How Underprivileged Groups Can Solve Japan's Workforce Shortage

Japan's workforce crisis

Japan is facing a workforce crisis that can no longer be ignored. The country’s shrinking population and declining birth rate have led to a labour shortage that is only getting worse.

In 2024, more than 51% of companies in Japan reported they did not have enough full-time employees, and by 2030, Japan is projected to be short 6.4 million workers. The impact of this shortage is clear: increased workloads, which leads to burnout, lower productivity, and ultimately an economy struggling to keep pace, let alone compete globally. While many might immediately think about automation and overseas hiring, there is actually an overlooked solution right here in Japan.

These are the underprivileged and underutilised talent groups of Japan. For simplicity, let’s focus on these 3 groups: single mothers, women wanting to return to work, and youth in poverty. These groups represent a hidden potential workforce that, with the right support, could help bridge Japan’s labour gap. Companies that hire underprivileged groups can gain numerous benefits, including access to a broader workforce, improved employee retention, and reduced turnover costs.

Inclusive hiring also fosters innovation by bringing diverse perspectives and problem-solving skills, making businesses more adaptable. Additionally, supporting underprivileged workers enhances brand reputation, attracting ethical consumers and top talent.

Ultimately, this feeds back into a more successful company, which strengthens economic sustainability and ensures long-term business growth.

So who are these underprivileged groups and this untapped workforce?

Japan has 700,000 single mothers, and 85% of them are already working. This is the highest rate among the OECD countries (Organisation for Economic Co-operation and Development, a group of 38 mostly developed countries). Despite their high employment rate, 56% of single mothers live in poverty, making Japan the worst-ranked OECD country for single-mother poverty levels. Many of these women juggle multiple part-time jobs, earning below the 1.3 million yen per year paywall to avoid losing government benefits. The lack of childcare support, flexible work options, and career growth opportunities keeps them trapped in low-paying, insecure jobs that fail to provide financial stability.

Beyond single mothers, Japan has another overlooked group. These are women wanting to return to the workforce. Over 2.3 million Japanese women who left their jobs for caregiving responsibilities want to reenter the workforce but face rigid corporate structures, outdated hiring biases, and a lack of flexible hour career paths.

Many companies still operate on the assumption that employees must work full-time, with long hours, to be considered committed to their careers. This prevents talented, experienced women from reintegrating into the workforce, even though they have the skills and motivation to contribute.

Another group that remains underutilised is youth in poverty. Although this is more future-facing, these children are the future of Japan. More than 3.5 million children in Japan live in poverty, and only 10% of students from these backgrounds attend university, compared to 61% from financially stable families. A lack of education, mentorship, and job opportunities keeps these young individuals trapped in a cycle of poverty, preventing them from entering high-skilled industries. Without intervention and support, Japan will continue to see a widening gap between the employed and those struggling to enter the workforce.

So what are the barriers preventing these groups from joining the workforce?

Despite their massive potential, these groups face systemic barriers preventing them from participating in the workforce effectively. Japan’s rigid work culture is one of the main obstacles. The traditional, and let’s be honest, 9-to-9 workday and inflexible policies do not accommodate caregivers, parents, or those women wanting to re-enter the job market. Many companies remain stuck in old paradigms, failing to recognise that flexible work arrangements can boost employee retention, attract skilled talent, and increase productivity. Lack of childcare support is another significant issue. Many childcare centers operate on rigid schedules that do not align with Japan’s traditional long working hours, making it difficult for parents to find care that fits their employment needs.

Additionally, cultural expectations around work commitment often discourage flexible arrangements, leading to discrimination against employees. This is particularly true for mothers, who need to leave suddenly or early for childcare reasons. As a result, many women are either pushed into lower-paying part-time jobs because these have more flexible arrangements or excluded from the workforce altogether, further deepening the labor shortage.

Hiring bias also plays a role in keeping these groups out of the workforce. Many companies prefer fresh graduates over skilled returnees, assuming career gaps equal incompetence or missing the latest skills. These are of course a myth. It’s a reflection of outdated hiring biases rather than an accurate measure of a candidate’s abilities.

