedules as well as fixed-term project roles. If you would like to find out about the types of roles we cover in the market, do check out our active roles here.  

Building the pipeline for 2023, organisations will continue to on-board more talent to test, innovate, and develop products that empower their customers to experience greater services. If you are interested in finding out more about current opportunities in the market, please contact us to know more or fill up the form below and a dedicated specialist consultant will be in touch.