The traditional "job for life" in Japan is becoming a thing of the past, says a leading international recruitment consultancy.
Kevin Gibson, managing director of Robert Walters' Tokyo office, says an increasing number of foreign companies are entering the Japanese market as a result of deregulation. "This is drastically changing the traditional Japanese working environment. Most Japanese have enjoyed jobs for life in secure corporate structures. However, foreign companies entering the market are enticing local staff by offering both higher salaries and promotions based on meritocracy and performance. Japanese firms, on the other hand, promote on seniority and, as a result, are losing some of their younger staff to foreign firms."
Gibson says the average Japanese "lifetime" employee would have problems adapting to a western style of management. "As a result, the stakes and opportunities will rise for the younger Japanese who, in the past, had to wait in line for management opportunities."
He says, however, change had been slow as most Japanese favoured the stability a job for life provided.
Gibson says another reason leading to this huge change in the Japanese working environment is the appointment of Japan's new prime minister, Junichiro Koizumi.
"Koizumi has an aggressive agenda of structural reform. If his policies are able to be fully implemented, it will mean several large insurance and financial firms will be allowed to fail or form joint ventures, leading to a large number of redundancies.
"This will also result in a high number of 'distressed' assets and companies being bought by foreign firms. The balance sheets and IT platforms of these assets and companies, as well as their accounting practices, will need to be overhauled in order to meet international standards, creating a labour vacuum for young, bilingual professionals.
Gibson says the proposed reforms would produce unemployment at one end of the labour market and extreme demand for the younger, more internationally-minded professionals, particularly in the IT and finance sectors.
Demand for executives in Hong Kong is nearing the same lows seen during the financial crisis of 1997-98, according to the E.L Index, a monthly survey of the local job market.
Recent figures show that overall monthly demand for executives is down 25% and annual demand down 50% as recruitment activity stalls under the shadow of Hong Kong's economic slowdown. Compiled by recruitment firm E.L Consulting Hong Kong, figures in the survey also indicate a significant rebound in demand for executives is unlikely to occur soon.
"The monthly decline is larger than we expected and it's likely demand will fall again in the coming months as businesses defer recruitment until they see a stronger economy," said E.L Consulting's Principal, Alfred Chown.
"Demand is close to the abysmal levels seen during the 1997-98 financial crisis and the little recruitment that is taking place is being drawn-out with decisions taking much longer than usual," Chown said.
Steep monthly falls were recorded in the five executive sectors in the E.L Index.
Demand in the finance sector fell 33% with only banks and financial houses seeking finance executives. Elsewhere, demand for finance executives was largely insignificant.
The 25% drop in demand for engineering executives occurred despite modest demand from electronic component manufacturers, electronic consumer goods manufacturers and building and construction companies.
Similar falls were recorded in the management and marketing sectors with declines of 20% and 24% respectively.
Unlike other sectors, recruitment activity for marketing executives tended to be more widespread and included banks, telecoms, software vendors, property developers, healthcare, transport, textiles and consumer products.
Demand plunged 32% in the information technology (IT) sector, the largest and most resilient sector in the E.L Index.
Chown said recent declines in the IT sector were unprecedented in the seven years that EL Consulting has been tracking Hong Kong's executive job market.
"The falls reveal the extent the dotcom fallout has had on the sector and the wider economy. With the exception of the Chinese New Year recruitment bubble, demand for IT executives has been in decline since August-September last year."
Demand in the IT sector is down 58% compared with this time last year and is expected to fall further in the remaining summer months.
In the months ahead, Chown said several catalysts could trigger a rebound in the Hong Kong economy.
"A stronger US economy by the year-end and renewed interest in the China market are likely to be key factors.
"There has been a surge in the overall focus on China, particularly in the banking sector."
Reforms implemented by China as part of its pending membership into the World Trade Organisation will ultimately result in the arrival of more accessible banking services provided by global banks, which will be a huge boost for the Chinese economy, Chown noted.
With Beijing named as the host city for the 2008 Olympic Games a considerable investment in China's construction and tourism industries is sure to follow, Chown said. All of which can only help the economy.