“Japan was the country of lifetime employment, scrupulous employee loyalty and conformity, and relatively closed borders for non-Japanese professionals, right?
Well, times are changing. Not fast, but certainly evolving.
Japan is opening up to the potential of the freelance revolution. In fact, just a few months ago, the Japanese government agreed on a set of new policies to provide work visas for over 300,000 foreign workers in a wide range of industrial sectors. These workers help relieve serious skill shortages. And, in doing so, they further open the door to alternative work and career arrangements.
Japan is beginning to welcome the freelance revolution and the flexible blended workforce. Slowly, carefully, but it’s happening and will grow.
It’s not easy to be a freelancer in Japan. While in other cultures freelancers are respected as independent experts and entrepreneurs, Japan has long been a society of company employees. But, as lifetime security has become a thing of the past in Japan and Abenomics has put pressure on income, freelancing has begun to rise.
According to a recent report by Lancers’, the Japanese online talent marketplace, Japan has over million freelancers as of 2018, up approximately 5% from the prior year. Lancers estimates that 17% of Japan’s working population are in some way involved in the freelance trade—as full-time freelancers, part-timers, moonlighters and gig workers who have multiple sources of gig income.
Lancers’ is one of Japan’s leading online talent marketplaces, and has raised the funding to build out its marketplace and provide financial services to freelancers. A second made-in-Japan online talent marketplace is Crowdworks which focuses on data sciences, but like most Japanese online talent marketplaces, the range of skill categories is very large, from translator services to augmented and virtual reality expertise. As you might also expect from a Japanese company, Crowdworks’ mission is: “Make people smile as they work.” The company has a working relationship with Figure Eight, the well-respected U.S. based AI and Machine Learning platform. Japanese tech professionals on the Crowdwork’s platform are an important part of Figure Eight’s global tech resource base.
Lancers and Crowdworks are by no means alone. Beyond all of the global players that you’d expect to participate in the Japanese market—Upwork, Fiverr, Freelancer, Toptal—a number of local online talent marketplaces have begun to spring up, including:
Although startups don’t always report their client mix, the two largest marketplaces give an indication of Japan Inc’s and the government’s utilization of freelancers. Projects brought to the platforms include most of the big and mid sized companies in Japan, and support for startups that are not yet able to support full-time staff in some technical areas. Japanese tech talent is also well-respected across the Asian region, and Japanese freelancers are used a great deal by Japanese company units overseas. Language is an obvious factor; few non-Japanese speak the language sufficiently well to compete.
Although freelancing is growing in Japan, and government provides some encouraging policy support, the wide acceptance of freelancing as a legitimate and respectable career choice has yet to fully materialize. The cultural and societal challenges are considerable. Lancers’ CEO Yosuke Akiyoshi pointed out in an early interview, “We need to enlighten companies on the advantages in speed, cost and resources.”
But, barriers still limit the freelance revolution in Japan. As Akiyoshi recently opined at the Tech in Asia Tokyo 2018 conference that “the sharing economy in Japan is reaching a plateau.” Cultural, social and regulatory barriers to the independent professional or freelance life still create difficulty, and social protections are not fully in place. For example:
• There is still a worry about the competence of people who aren’t company employees. Freelancers are often presumed to be less competent and less professional. As one freelancer put it, “if you are not a company employee, everyone in society, particularly financial institutions, views you as having virtually zero credibility.”
• Banks regularly discourage freelancers from seeking mortgages and loans.
• Companies frequently avoid hiring former freelancers as regular employees, thinking they must have inferior skill, loyalty and drive.
• Because freelancers lack access to employer provided social insurance, freelancers are forced to rely on the national health insurance system, which is not as generous.
• Young parents have difficulty finding public day care for their children as public daycare services often gives priority to corporate workers.
• Fair compensation is also a problem for freelancers in Japan. Commissions can be significant drag on pay, with multiple layers of subcontractors often requiring a percentage of the freelancer’s rate.
• Then there is the challenge of staying technically fit and up to date. Within the Japanese technical community, there is often a concern that without a big company providing continuing education and the right project work, professionals are fearful that they will fall behind. As one high-tech expert said, “Of course I’m nervous about staying up to date. Tech is changing at an ever accelerating rate. I’m worried without a company that trains me that I can’t catch up.”
• Finally, many Japanese companies prohibit their employees from off-hours moonlighting, a frequent freelance career path. Or, it is effectively discouraged by long hours at work. And, unlike other global regions, there isn’t a social safety net. Keio University professor Yoshio Higuchi argues, “Becoming a freelancer sounds appealing. But like furita (young, serial part-time workers) who were once touted for their flexible working style, it may be just yet another word for vulnerable non-regular workers.”
Despite these challenges and obstacles, the economic necessity of both individuals and corporations is driving the adoption of freelancing in Japan.
It started with moonlighters, who needed the income from a second job, or saw “second shift” work as a career path to a different profession. Now, as of 2018, over 7 million Japanese—11% of the workforce—will work at least two jobs. This compares with countries like the U.S., that have embraced freelancing and the gig economy for longer, and where 20% of the U.S. workforce had second jobs in 2017.
While economic conditions led the past generation in Japan to moonlight, freelancing as a true career alternative will continue to grow in Japan as government and business embraces the benefits of a flexible blended workforce and legitimizes freelancing as a respectable career alternative to full-time employment. APAC CEOs interviewed by the Economist in a 2018 study call for a more agile and innovative approach to work, career and the workforce. They see the impact of AI and automation. They understand that a more flexible blended workforce is required, and that historical cultural barriers need to be overcome.
So far, so good. Among the talent marketplaces, Crowdworks has grown revenue by a multiple of 20 times, from $3 million in 2014 to $60 million in 2018. Lancer’s has raised more than $20 million in venture funding through 2018, and has engaged with important Japanese banks. A brace of new competitors has risen to join the competition for freelance industry growth. Although it may take more time than in other regions, the freelance revolution is slowly but surely gaining traction in the land of the rising sun.”
By Jon Younger
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