ArrowArtboardCreated with Sketch.Title ChevronCrossEye IconIcon FacebookIcon LinkedinShapeCreated with Sketch.Icon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Economy

Foreign employers have edge in battle for Japan's IT graduates

Global rivals pay more and make earlier offers in tight labor market

Japanese employers officially kicked off college graduate recruitment season on March 1.

TOKYO -- Japanese companies are at a disadvantage against international rivals when hiring the country's young information technology professionals because of lower pay and self-imposed recruitment restrictions.

Chinese smartphone maker Huawei Technologies is offering engineers fresh out of college around 400,000 yen ($3,763) monthly to start, nearly double the salary from competing Japanese manufacturers.  

"We set the pay to the same level as global competitors," said a Huawei Japan representative. "Starting wages at Japanese companies are low; we don't believe ours is high."

This disparity shows up at higher pay grades as well. In China and Singapore, department heads earn the equivalent of 23 million yen to 24 million yen a year on average, according to Mercer, a U.S. human resources consulting firm. Meanwhile, Japan is paying 19.81 million yen.

Not only are foreign employers outbidding corporate Japan in salaries, they also have an edge when recruiting recent graduates.

This job fair at a Chiba convention center on March 1 drew around 670 companies.

Responding to concerns that the recruitment race would interfere with studies, Japanese companies belonging to the Japan Business Federation, the business lobby known as Keidanren, are policing themselves.

Under the body's guidelines, employers cannot start information sessions for college students until March 1 of the academic year preceding the graduating year. The actual hiring process, including interviews, is forbidden until June 1 of the graduating year.

College juniors have been seeing unofficial job offers ahead of schedule, however. "I've already received two informal offers from consulting companies," said a third-year student at Keio University in Tokyo.

Startups and companies not in Keidanren are being pressed to push up their timetable for hiring.

"Foreign companies start recruitment activities early, so they will capture the top talents first," said a human resources manager for a major real estate agency. "We participate in events that include many international firms to establish early contact with students." 

What's more, several Japanese companies have been unable to fulfill recruitment goals, underscoring the tight labor market among college students. For each member of the graduating class of 2018 there are 1.78 job openings, according to Recruit Works Institute. That ratio has been rising for six straight years.

Some Japanese companies are starting to fight back. NEC has been busy filling research positions with college graduates abroad. Over the past three years, the IT services and products company has hired at least six specialists in artificial intelligence and other innovations who graduated from the Indian Institutes of Technology.

Chat app provider Line  has adopted a selection process for high-level communication engineers that grants an extra 1 million yen in starting annual salary for those who pass it. Mercari, which runs a mobile flea market app, will sweeten the annual pay of recruits who perform well as interns.

Starting this April, CyberAgent is abolishing its one-size-fits-all initial pay scale for engineers. College graduates versed in AI and similar cutting-edge technology will get a yearly salary of at least 7.2 million yen.

You have {{numberReadArticles}} FREE ARTICLE{{numberReadArticles-plural}} left this month

Subscribe to get unlimited access to all articles.

Get unlimited access
NAR site on phone, device, tablet

{{sentenceStarter}} {{numberReadArticles}} free article{{numberReadArticles-plural}} this month

Stay ahead with our exclusives on Asia; the most dynamic market in the world.

Benefit from in-depth journalism from trusted experts within Asia itself.

Try 3 months for $9

Offer ends September 30th

Your trial period has expired

You need a subscription to...

See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

See all offers
NAR on print phone, device, and tablet media