In Japan, Culture Feeds a Demographic Time Bomb

What the demographic time bomb looks like in Japan

Each time I’m in Japan and walk around Tokyo, I find the demographic issue very apparent. There’s a concept in Japan called ikigai and it loosely means living with purpose. The Japanese not only live longer than almost any other national group but they’re very active. You do notice a lot more elderly people out and about, working in stores and restaurants and as safety monitors directing the public around construction sites.

While current law in Japan requires companies to allow employees to work until 65, many companies have been hiring back retirees as advisors. The employees’ salaries will likely be reduced and titles will change, but the work for the most part will remain the same.

Traditional culture closes off policy and management options

The Japanese are taking steps to deal with the demographic situation that they’re facing. They’re implementing legislation and even the corporate-level mindset of executives has been slowly changing.

You look at which solutions are more likely to be viable going forward and that depends on many factors but a big one is national culture. While a country’s culture does change over time, such changes, especially in the very homogeneous population found in Japan, occur much more slowly than what the potential solutions require.

You hear in the media: increase working hours. The Japanese are already working pretty long, and that’s culturally driven. Can you ask someone who already works on four hours of sleep a night to go down to two?

Similarly with teleworking. There is a lot of pressure on the Japanese to be present at work because if you’re my boss and you don’t see me every day at work, I’m afraid of being perceived as someone who’s not loyal to the company. So even though you tell me I can work from home, I’ll come in and stay late even though my work is done.

Increase immigration. This is a political hot potato, and there’s huge resistance. As the population continues to age, seniors are dominating the political landscape. They have the voting power and they’re still more traditional in their way of thinking.

So you can't say, Change the culture and we can start implementing these ideas. That’s not going to happen. Instead, you have to look for solutions that are most viable for Japan and then at the opportunities for Canadian firms with those more viable solutions.

A labour market opening for foreign firms

Women in Japan are highly educated — just as well educated as men — but have nowhere near the same workforce participation and, when they are in the workforce, they mostly occupy lower-level clerical or service jobs.

Prime Minister Abe and other politicians always set lofty targets — by such and such a year there will be so many women on board of directors or as managers. However, they also consistently miss those targets.

The government offers incentives to companies to hire more women, but Japanese companies generally are not hiring them to the intended degree. Traditional business culture is still in place, so even if they hire more women, they’re not necessarily changing their practices to provide those women the opportunity to advance.

In recent years, I have often asked Japanese female university students both in Japan and those on exchange in Canada, What do you aspire to achieve with your career? More and more, they tell me, I’d like to work for a foreign company because they’ll be more open to hiring me and I’ll be more likely able to climb the corporate ladder.

So if you’re a Canadian firm in Japan, there are three factors to consider. You have incentives for companies to hire women. You have the Japanese companies behaving as they have behaved in the past, which means that labour supply, for the most part, is available for foreign companies. And you have an increasing interest among younger female Japanese who are highly educated to join foreign companies.

Canadians fit well with the Japanese

What difficulties would there be for a Canadian company in Japan? You can have a great product, a great opportunity, address a great need. But culture comes into play.  Does the way you do business fit with the Japanese way of doing business?

For many Canadian companies, to be successful in Japan, they can’t go it alone. They need a Japanese partner. Many Japanese companies are very traditional in their way of doing business. They’re highly process-oriented, highly risk-averse organizations. The way they make decisions will be much slower than Canadians are used to because harmony is important and when they go about making a decision, there typically has to be unanimous agreement. Their approach often is: We’ll invest the time upfront to consider everything that could go wrong, to establish trust, and to ensure there will be harmony because if we vet everything now, there’s lower likelihood there will be problems once it’s implemented.

Given that the doors to Japan are opening further for Canadian companies and professionals, it is important to understand that there are a lot of synergies, even culturally speaking, between Canada and Japan; the importance of trust and transparency, for example. In many ways, the Japanese perceive Canadians in a very positive way. One Japanese executive once said to me, You know, we see you as white. I said, White as in Caucasian? No, he said. Not hostile, nonthreatening. We’re more comfortable signing a contract with you. We’re more comfortable believing that you would honour the terms of the contract.

These may be stereotypes, but it’s a fact that country perceptions do exist.

—Interview by Alan Morantz