More major Japanese companies plan to reduce the number of new graduates they hire from fiscal 2027 despite the country’s labor shortage as they turn to digital solutions including artificial intelligence to improve productivity, a Kyodo News survey showed.
A survey of 111 companies suggests a possible shift in the aggressive hiring trend seen since the COVID-19 pandemic, with digitalization reshaping labor-intensive work and the Middle East crisis making the economic outlook uncertain.
In the survey conducted from mid-March to early April, 23 percent, or 25 firms, said they plan to reduce the number of new graduates they hire for the fiscal year starting in April 2027, up 11 percentage points from a year earlier.
By contrast, just 16 percent, or 18 companies, said they would increase hiring, making the first time in five years that there are more companies planning to cut the number of new graduates than increase.
The results also highlight a shift toward more diverse hiring beyond new graduates, including foreign workers and mid-career recruits.
Some 39 percent of the firms, including Fujifilm Holdings Corp and restaurant chain operator Skylark Holdings Co, said they plan to hire more foreign workers for positions in Japan, citing expectations for innovation and overseas business expansion.
Companies are also increasingly turning to mid-career hiring to secure skilled workers.
Hitachi Ltd. and MUFG Bank said the number of their fiscal 2027 new graduate hires will be less than their mid-career hires in fiscal 2026, citing their urgent need to secure talent with experience in digital fields.
As for companies planning to cut hiring, the most cited reason was labor-saving measures through digitalization. Murata Manufacturing Co., for instance, cited improved operational efficiency such as through the use of generative AI.
The survey also showed that 35 percent of the companies plan to maintain their levels of new graduate hiring for fiscal 2027 at the current fiscal year’s level, while 22 percent said they are still undecided, with 5 percent providing no response.
Regarding labor shortages, 38 percent of companies said they feel a shortage, while 37 percent said they do not. Many firms reported shortages of engineers and manufacturing workers.
Competition to recruit new graduates remains intense, with 77 percent of companies saying the job market remains favorable to students or is becoming increasingly so.
To attract talent, more companies are willing to raise pay, with 74 percent saying they are increasing starting salaries for fiscal 2026 and 9 percent considering increases in the future, according to the survey.
It also found that 77 percent of companies have already started rehiring former employees.
© KYODO