In reality, skilled returnees often bring valuable experience, resilience, and adaptability, along with fresh perspectives gained from their time away. Many have also upskilled independently or through informal learning, making them just as capable, if not more so, than recent graduates. Dismissing these candidates not only limits a company's talent pool but also hinders workforce diversity and innovation. This outdated perspective leads to a loss of experienced, qualified workers who could be valuable assets if given the right opportunities.

Additionally, youth in poverty often lack access to career mentorship and training programs, making it difficult for them to secure jobs that offer long-term stability. Food scarcity adds another layer of struggle, as many face hunger or malnutrition, which affects their ability to focus on education and skill development.

Without financial resources, they cannot afford food, which affects their education. They cannot access vocational training or even basic job-search tools, such as appropriate work attire or access to computers for applications and interviews. Limited professional networks further disadvantage them, as they miss out on the informal guidance and job referrals that more privileged youth receive through family or school connections.

The stigma surrounding poverty can also lead to discrimination in hiring, with employers often favoring candidates from more stable backgrounds. As a result, many of these young individuals are forced into low-paying, unstable jobs with little opportunity for growth, perpetuating the cycle of poverty, food insecurity, and economic hardship.

So what practical solutions can HR and leadership in companies take?

Companies in Japan have a unique opportunity to turn this untapped workforce into a strategic advantage. By making key policy changes, businesses can not only address their own labour shortages but also contribute to economic and social growth in Japan.

One of the most effective steps companies can take is offering flexible work arrangements. Remote work, flexible hours, and part-time career paths can help single parents and caregivers balance work and family responsibilities. Introducing returnship programs for women wanting to re-enter the workforce can provide structured opportunities for career reintegration. For example, job-sharing models, where two employees split a single full-time position, can also help create more accessible work environments for those with caregiving responsibilities.

Reforming hiring practices is another critical step. Instead of focusing on career gaps, HR leaders should assess candidates based on their skills and potential contributions. After all, we’d like to think we are hiring talent to fix a problem rather than simply rewarding uninterrupted career paths. A truly effective hiring strategy should prioritise the value a candidate brings to the company, whether through problem-solving abilities, adaptability, or fresh perspectives, rather than penalising them for time spent outside the traditional workforce.

Another solution is to establish apprenticeship and mentorship programs targeted at youth in poverty. These can provide them with hands-on training and career guidance. Similarly, providing on-the-job training and support is essential for long-term workforce development.

Partnering with NPOs and community organisations to train and recruit underprivileged workers can create sustainable employment pipelines. Perhaps even offering sponsorships for vocational training and certifications can help low-income youth and single mothers acquire valuable skills. Internal mentorship programs can also play a role in helping underprivileged employees navigate corporate culture and career growth.

Finally, in light of DEI programs being rolled back and dismantled in some countries, it is more important than ever for companies to take proactive steps to ensure equitable hiring practices.

Companies need to champion diversity and inclusion at leadership levels. Setting hiring targets for underprivileged groups and measuring inclusion success with concrete metrics can ensure accountability. Training HR teams to recognize and eliminate bias in hiring practices is crucial, particularly as structured diversity initiatives face increasing challenges. Establishing a corporate culture that genuinely values inclusion will not only attract top talent but also enhance overall workplace innovation, morale, and long-term competitiveness.

Companies that embrace inclusive hiring will not only address labour shortages but also gain significant competitive advantages. Higher retention rates, enhanced innovation backed by skilled and experienced employees, stronger employer branding and employee loyalty, and long-term workforce sustainability are all benefits of investing in underutilised talent groups.

Employees who feel valued and supported are more likely to stay, reducing turnover and training and hiring costs. A diverse workforce also brings fresh perspectives, leading to more creative problem-solving and better decision-making.

Conclusion

To conclude, Japan’s workforce crisis is not just a numbers problem, it’s a missed opportunity.

The single mothers struggling to make ends meet, the women eager to restart their careers, and the youth desperate for a future all represent a huge pool of talent waiting to be tapped. Companies that recognise this will not only solve their workforce challenges but will also define the future of Japan’s economy.

Ignoring this untapped workforce will only exacerbate labour shortages, forcing companies to rely on short-term fixes like overwork, automation, and outsourcing. However, businesses that take proactive, inclusive steps now will lead the way in building a stronger, more competitive Japan.

The question is not if companies should act but how fast they will act before their competitors do. The time for change and support for underprivileged groups is now.