Japan Startups More Attractive than Company Employment

The midcareer job market in Japan is changing fast, with an increasing number of workers trading secure jobs at large companies for new opportunities at startups.

Ambi, a job placement website run by En Japan, shows that the number of workers moving to startups from well-established businesses rose more than sevenfold in three years since the first half of fiscal 2018, far surpassing the overall job-hopping increase of 3.8 times. These midcareer changes accounted for 21.4% of all job switches made through the Ambi website, up about 13 points from three years earlier. The trend is particularly strong among workers aged 40 and older — the loyal backbone of corporate Japan — and could serve as a catalyst for Japan’s economic revival, said one expert.

“Now I can try new things while making use of my experience,” said Minako Uryu, who last year found a job at Housmart, a developer of marketing support systems for the property sector. “Furthermore, my income went up about 10%.” At the new company, the over-40-year-old Uryu develops chat-based customer service programs using her previous experience at an IT systems company.

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Many large Japanese companies continue to recruit fresh college graduates for lifetime employment — a practice that has powered Japan’s postwar economic growth. The average duration of full-time employment in Japan was 12.5 years in 2020, down 0.2 years from four years earlier but still much longer than 4.1 years in the U.S. and 8.6 in Britain. How large companies are dealing with the COVID-19 crisis has raised red flags among many young people, making them aware of the vulnerability of what was once seen as secure jobs. “People want to work for startups because they believe they can acquire new skills faster,” said an En Japan official.

Many startups also offer better salaries and other benefits to lure new talent. More than 20% of help-wanted ads from startups show annual salaries of over 10 million yen ($87,070) compared with about 10% of ads from listed companies. While well-established companies are bound by existing compensation structures, startups have no such restrictions.

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Ubie is one such startup trying to attract talent with fat compensation packages. Eager to find staff who can increase business with pharmaceutical companies, the Tokyo-based health tech concern offered an annual salary of well over 10 million yen to new hires, including those from foreign consulting firms, said a person close to the company. Startups offered an average annual salary of 8.04 million yen in the April-September period of 2021, up 20% from four years earlier, according to data from the Ambi website. Also, starting salaries offered by listed companies are barely rising, helping the startup sector narrow the initial salary gap to 150,000 yen from 380,000 yen.

This “has made it less advantageous to stay with big companies and is facilitating job changes for skilled workers,” said Hiroyuki Motegi of Recruit Works Institute. A Recruit survey found that a record 31.5% of job hoppers received a pay hike of more than 10% in the last quarter of 2021. This represents a rise of 1.9 points from two years earlier, before the pandemic started.

Many Japanese still believe that job-hopping is not an option for those over 35. But the figures contradict this notion, as 34% of job switches were made by workers in their 40s last year, compared with 25% for those in their 20s. Together, workers in their 40s and older accounted for 48% of total job changes, according to En Japan.

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(Source: Nikkei Asia | Pic: Japanese Woman Working, Rawpixel Ltd)

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