Why Japan's Mass Recruitment of New Graduates Needs to Change

In Japan, there is a unique system called "mass recruitment of new graduates." Companies recruit prospective graduates during the same period each year and interview and test them while they are still in school. Then, they hire a certain number of students and have them work immediately after graduation. 

This recruitment system allows companies to hire employees in a lump sum. They can train all recruits at once and then utilize them as part of the workforce. In the past, it was very effective in securing a large amount of uniform labor for the mass production of high-quality products. This in turn supported Japan's rapid postwar growth. 

In June 1953, the Japanese government made an agreement with schools and companies regarding the hiring process under this system. The hiring process would begin in mid-October of the year before graduation and last about one month.

However, this agreement was abolished in 1996. The penalty for violating the agreement was minimal, and many companies began to neglect the agreement. Since then, most Japanese companies have based their recruitment on the mass hiring of new graduates without strict rules. 

Limits of Mass Recruiting

However, in recent years, competition among companies for human resources has intensified. An increasing number of companies are beginning to screen university students long before the official job-hunting period under the mass recruiting system. They do this through what they call an internship program.

This mass recruitment system worked well during the high-growth period. However, is it effective for today's Japanese companies, where lifetime employment and seniority systems are collapsing? And will it be able to compete with foreign companies that do not follow this system and hire year-round? Amid these questions, this mass recruiting system has reached a turning point.

Studying or Job-Seeking?

From the perspective of educators, it is time to rethink the system of mass recruiting of new graduates. During my time as a lecturer at Waseda University, I was often frustrated by last-minute absence notices from students just before class. 

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My classes emphasized presentations and group discussions. That meant the absence of a student from a part of the class for which he or she was responsible caused inconvenience to other students. It necessitated a change in the schedule for the next and subsequent classes.　

In one instance, a student was summoned by a company that was a major member of Keidanren. It coincided with the day Keidanren's announcement that it would not discourage students from studying during job-hunting was reported in the press.

The mission of universities is to provide young people with the basic knowledge to enter the workforce during the transition from student to professional life. In Japan today, however, many young people are entering the workforce with inadequate education. The time they should be spending on their studies is being cut short by job-hunting activities.

No Time to Study

The practice of hiring all new graduates at once was effective during the high-growth period. But it is not suited to the current era. 

If many companies adopted a year-round hiring system instead, students would be able to focus on their studies and personal development. Universities would also be able to raise the level of education.

The stereotype of Japanese university students has been that they enter university after facing fierce competition in entrance examinations. However, after entering the university, they spend their time in club activities and part-time jobs, somehow graduate, and find employment without much effort. 

Recently, however, an increasing number of students are spending much longer on job hunting. They have no time for study, let alone club activities or part-time jobs.

Decline of Japanese Universities

Some universities compensate for the decline in student enrollment caused by Japan's declining births by enrolling more foreign students. Others are moving to consolidate their operations with other financially struggling universities. The plight of Japanese universities is becoming more serious. At the same time, the quality of education at Japanese universities is being questioned.

In the past, Japanese companies used in-house training programs to teach new hires the basics of business operations and interpersonal skills. Moreover, they gave new hires thorough and detailed employee training as if to say, "Forget everything you learned in college because it is useless, and start learning the basics today." 

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However, few companies in Japan today can afford to train their employees as much as before. In recent years, an increasing number of people working for companies in Japan regret not studying more during their school years.

Job Dissatisfaction

Gallup, an American research firm, annually surveys workers aged 15 and older in nearly 160 countries to determine employee engagement. In other words, the degree of involvement and enthusiasm of employees in their work and workplace.

According to the company's report for FY2023, the percentage of "employees who are motivated and proactive about their work" was only 6% in Japan. Compared to 23% for the world and 33% for the United States, Japan's figure is notably low.

In contrast, the "percentage of people who are unmotivated about their jobs" was 24% in Japan in 2023. The country had four times as many employees who were not motivated to work as those who were. This trend has remained at the same level for the past decade.

The Japanese figure for the "percentage of employees who are watching or actively seeking a new job" was 33% in 2023. Although this figure is lower than the 49% in the US, it is surprising that one out of every three employees in Japan intends to change jobs. This shift is notable in an economy that, until recently, functioned well under the lifetime employment system, which guaranteed jobs until retirement.

Lacking Passion and Dreams

Sony once stunned the world by introducing the Walkman. Many of Sony's employees at that time must have joined the company out of admiration for the company's founders, Masaru Ibuka and Akio Morita. They were full of innovative spirit in product development. 

In addition to Sony, there were many other Japanese companies that inspired dreams and passion in their employees. Unfortunately, I do not often hear about such passions from today's Japanese companies. 

Nevertheless, some companies such as Rakuten have started hiring new graduates and mid-career workers year-round. Some universities, such as the Tokyo Institute of Technology and Tokyo Medical and Dental University, are seeking new ways to compete with top-tier universities overseas through consolidation.

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The fact that there is a movement, albeit a gradual one, to seek change in the existing structure is a small silver lining.

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Author: Yoshifumi Fukuzawa

Yoshifumi Fukuzawa is a business consultant and former lecturer at Waseda University.