Tokyo professionals - recession proof?

By Kevin Gibson
The recent economic slowdown and turmoil in the financial markets have left many people assuming that the professional employment market in Tokyo is about to collapse. The good news for Tokyoites is that the doomsayers have so far been proved dead wrong.

The resilience in demand for many positions is underscored by the recently published Robert Walters Salary Survey 2008 which tracks trends in wages of specialist professionals in Tokyo and 25 other markets in 15 countries around the world.

The survey shows that some “recession proof” careers have emerged where demand has increased and wages are set to rise. In particular, people with technical skills in areas such as JSOX and JGAAP are very highly sought after with employers fighting a very fierce war for this talent. Japanese bilingual professionals in almost any discipline still enjoy great demand for their communication skills from foreign firms and an increasing number of Japanese firms. Even those foreigners who speak no Japanese at all but possess financial product expertise in accounting, computer programming or compliance have seen demand for their skills continue to rise.

In fact, a consistent feature of the traditionally volatile financial services sector is that these firms can never typically find enough experienced accountants, auditors and compliance professionals. This demand is even more pronounced in the wake of the recent trading scandal in France. Professionals in accounting and auditing continue to enjoy year-on-year wage and career progression despite the sub-prime losses encountered by some of the world’s most respected financial institutions. For example, an internal auditor with 5+ years experience can likely command an annual salary of between 13-20 million yen in 2008 versus 12-18 million yen in 2007, according to our survey data.

That’s not to say that Tokyo professionals have been completely unscathed by the recent turmoil in financial markets. There have been well-publicized retrenchments in some sales and trading divisions at banks. However, these cuts have been in selected areas that have been directly impacted by the credit crisis. Most global organizations are pursuing long-term Asian growth strategies and are reticent to make any “knee jerk” reactions in this area and risk losing the momentum they have generated in the region in recent years. This attitude is also reflected by the fact that most large IT projects are still going ahead when typically they were put on hold or cancelled in previous financial crises. However, IT directors are under increasing pressure to complete projects on or under budget, so IT project managers have seen a jump in demand for their skills, which is a new phenomenon.

There is also good news for those professionals in this area that have been unfortunate enough to be let go at financial firms during the current turmoil. There are a large number of openings available for them.

Another hiring hot spot that continues to defy expectations is consumer sales and branding. We are seeing tremendous demand for experienced professionals in these areas belying the headline numbers that show declines in consumer spending & confidence. Japan’s vast and complex consumer market has long held great attraction for international consumer products firms. Recently, several global brands have decided to sidestep their traditional Japanese distributors & partners and make a play directly for the highly prized Japanese consumer, triggering a surge in demand for sales & marketing talent in this area. Our survey reveals that product/brand managers with 4-5 years experience can expect to see their annual remuneration rise by about 15% to 8-12 million yen this year. The new flagship-style stores opening up all around Tokyo are physical evidence of this direct investment.

Trying to find qualified bilingual professionals in Japan has always been extraordinarily difficult with jobs outnumbering applicants in some areas by as much as 5 to 1. This has made it extremely difficult for businesses to grow in Japan without straining already stretched salary structures.

For many recruitment directors, it actually comes as a relief to have fewer firms bidding for the same staff. And for some candidates it is almost a relief to have a manageable number of choices. In some senses, the market has seen a return to relative normality with wage inflation continuing in some hot-spot areas.

The broader, long-term trend by international firms to localize senior management in Japan will continue and in may cases, bilingual Japanese professionals will command higher packages than foreigners, which is interesting as localization strategies were typically part of a cost control mandate. The flip side to these trends is that lower skilled members of the work force are seeing salaries slide as their roles are being made temporary or part-time. In fact, by 2010, it is predicted that almost 50% of the workforce will be in part-time or temporary employment which is quite a remarkable statistic when you consider Japan’s corporate history. So the outlook is one of polarization with career winners and losers, which reflects the broader trends in the Japanese economy.

The Robert Walters Salary Survey 2008 is available at www.robertwalters.com/en-jp/salarysurvey/download.do

Kevin Gibson is managing director, Japan operations, Robert Walters Japan KK (http://www.robertwalters.co.jp/?id=pr020)