Japan’s small and medium-sized businesses—nearly 99.7% of all companies and responsible for about 70% of employment—are facing a serious talent shortage. Turnover rates across SMEs are far higher than in large firms, leading to almost 350 bankruptcies in 2024 tied to labour gaps.

To tackle this, Japan is combining digital HR tools and government support:

• HR platforms are helping SMEs streamline operations, highlight career paths and boost retention.
• Small business plans like Benesse’s Udemy access and Reskilling Camp give affordable training options.
• A 5‑year JPY 60 trillion investment—around USD 417 billion—is targeting wage growth, productivity, and labour-saving tech.

I see this as a clear example of how small organisations can build resilience:

• Streamlined HR + Clear Development Paths = Better retention
• Government Incentives + Digital Adoption = Reduced Operational Risk
• Training and Upskilling = Sustainable Productivity Gains

And here’s where I see a crucial shift happening: the strategic use of freelancers, especially those with high-level, cutting-edge skillsets—think DX, UI, UX, data, AI—isn’t just a workaround for talent gaps, it’s often a better solution.

From my experience, sometimes hiring full-time talent can slow companies down—not just because it’s a fixed cost, but because the process is longer and heavier. Freelancers, on the other hand, are a variable cost—you can start small, scale up or pause depending on your needs. And importantly, the time-to-fill with freelancers is drastically shorter. Companies can onboard skilled professionals in days, not months. And with the ability to hire globally, companies can tap into incredible talent from across borders.

For HR and business leaders, the lesson is simple: supporting people with structure, tools and strategic policy matters more than ever in tight labour markets.

#Japan #SME #StrategicHR #BusinessGrowth