Episode #100: Hey Boss, Your Nightmare Begins Now!

Why is it becoming so difficult to hire young talent in Japan?

Across Japan, employers are facing an increasingly severe shortage of young talent. The numbers are stark. The job offer rate for graduating university students in April 2015 was around 97%. At the same time, this is already a relatively small pool: only about half of high school graduates go on to university, well below the average in many developed economies.

On top of that, almost all high school graduates can secure work immediately after graduation. The job placement rate for high school graduates is close to 99%. This means there is intense competition for every capable young person entering the workforce, regardless of education level.

For both Japanese companies and multinational companies operating in Tokyo, the message is clear: demand for young talent will continue to outstrip supply. The “war for talent” is no longer a metaphor — it is a daily management reality.

Mini-summary: Japan’s youth talent pool is small, highly sought after, and almost fully employed at graduation. Companies cannot rely on traditional hiring practices and must rethink how they attract and retain young professionals.

What long-term demographic trends are driving Japan’s talent crisis?

Japan’s demographic headwinds are structural, not temporary. Over the last 20 years, the number of people aged 15 to 24 has roughly halved. The number of Japanese turning 20 was about 2.76 million in 1976; by 2015, it had dropped to around 1.26 million. This is not a short-term dip — it is a long-term shift.

The core driver is the low birthrate. To maintain a stable population, a country typically needs a birthrate of about 2.1 children per woman. Japan sits significantly below that, at around 1.4. That is far below replacement level, and there is little evidence of a coming baby boom.

At the same time, Japan’s immigration policies remain extremely restrictive. In 2014, for example, only a tiny number of refugees were accepted out of thousands of applicants, and broader immigration reform has moved very slowly. As a result, Japan cannot count on incoming foreign talent to offset its shrinking youth population.

Mini-summary: Fewer births, rapid aging, and limited immigration mean the pool of young workers in Japan will continue to shrink. Companies must assume that talent scarcity is a permanent condition, not a temporary cycle.

How are social and lifestyle trends further reducing the future workforce?

Demographics are only one part of the story. Social and lifestyle changes are also reducing the number of future workers in Japan.

Research shows that many young adults are delaying or avoiding marriage and having fewer children. Surveys have highlighted low interest in sex among some segments of young men, and rising numbers of couples with little or no sexual activity. Combined with later marriage and fewer children, this directly translates into fewer future workers.

At the same time, Japan is not seeing a major shift toward self-employed entrepreneurship that might create new economic dynamism. According to global rankings, Japan is relatively low in ease of starting a business. That means fewer new enterprises and fewer entrepreneurial paths for young people. While this reduces “brain drain” to startups, it also slows innovation and limits opportunities for high-potential youth.

Mini-summary: Lifestyle trends — delayed marriage, fewer children, low birthrates, and limited entrepreneurship — all reinforce the long-term scarcity of young workers in Japan.

How do education choices and English skills impact the talent pool?

The challenge is not just the number of young workers, but also the skills and international readiness they bring.

First, a relatively small proportion of Japanese students study abroad, and the number has declined significantly since the early 2000s. Overall, the number of Japanese students studying overseas has fallen more than 30% since 2004. At the same time, surveys of high school seniors indicate that a majority do not enjoy studying English.

This combination — fewer study-abroad experiences and low enthusiasm for English — reduces the future supply of globally ready talent. For multinational companies in Tokyo and Japanese companies with global ambitions, that means fewer young employees with strong English skills and international exposure.

Leaders in major firms have already noticed this. Some have remarked that many young people in Japan feel comfortable staying inside the domestic environment and are not enthusiastic about “going global” or studying English. For companies that need bilingual, internationally minded professionals, the competition is especially intense.

Mini-summary: Declining overseas study and weak motivation to master English are shrinking the pool of globally capable young professionals, intensifying competition for bilingual and internationally minded talent.

In major cities like Tokyo, the job openings to job seeker ratio has risen well above 1.0, reaching levels around 1.65 in recent data points. This means there are significantly more job openings than job seekers. In practical terms, companies are competing fiercely just to receive applications, let alone secure acceptances.

Foreign companies in Japan frequently report that even attracting student applications is getting harder. Students often receive multiple offers and can afford to be highly selective. Even after extending a job offer, employers cannot assume the candidate will join — or stay.

