Why Japanese firm are covering Gen Z’s student loans and housing costs

Japan’s labour market is facing a seismic shift as an ageing population and declining birth rate force companies to rethink their recruitment strategies.

With the working-age population shrinking by over 36% in three decades, employers are pulling out all the stops to attract and retain the emerging Gen Z workforce.

From subsidised housing to student loan reimbursements, the competitive hiring landscape is reshaping how Japanese businesses operate.

Japan’s labour market crisis

The latest data underscores the urgency of the issue.

Japan’s Ministry of Internal Affairs and Communications reports that the workforce aged 20 to 24 has dwindled significantly, and a projected shortage of 11 million workers by 2024 looms over the nation.

To counter this, companies are proactively securing talent even before students graduate.

According to Shushoku Mirai Kenkyusho, over 40% of students set to graduate in March 2024 had already secured job offers by the previous year—marking the highest percentage since 2016.

This intense demand has given graduates unprecedented leverage in negotiating employment terms.

Japanese Gen Z get innovative perks

To stand out, Japanese firms are going beyond traditional salary packages. Subsidised housing has emerged as a popular incentive, particularly as inflation has driven up living costs.

Nippon Life, for instance, provides low-cost accommodation for its employees near Tokyo Disneyland, while Itochu Corporation has built residential facilities featuring cafes, saunas, and meal plans.

These initiatives have become lifelines for workers grappling with Japan’s cost-of-living crisis.

Student loan assistance is also gaining traction.

The Japan Student Services Organisation reveals that the number of companies offering loan repayment benefits doubled in the past year.

Tokyo Energy & Systems, for example, provides monthly reimbursements of up to ¥20,000 ($127), capped at ¥3.6 million ($22,800).

Such perks make these roles particularly appealing to new graduates burdened by debt.

Beyond financial incentives, the introduction of flexible work arrangements is also reshaping Japan’s rigid corporate culture.

The Tokyo Metropolitan Government will roll out a four-day workweek for its employees starting April 2024, following the success of similar programmes in Europe.

Addressing the broader implications

Despite these efforts, the labour shortage has prompted some businesses to consider hiring foreign talent.

Companies like Hizatsuki Confectionery have started recruiting overseas, although linguistic and cultural barriers remain a challenge.

For now, domestic workers are still the preferred choice, with employers focusing on retaining local talent through enhanced benefits.

The long-term implications of these strategies raise questions about sustainability.

Will perks such as subsidised housing and four-day workweeks be enough to counteract the declining birth rate?

Moreover, as businesses compete for a shrinking pool of workers, smaller firms may struggle to match the offerings of larger corporations, potentially exacerbating inequality in the labour market.

The post Why Japanese firm are covering Gen Z’s student loans and housing costs appeared first on Invezz