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Job Placement Firms Enjoy Explosive Growth

August 31, 1999

Outplacement businesses, which help workers facing layoffs due to corporate restructuring find new jobs, are enjoying rapid growth. These companies are contracted by corporations to provide know-how and job information to those faced with the need to find new employment. The growth of this industry has been spurred by companies and conglomerates that have been forced to cut back their surplus staff, as well as changing employee attitudes toward the Japanese tradition of lifetime employment.

The High Cost of Outplacement
One major outplacement company in Tokyo is contracted by corporations to assist middle- and upper-aged workers who have been targeted for restructuring. In addition to instructions on resume writing and interviewing, it also provides information on employment opportunities.

This firm currently has about 500 registered job seekers. The companies looking to unload employees pay the fees for the service--1.5 million yen (13,000 U.S. dollars at 115 yen to the dollar) per person. It takes four months on average to find a job for each individual, usually with a medium-sized or start-up firm. Though the outplacement company saw little growth for some time after its establishment in 1992, the number of requests for its services has been growing rapidly since 1997: Sales for fiscal 1998 were 1.5 billion yen (13 million dollars), a threefold increase over the previous year.

Another outplacement company assigns a placement specialist to each job seeker to provide individual consultation as well as moral support. The company also conducts computer and English conversation classes and offers lectures on industry trends.

Outplacement businesses first appeared in Western countries and began to take off in the 1970s when economic growth and hiring began to slow. Some 20 years later, Japan found itself confronted with a similar situation. Three or four years ago there were no more than a dozen or so outplacement companies in Japan. Since then, with many foreign-owned companies and existing temp agencies making forays into the industry, the number has increased to around 80.

Naturally, competition is fierce. Each company has its own prescription for success: One claims the key is bettering the abilities of its consultants; another concentrates its efforts on digging up a plethora of employment listings in order to quickly place job seekers into optimum work positions. There are even cases of highly qualified job seekers with backgrounds in sales or personnel management winding up taking positions with the outplacement companies themselves.

The End of Lifetime Employment?
Until recently, large corporations dealt with excess employees by loaning or transferring workers to subsidiaries or affiliates. But with this custom becoming less and less affordable in today's economy, an increasing number of companies have begun encouraging older employees to voluntarily retire early. Outplacement companies have evolved to help absorb the shock of this restructuring process.

Most corporations undergoing restructuring have little knowledge of how to support workers embarking on job changes. The job listings provided by publicly run employment offices tend to cater mostly to blue-collar workers; office and technical listings are scant, providing little help to white-collar job seekers. This has resulted in a booming market for outplacement businesses--now valued at 8.5 billion yen (74 million dollars) in 1999, it is expected to swell to 28 billion yen (243 million dollars) in five years.

Workers are also rapidly becoming less tied to the traditional system of lifetime employment. In spring 1999 one large department store recruited volunteers for early retirement from among employees aged over 40; though it had hoped for 600, nearly twice as many--1,151 employees--came forward. According to one private research agency, of 74 companies that recruited volunteers for early retirement between January and March, 11 exceeded their target numbers.

A growing number of older workers are moving to boost their re-employment chances by taking classes to gain professional licenses and additional skills, such as English conversation. These people are hoping to use their specialized knowledge to embark on a second career or even start an independent venture.

Trends in JapanEdited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.