Japan provides unique opportunities for companies looking to expand their global footprint but has some unique employment challenges. As the third largest economy by nominal GDP, Japan is a developed market with large multinationals that compete on a global scale. The government, led by Prime Minister Shinzo Abe, has expressed a commitment to stimulate the economy and promote growth.
Cost of Japan hiring
- When considering hiring an expat versus a local national there are two main costs to consider: hard costs and time.
- If hiring an expat you need to consider the time it takes to find a candidate, if they need to move, as well as the immigration process.
- The hard costs that won’t be incurred by hiring a local national include government fees and visa costs, typically costing up to $5,000.
- If you want to learn more about compliantly hiring expats, take a look at this post.
- When sending an expat into Japan they must obtain a work visa, from our experience this process can take 3-6 months.
- Upon entry, the employee will receive the status of a residence. A working visa by itself does not permit a foreign national to live or work in Japan but is only considered evidence of documentation to then obtain a residence status.
Japanese culture places a high value on honor and status and this extends to the business community. For Japanese citizens working for a well known, respected brand name company is very important.
When considering sending an expat to Japan it is important to consider cultural norms. While there is a robust expat community, Japan is the most developed western countries, is very homogenous, with over 98% of the population being ethnically Japanese. Speaking English is not a common practice, so think twice before sending that star salesman to Japan.
Japan offers robust social programs to employees that include the following mandatory benefits:
- Health insurance
- Nursing care
- Workers compensation
- Transportation from home to work
- Child benefit (if applicable)
In addition, many Japanese employees receive semi-annual bonuses in summer and at the end of the year. The bonuses are not required by law, but the vast majority of Japanese employers pay them to their employees. Generally, each bonus is equal to two or three months of salary.
When sending an expatriate overseas employers can use tax equalization agreements as a way to cover the tax burden for employees. For US employers the US and Japan do have a tax equalization agreement in place.
To learn more about international expansion strategy, take a look at our ebook “The Ultimate Guide to Global Expansion”