Retention is a serious issue. About 40% of new hires leave their first employer within three to four years, looking for better conditions, stronger development opportunities, or a more engaging culture. Hiring alone is no longer enough; keeping talent has become just as critical.

Mini-summary: With more job openings than job seekers and high turnover among young employees, companies in Japan must compete not only to hire but also to retain talent over the long term.

What do young professionals in Japan expect from employers?

Surveys of young employees in Japan reveal a very clear pattern: they want growth and security, but on their terms.

When asked about their priorities:

• A large majority say they want to develop their skills.

• More than half say they value job security.

• Many still express a desire to stay with one company until retirement in principle.

• At the same time, a significant portion say they would change jobs for better working conditions.

There is also a noticeable attitude toward compensation. Between 2013 and 2014, the percentage of people who preferred salary not tied to performance or achievement rose substantially. This suggests some young professionals value stability and predictability more than aggressive performance-based pay systems.

In other words, they want security, meaningful development, and fair treatment — and they are willing to leave if they do not get it.

Mini-summary: Young professionals in Japan want skill development, security, and supportive working conditions. They will stay with companies that invest in them and will leave employers who fail to meet these expectations.

Why is leadership and management training critical in this environment?

In a tight talent market, companies that invest in people win. The organizations that will outperform others in Japan’s “war for talent” have one thing in common: they deliberately build a culture that attracts, grows, and retains high-potential employees.

This is where leadership training, sales training, presentation training, executive coaching, and DEI training become strategic, not optional. Young employees want to see a clear path for growth. They want managers who coach, not just supervise. They expect inclusive, fair, and psychologically safe workplaces.

Middle managers are the critical link. They directly shape the daily experience of new hires. Well-trained managers know how to:

• Engage and motivate young team members.

• Provide constructive feedback and coaching.

• Build inclusive, respectful team cultures.

• Communicate expectations clearly and fairly.

Dale Carnegie has over 100 years of global experience in developing leaders and transforming workplace culture, and more than 60 years of experience working with companies in Tokyo. That history has shown repeatedly that when managers build trust, communicate effectively, and recognize people’s contributions, retention goes up — especially among younger employees.

Mini-summary: Training leaders and managers is one of the most powerful levers companies in Japan can use to attract, develop, and retain scarce young talent.

What practical steps should companies in Japan take now?

Given the structural talent shortage, companies in Japan — both domestic and multinational — need to move from reactive hiring to strategic talent management. Practical steps include:

1. Prepare for ongoing talent scarcity
   Treat the talent shortage as a long-term reality, not a temporary fluctuation. Adjust recruitment, workforce planning, and succession planning accordingly.

2. Invest in structured training for new entrants
   Provide high-quality onboarding, soft skills development, and clear career pathways. Leadership training, sales training, and presentation training all signal that the company is committed to employee growth.

3. Develop middle managers as talent retainers
   Train supervisors and mid-level leaders in coaching, communication, empathy, and inclusive leadership. Executive coaching and DEI training can help them manage diverse and multigenerational teams effectively.

4. Align rewards and working conditions with expectations
   Review working conditions, recognition systems, and career development frameworks so they match the expectations of young professionals — especially around growth, fairness, and well-being.

5. Strengthen succession planning
   Identify and develop future leaders early. In a shrinking labor market, succession planning is not just good practice — it is essential risk management.

Mini-summary: Companies in Japan must act now: invest in training, empower managers, improve working conditions, and build robust succession plans to survive and succeed in a permanently tight labor market.

• Talent scarcity is structural, not temporary. Low birthrates, an aging population, and limited immigration mean the pool of young workers in Japan will continue to shrink.

• Young professionals want growth, security, and support. They expect skill development, fair treatment, and managers who coach, not command.

• Leadership and management training is a strategic differentiator. Companies that invest in leadership training, sales training, presentation training, executive coaching, and DEI training will attract and retain more of the best young talent.

• Succession planning cannot wait. In a market where 40% of new hires may leave within a few years, proactive succession and talent development planning are essential.

Founded in the U.S. in 1912, Dale Carnegie Training has supported individuals and companies worldwide for over a century in leadership, sales, presentation, executive coaching, and DEI. Our Tokyo office, established in 1963, has been empowering both Japanese and multinational corporate clients ever since.