Japan's Employment Security Act requires a recruitment business to obtain a license. Failure to do so can result in imprisonment of up to a year. While I've met sleazy recruiters, sending them to prison seems a tad excessive to me. Curious about why the industry is so harshly regulated, I started digging. This took me into the seemingly dry but surprisingly interesting topic of the history of recruitment in Japan. As virtually nothing about this is written in English, I'm sharing what I found.

Japan’s first employment agency

The earliest account of an employment agency in Japan comes from the mid-Seventeenth century. Keian Yamato was a doctor who was sometimes asked by his patients to introduce servants or help arrange marriages. He was compensated for these introductions, and eventually this side business grew so successful that it overtook his medical practice. In 1652, he quit his job as a doctor to focus on his introduction business instead. So much so was his early fame, that early employment agencies were called “Keian” after him.

Keian’s agency and others got started at that point in Japanese history because the economic conditions were right for them. For an employment agency to be a viable business, there needs to be both a large supply of people seeking employment, and employers seeking labor. By mid-Seventeenth century Japan, such a market for labor was flourishing in response to a shift in Japanese society that had started with the dawn of the Edo Period, fifty years earlier.

The labour market in the Edo Period

The Edo period started in 1603 when Ieyasu Tokugawa officially assumed control of Japan. Before he came to power, for the last century and a half, Japan had been in a state of near-constant civil war, leading to much of the country struggling to recover from the ongoing conflict.

Ieyasu chose Edo, modern day Tokyo, to be the center of his government and country. Previous to this, the political and cultural center was located in western Japan, and Edo and the surrounding region had been economically underdeveloped. But Ieyasu enacted policies that encouraged the urbanization of Edo, transforming it from a small castle town with only one hundred houses to a bustling metropolis of over 250,000 people by 1650.

Not only did Ieyasu pursue urbanization of Edo, but his policies encouraged it throughout Japan. The government divided all of Japan into specific regions, granting each to a local Daimyo, a powerful feudal lord, who built their own castles surrounded by Samurai residences. This lead to a growth in the number of artisans and merchants, who in turn needed staff, creating new employment opportunities.

Further driving demand for labour was the government policy of Sankin-kōtai, which required Daimyo to alternate living between their holdings and Edo on a yearly basis, in an attempt to prevent them from gaining too much power. As it was infeasible for Daimyos to relocate their entire household to Edo, this led to a demand for temporary staff.

Simultaneously, Edo saw a large influx of job seekers. Traditionally in Japan, the eldest son inherited everything: the family name, business, and any assets. Other children were seen as a burden, particularly for poor families. Struggling families practiced “Kuchi-berashi”, literally translated as reducing the number of mouths, where they would place their children to work elsewhere. As Edo flourished, many second sons and daughters of poor rural families journeyed there in search of employment.

Not only did children seek employment in Edo, but so did adults. Often these were people from farming villages who were cast out by their family, or samurai who became masterless after their leader fell in battle.

As these job seekers didn’t have local connections, they sought out someone who could make introductions. With the burgeoning employment market, recruiting as a profession was born in Japan.

Employment in the Edo period

Employment is a relationship where an employer pays an employee for work. While this has been one type of relationship, there are others where people perform work without receiving compensation, such as slavery or indentured servitude. In the Edo Period, the division between compensated and forced labor was ambiguous, with the term Hōkō, roughly translated as “service” or “apprenticeship”, used to refer to a wide range of employment-like relationships.

The most straightforward kind of Hōkō was temporary labor, where a person tended to be paid daily. Another form was a long term contract of a year or more to work for a samurai house. With this contract, they were usually paid on a monthly or yearly basis, however the salary itself was low as they were also provided room and board while working for the family.

Unpaid apprenticeships also fall under the term Hōkō, whereby a person would work for an artisan or merchant to learn the business. While they usually wouldn’t be directly paid for their work, the expectation was that their previous employer would sponsor their new business.

Children could also be placed out to work under a Hōkō agreement, where they would often learn a craft while being given food, clothes, and a place to live, but not be directly financially compensated. The parents of the children would be given what was effectively an interest free loan: they’d get a lump sum payment when the child started the apprenticeship, which they’d need to pay back when it ended.

While Hōkō tended to refer to agreements of fixed duration, it also encompasses a slavery-like relationship, whereby a whole family was born to serve a wealthy family for their entire life. Near the beginning of the Edo period, this form of permanent Hōkō was banned, and restricted to a fixed period instead (a maximum of 3 years in 1616, but extended it to 10 years in 1625).

Recruiter or human trafficker?

In modern parlance, just like there is a clear divide between employment and forced labour, there is also a clear divide between recruiters who perform employment matchmaking, and human traffickers who provide uncompensated labourers to employers. In the Edo period, the difference between these two professions was murkier than it is today.

For instance, when children ventured into Edo in search of employment and didn’t have any local connections, they would sometimes make use of a local recruiter. These recruiters would sign a contract on behalf of the parents with an employer. While some of these were benevolent, it was easy for them to be exploitative, and force the children to take jobs with poor working conditions.

