When Akiteru Teraoka, 37, worked as a sales manager at the Tokyo headquarters of one of Japan’s largest employment companies, Pasona Group, he left home at 7 a.m. Five days a week, he endured an hour-long trip on a crowded train. Now, since moving last October to a remote resort island 600km away, he’s been enjoying the sea views on his 10-minute drive along the coast to work, after a short -casual lunch with his wife and two sons.
Teraoka leads a team of 110 people on the island of Awaji in western Japan. He still takes care of his Tokyo-based clients, albeit remotely – organizing recruitment meeting schedules, formatting resumes for job candidates and working closely with his former colleagues in the Japanese capital. “Not only can I now spend more time with my family, but I can continue to build my career with the company from Awaji,” he says. “I do tasks that I previously thought were only possible in Tokyo.”
Teraoka is one of nearly 350 Pasona employees to have moved to the island since the company made headlines in September 2020 when it announced a plan to move many of its headquarters functions there, as well only 1,200 employees, by May 2024. Pasona is just one example. of how Japanese companies, ranging from entertainment agencies to beer breweries to software developers, are rethinking their working habits in the wake of the coronavirus pandemic.
In his office in Awaji, with a panoramic view of the blue Seto Inland Sea, Pasona Group General Manager Yasuyuki Nambu says younger generations of employees, especially those with young children, are “changing their values, moving from being centered on Tokyo to seeking an environment surrounded by the sea and the mountains”.
While hybrid and remote working have changed workplace cultures around the world, the changes are particularly stark in the world’s third-largest economy. Japan is known for its long working hours and low productivity, where being in the office – and leaving after your boss – has often been more important than what is actually realized.
A series of natural crises, including the 2011 Tohoku earthquake and tsunami that triggered the Fukushima disaster, had already alerted CEOs in Japan to the need to diversify risk. This aligned with government policy, which offers business relocation subsidies, primarily to strengthen regions and “de-risk” capital. Yet before the pandemic, the country’s decades-old working habits had made the idea of leaving Tokyo nearly impossible, as customers, universities and government departments are all concentrated there.
Now this ingrained belief is being dismantled. According to business information firm Teikoku Databank, more than 350 companies moved their main offices from Tokyo and its neighboring prefectures to the countryside last year – a record. Moreover, for the first time in 11 years, more companies left the capital than entered it. This confirmed population trend figures from the Ministry of Interior and Communications, which showed that in 2021, more people left Tokyo’s 23 central wards than arrived, for the first time. since the start of the recordings.
“The trend of companies relocating to regional areas is unlikely to stop. Companies will carefully select what works best in Tokyo,” says Yutaka Okada, head of research at Mizuho Research & Technologies. Now, with heightened uncertainty amid the pandemic and Russia’s invasion of Ukraine, “remaining work should be moved elsewhere as part of cost-cutting efforts” to prepare in the future, he adds.
Nambu de Pasona, who moved to Awaji Island in 2020 and has barely returned to Tokyo since, said earthquake risk has always been one of the issues keeping him up at night. . He embraced the new work habits sparked by the pandemic to eventually help it move the head office away from the capital. As the company had been engaged in agriculture and tourism in Awaji since 2008, the island was the option he had in mind. Nambu says executives from various industries visited Pasona’s new offices to understand how the operation works.
Since announcing its relocation plans, Pasona has opened five offices on Awaji Island, which has a population of 130,000. Some employees moved into a new headquarters that opened in May, but the company left other offices open. The company – which hasn’t changed the wages of relocated employees, despite the lower cost of living than in Tokyo – has had to overcome challenges in everything from internet connectivity to the availability of schools and hospitals , and purchased land to build apartments to make up the shortfall. in housing.
Being a pioneer in the relocation boom has brought unexpected benefits. Companies still reluctant to move their headquarters out of the capital have begun to outsource accounting and other back-office functions, gradually winding down their operations in Tokyo. Pasona capitalized on this demand, bolstering its business process outsourcing services and expanding its facilities by leasing a floor of the island’s large mall.
Nambu says the company is attracting the attention of tech engineers who want to return home to the island, allowing Pasona to start new ventures involving avatars and the metaverse. “We couldn’t attract these engineers to Tokyo, even though we were paying high salaries,” he says. The company intends to hire about 10% of its planned 1,200 employees locally on the island.
Other businesses that have moved away from the capital are also creating new businesses. In July 2021, Amuse, a listed talent agency based in Tokyo, set up a new headquarters combining studios and training rooms at the foot of Mount Fuji, about two hours away.
The company has kept its Tokyo offices – downsizing them considerably – as a “staging area” to prepare documents when meeting with clients, for example. “The new headquarters functions as a creative content workshop,” said Nobuhiro Kashiwagi, a senior executive. “It’s not that we intend to move the entire operation to Tokyo at the foot of Mount Fuji, but we want to encourage the style of work where locations don’t matter.” So far, 20 people have moved to the mountain area, but others are mostly making a trip when needed from their homes in the capital.
Not everyone is enthusiastic about the idea of moving. Experts warn that he cannot succeed without proper consultation with employees, including offering them allowances to enable them to travel regularly to Tokyo. “Management should spend enough time explaining the purpose of relocation, as it means forcing staff to change their life plan,” says Yuji Kobayashi, senior researcher at Persol Research and Consulting. As people still want to live in the thriving capital, “companies might even be seen to be using relocation as an excuse to lay off employees,” says Takeshi Hioki, a management consultant.
Although Nambu says living in Awaji contributes to employees’ “spiritual wealth”, some of those who work in Tokyo have mixed feelings. “I’m not going to the island,” says a Pasona employee in her forties. “I have my family with one child here, and frankly, I have no problem living in Tokyo.”
Building relationships with local authorities and businesses is also key to successful relocation. “At first we were overwhelmed with waves of questions like ‘Are you sure about the decision? “, “Do you want to stay here long?” Kashiwagi, who took months to convince locals. Nambu echoes the challenge, saying the community initially thought Pasona would leave if things didn’t work out.
“Simply relocating a business to a remote area cannot be the goal of boosting regional areas,” as the government had hoped, said Keisuke Muramatsu, who heads public sector business at KPMG Azsa. Although he thinks more businesses will make the decision to leave Tokyo, the areas accommodating these newcomers are expected to play a vital role in organizing infrastructure and providing public services. Close collaboration between the private and public sectors, he adds, will determine the future of Tokyo’s decentralization.