Back in 2015, when I had just started in recruitment, I participated in a seminar, as one of the speakers, together with a group of young consultants from Mitsubishi UFJ Research and Consulting. We presented the results of a survey of hundreds of foreigners working in Japan to a group of business owners equally interested in the foreign labor force in Japan. One of the guest speakers introduced some concepts I had never heard of (not even during my time as a young labor law-focused lawyer back home): the job-based and membership-based employment systems. In Japan, the speaker continued, the membership-based system prevailed, while overseas (mostly in Western countries), the job-based system dominated. In recent years, this discussion has gained momentum.

The question you might be asking is: Does this matter to us as foreigners working in or thinking of moving to Japan?

Before answering, let’s first spend some time setting definitions and checking some facts.

The Definition

I find the definition by the researcher Hamaguchi Keiichiro from the Japan Institute for Labor Policy and Training one of the easiest to understand: In a membership-based system, a person (employee) comes first, and a job is created and assigned to him/her. In a job-based system, a job comes first, and then a person who suits that job is assigned to it.

The table below summarizes the key features of both:

Job-based	Membership-based
Job tasks are clearly defined	Job is relatively vague
Performance and market-based salary and promotion	Seniority-based
If no more work (job done) dissmisal comes	Lifetime employment
Employees take full responsibility for learning/capacity building	Development through transfers/rotations and training (within the company)

Some Facts
According to a survey of 740 representative companies in Japan, conducted by the research branch of the major HR management company Person, in 2021, 18% of the surveyed companies had introduced the job-based employment system, and 39.6% were considering implementing it. According to a smaller-scale survey, run by a domestic company, by 2024, 54.9% of surveyed companies had adopted the job-based system.

When it comes to big-name players, companies such as Hitachi, Panasonic, and KDDI have joined the party.

I’m not aware of a survey that is representative of the millions of companies in Japan, but the initial information signals an increase in the adoption of the job-based system.

People are starting to understand its benefits. For instance, a young employee at a venture marketing company called Liddell, which implemented job-based recruitment in 2020, has already seen his income double. At this company, employees at the “same level” can have different salaries based on their performance. It’s accelerating the speed of upskilling.

The need to increase productivity is the most common reason cited for the adoption of the job-based system.

The transition is not smooth, and not because Japan is supposedly slow to change, as it is commonly accused of, but because while many people see more advantages in the job-based system, there are also many others who favor the membership-based system. For instance, the flexibility it offers in rotating an employee across different “roles.”

Besides, let’s keep in mind that a theoretical framework developed to explain society is one thing, and what actually happens is another. Life is richer than how it is described or conceptualized in papers, and this includes the world of business and work. Some doubt that Japan has always had a “pure” membership-based system. For instance, according to the Japanese management consultant Tsuguo Ebihara, who started his career at Recruit, one of the largest HR companies in Japan, employees are rotated but within a familiar radius. They are not rotated at the company’s entire will to any department, as it is commonly believed.

Nevertheless, while accepting that there is no absolute purity, the membership-based system described above is a fair representation of the Japanese landscape, or at least of the companies with that system.

Despite the increase in the number of companies that have adopted the job-based system, it is still unpredictable which system will prevail, if any. My guess is that in the short- to mid-term future, we will see more companies adopting a sort of Japan-specific version of the job-based system, preserving some elements of the one that many believe in—as they also perceive its benefits.

The reason is automation and the need to attract more foreign talent.

Together with the need to increase productivity—or even as a precondition—automation is expected to drive demand for those with high-level skills and expertise. According to Mitsubishi Research Institute (https://www.youtube.com/watch?v=oaO8kGV-kAw, minute 0.18), by 2030 there will be a shortage of more than 1.5 million of professionals in fields such as IT (STEM-focused).

When it comes to attracting more foreign talent, which is becoming a must-do policy for Japan, considering the severe low birthrate and aging reality, a job-based system seems more accommodating to foreigners as it facilitates international mobility—Btw, this is an answer to the abovementioned question.