Japan Tech Firms Face Talent Crunch; Seeking Foreign Workers, Boosting Wages

Japan's technology industry is facing a significant talent shortage, prompting companies to look for solutions such as hiring foreign workers and raising wages to address the problem (via Bloomberg).

According to recent reports, three-quarters of technology employers in Japan expect recruiting to be extremely competitive in 2023 due to a scarcity of qualified candidates.

The shortage of skilled labor is not limited to the technology sector, and it affects many industries in Japan. The country's efforts to digitalize its economy and revitalize its semiconductor industry are hampered by a shortage of skilled workers.

Companies are now racing to streamline their hiring processes in order to remain competitive in the market, as opposed to their counterparts in the United States, where tech layoffs have been prevalent.

Japan Needs More Software Engineers

Bloomberg also reports that software engineering is one area where Japan faces a particularly acute shortage, leading to delays in digital transformation initiatives.

To combat this, there is a growing consensus among tech hiring managers to look beyond borders for talent. With Japan's foreign worker population surpassing two million, there's a ripe opportunity to tap into a diverse pool of skilled individuals.

Experts like Lionel Kaidatzis, managing director of Morgan McKinley Japan, emphasize the need for Japanese organizations to cast a wider net in their search for talent. He suggests that looking beyond domestic borders could yield individuals with cutting-edge skills and valuable experience, essential for driving innovation in the tech sector.

However, attracting and retaining talent is not just about finding the right people; it is also about offering competitive compensation packages. High salary offers are increasingly becoming a priority for technology workers in Japan, with many rejecting job offers due to inadequate compensation.

In response, over 70% of employers plan to raise wages in certain roles to remain competitive in the market.

Japan's Aging Population

Japan Times reports that the government committed ¥3.5 trillion ($23.6 billion) to increase the birth rate earlier this year. However, employers have been facing challenges due to a shortage of available workers.

While the tech industry grapples with its talent shortage, Japan's aging population presents another challenge for businesses across various sectors. Efforts to keep the elderly employed for longer have led to innovative solutions such as job-matching platforms and flexible work arrangements.

One such platform, Sketter, connects nonessential jobs in nursing homes with potential workers, freeing up caregivers to focus on their primary responsibilities. This approach not only addresses labor shortages but also provides meaningful opportunities for older individuals seeking engagement beyond retirement.

In addition to elder care, initiatives like raising the retirement age for taxi drivers aim to alleviate transportation challenges in rural areas with declining populations.

By offering more flexible working hours and expanding job categories, companies are finding creative ways to match older workers' skills and preferences with specific tasks.

Furthermore, initiatives like the "Restaurant of Mistaken Orders," which employs dementia patients as waiters, highlight the importance of raising awareness and fostering social inclusion for vulnerable populations.

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