Article: Japan’s tryst with the gig economy

Permanent Recruitment

Japan’s tryst with the gig economy

Over the years Japan has been loosening its labor markets to enable employees to hold more than one job and take up multiple gigs to meets its demand for more workforce. But not without its own set of drawbacks.
Japan’s tryst with the gig economy

One of the key ways in which technological advancements have affected business today has been through its active role in reshaping labor markets. Compared to traditional talent pools, companies now have access to that type of talent which doesn’t necessarily fit into their pre-existing models of employment and yet remain highly relevant. In light of growing competition and changing business environment, many companies have begun tinkering around with their employment models to create more space for project-based and contractual employment that allow them greater freedom over managing workforce costs while ensuring efficiency.

This shift has been impactful for job seekers as well. Many who’ve remained in the labor markets looking for jobs can now join multiple companies on a freelance basis or take up more than one job. Often facilitated my modern-day technologies like digital platforms, AI and automation, many in the job markets find themselves with more, albeit, often precarious job opportunities. This often forms the basis of a gig economy.

Although the advent of gig economy has been majorly a case exhibited by developed nations, it still remains a new territory for employers and job seekers. Even legislatures are slowly waking up to what has now grown to become an important part of labor markets today—the advent of part-time and gig workers; a reality in which job seekers are actively looking for second jobs. Across the globe, developed economies have begun recognizing the prevalence of the ‘gig economy’ with many experts at The Guardian pointing out the need for regulations to ensure partakers find themselves legally protected against exploitations. But most debates are still at nascent stages and with legislatures often having to balance the need of employees and employers with economic constraints. And nowhere has this interaction been more pivotal today than in Japan.

Faced with an aging population and a comparatively shrinking workforce, the Japanese economy has been facing a shortage of labor for quite some time now. One of the developed economies in the world, it is now faced with increasing jobs but a falling number of job seekers to fill those positions. Thus it came as little surprise when, as a response to the growing need for flexibility in job structures, policymakers revised the work regulation models being followed and allowed employees to hold more than one jobs. Aimed at addressing the growing labor shortage in the Japanese markets, the resolution allowed employees to take up multiple jobs, or gigs, in hopes that they would fill in the gaps. Thus in the case of Japan, not only has gig economy emerged as a result of evolving employer-employee relations but rather because of structural involvement by the government to push for greater labor mobility.

The employers take

As employers slowly wake to change economic reality, it is necessary to not only follow the recent directive but to use it as a starting point to reshape hiring talent models within the company which don’t necessarily depend upon traditional talent pools. But as it currently stands, many employers are yet to evolve their hiring and management practices to keep up with the government directive. To understand the relevance of such a shift, it is important to look at how Japanese labor markets have traditionally been structured. The prospect of employees working in more than one jobs is fairly new in a society which has traditionally valued loyalty. This was also reflected in how until recent times government regulations forbade anyone from medium and small businesses to take up more than one jobs; most companies, in turn, internalized this and had usually strict employment rules.

Moving ahead though doesn’t seem to be a straight road. Despite regulation allowing workers to take up multiple jobs, there still seems to be a great reluctance among companies in allowing their workers to do so. A survey conducted by the Japan Institute for Labour Policy and Training found that three-quarters (75%) of Japanese companies do not want their employees to have side jobs, citing how this may affect their workers’ efficiency levels. Only 11% said they allowed such practices while only 8% are considering allowing side jobs for their employees.

Impact on job seekers

Engaging in work outside of one's primary job, usually in a freelance or part-time role, is a new domain for Japanese employees. Compared to other developed markets like the US and Europe, the working population that takes part in the freelance economy is quite low. As a result, only a small percentage of employees are partaking in work outside their primary jobs (In comparison, some estimates put around 30 percent of the working population in the US to be a part of the freelance work culture). Government policies and reluctance on the part of their employers have traditionally meant that many don’t opt to take up more than one jobs. But that doesn’t mean the willingness to take up more jobs is any less.

Studies have shown a rise in the number of employees engaging in at least two different jobs in the last year. Freelancer job place Lancer recently estimated that around 11 percent of the workforce — or around 7.44 million Japanese will work at least two jobs this year. This rise although facilitated by the ease of regulations is mostly driven by the falling purchasing power that Japanese people experience today.  And this is where the gig economy hasn’t really been as efficient in solving the country’s labor issues. Despite PM Abe’s remarks on creating a new age workforce would offer “individual freedom”, most are driven to taking up two jobs to make ends meet. This often overrides the benefits that gig economy might provide to an economy and end up leading to other societal problems.

The problem of Karōshi or deaths resulting due to overwork has traditionally been prevalent among full-time salaried individuals.  As a result of an intensive work culture, a problem first recognized in the 1980s saw more and more salaried employees fall victim to fatalities from heart attacks, suicides, and other health issues resulting from the stress and fatigue of long hours spent on the job. But recently a similar trend has been noted among people who work part-time, according to The Atlantic.

Such challenges put the onus on regulators and legislatures to take a better look at how gig economy is ultimately reshaping the work structures and affecting individual lives in the process. Although some companies anticipate that allowing side jobs will enable employees to gain experience and connections they would have difficulty developing in their primary work, improving both performance and morale. Workers, meanwhile, have the opportunity to earn extra money at a time when wages are largely stagnant in Japan. But in order to truly envision this dream, the future of gig economy in the country has to be kept in close attention.

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Topics: Permanent Recruitment, #GigEconomy

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