During this period, the government also established special regions called Yukaku, which became the only legal area to practice prostitution. The government saw Yukaku as a way of maintaining public order and collecting taxes. To ensure a steady stream of new prostitutes, the government allowed the “apprenticing” of young girls into prostitution. Unlike normal apprenticeships though, where the parents needed to pay back the “loan” that they received, the girl herself became responsible for paying it back. The amount the parents received was so much though, that even if the girl worked her entire life as a prostitute, she could never pay off the debt. The only way out was to have a wealthy man buy out her remaining debt, and become his mistress. Some recruiters took advantage of Yukaku, and effectively bought young girls from poor families in rural areas and sold them to brothels.

First steps towards regulation of recruitment

In 1867, the Tokugawa shogunate was finally toppled, ushering in a new era in Japanese history, referred to as the Meiji period. Whereas the previous government had maintained an isolationist stance, the new government embraced western technology and culture, seeking to modernize the country before it was subjugated by western powers.

As part of this modernization, the government abolished the strict class system that divided Japanese into Samurai, peasants, artisans, and merchants, declaring that everyone who had been peasants, artisans, and merchants to be equal. People who were formerly Samurai and Daimyo however were still granted a status as nobles.

With this move modernity, the government sought to regulate the recruiting industry. In 1872, they introduced a requirement that recruiters be licensed and have a guarantor. They also limited the fee a recruiter could receive to be a maximum of 5% of the salary of the introduced employee. This fee was paid by both the employee and employer.

International attempts to ban private employment agencies

As part of the Treaty of Versailles that ended World War I, the International Labour Organization (ILO) was founded to advance social and economic justice through setting international labour standards.

At their very first meeting in 1919, the ILO called on its members to establish free public employment agencies and move towards banning fee charging agencies. As a member of the ILO, Japan created a new law, which required municipal governments to establish public employment agencies and introduced stricter requirements for private employment agencies. While there had been 9,712 private agencies in 1926, the number dwindled to 2,541 by 1934.

The new regulation of the industry also saw stronger controls against unethical recruitment, such as using exaggerated or false claims to recruit people, forcing applications, recruiting women to be prostitutes, blocking applicants’ freedom, and so on.

In April 1938, the public employment agencies that had been operated at a local level were nationalized with a new law. This law also banned private agencies, except for some of the existing agencies, which were allowed to continue while facing even stricter regulations. Many of the private agencies who were banned merged into the national agency. The driving factor for this nationalization was not human rights though, but rather a response to a rapid increase in demand by the military for labor due to the Second Sino-Japanese War.

The loosening of regulations

With the end of World War II, the Allied occupation of Japan worked to reform the politics, society, economy, culture and all the other aspects of the country. The occupation also called for labour from the Japanese. The first request being to supply the US embassy with 200 gardeners, 110 cleaners, and two elevator mechanics. These requests increased over time, but the national employment agency was unable to fully meet them.

This unfulfilled demand was despite widespread unemployment in Tokyo. Due to the defeat in the war, there was an overwhelming mood of depression in the capital, and many people lost the motivation to find a proper job, instead subsisting as day labourers working at the black markets that had sprung up.

At this time, while fee charging agencies were still generally banned, there were certain professions that were considered exceptions, and licensed recruiters were permitted to make introductions. These included those in the field of art, music, and entertainment. In 1947, this list was expanded to include more jobs such as scientists, doctors, dentists, vets, pharmacists, lawyers and accountants. In 1948, it was expanded once more to include nurses and midwives. This list continued to be expanded until many different kinds of jobs were permitted.

In 1999, the law was drastically overhauled, moving from explicitly listing allowed jobs, to specifically excluding certain jobs. This shift reflected the government's concern that by needing to constantly update a list of permitted professions, they wouldn’t be able to quickly react to a diverse and sophisticated job market.

Along with this change, recruiting firms were also allowed charge a company up to 50% of the annual salary of a successful introduction. Previously, recruiting agencies could charge only a maximum of 10.1% of the six month salary after a successful introduction. Today, typically recruiters charge 30-35% of the salary, but in some cases, such as introducing an executive-level employee, or a highly in demand engineer, it is possible to receive a 50% fee.

This legal change transformed the recruiting industry in Japan. In 1996, there were only 300 recruiting agencies in Japan, most of which were small and only supplied housemaids, store clerks and other short term workers. However, just three years later in 1999, this number had more than tripled to 947 firms. Two years after that, in 2001, the number of firms had almost tripled again to 2,741. As of 2019, there are more than 20,000 firms, with more than 100 new firms being registered in Tokyo each month.

Criminal penalties for violating recruitment law remain, and though there are few modern examples of people being arrested for practicing recruiting without a license remain, they do exist, such as in 2009, when a Chinese national was allegedly arrested for introducing workers without a license, and in 2017, when a Yakuza was arrested for recruiting people to decontaminate Fukushima Daiichi power plant without a license. That these penalties remain are largely an artifact of the laws evolving from a much earlier time, when recruitment was a profession that walked the line between introducing employment and selling people themselves.

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