Pioneering Labor Market Liquidity: The Future Opened by Dual and Side Employment

In April 2018, Shinsei Bank became the first major bank to lift the ban on dual and side employment. The predecessor of Shinsei Bank was the Long-Term Credit Bank of Japan (LTCB), which played a role in providing long-term funds to heavy industries. Let's trace the process by which a conservative company, once predicated on simultaneous recruiting of new graduates, lifetime employment, and seniority-based systems, underwent a drastic transformation.

After the collapse of LTCB, the bank underwent nationalization, transitioned to foreign management, and converted into a commercial bank, actively recruiting human resources from outside who could be immediate assets. At that time, there were many foreigners and people from foreign-affiliated companies, and foreigners accounted for half of the management team. Currently, of the approximately 2,200 employees on a non-consolidated basis, more than half are mid-career hires, including many specialized professionals from different industries. In an organization that embraces such diverse talent, it is not uncommon for former employees to rejoin the company, and the nature of employment has become flexible.

Working at a company is no longer about serving an organization, but rather "providing a certain role and results to an organization based on a contract and receiving compensation commensurate with that." As the awareness of employees shifted from "joining a company" to "engaging in work," a culture that naturally accepts side and dual employment has been fostered.

Against this background, it was in the winter of 2017 that the bank decided to lift the ban on side jobs, which had effectively been disallowed by internal regulations.

In lifting the ban, we did not establish detailed rules, but narrowed the principle down to a single point: "No restrictions shall be imposed as long as they do not violate compliance (competition, conflict of interest, etc.) or safety considerations (dangerous work)." The policy applies to new graduates, fixed-term employees, and part-timers, and allows for both employment by other companies and sole proprietorships.

Regarding the risks inherent in such loose principles, we have organized them as follows:

(1) Duty of devotion to duties and provision of labor. The duty of devotion is ensured by evaluating the "results" of whether employees are fulfilling their expected roles, and the duty to provide labor is guaranteed by enforcing compliance with work rules.

(2) Health management and duty of safety. Work at this bank must comply with labor laws, and in the case of dual employment, the upper limit of total working hours is set in accordance with the guidelines of the Ministry of Health, Labour and Welfare.

(3) Management and tracking of working hours. Employees are required to self-report the total hours spent on side jobs on a monthly basis, but there is no strict daily management. The HR department will intervene if problems are found, but there are no such cases at present.

(4) Non-compete obligations. We believe there is no problem as long as what should be done in the main business is not transferred to a side job for personal gain. Even if it is a competitor or a client, it may be permitted depending on the nature of the work.

(5) Confidentiality obligations. Information leakage can occur regardless of whether one has a side job, so we do not treat side jobs as special. When taking on a side job, we ask employees to agree to a written pledge.

Some may view this as overly tolerant, but since the legal system itself is still in the design stage, we will not move forward if we over-regulate ourselves with excessive risk hedging. We achieved early implementation by adopting a self-reporting system without restrictive detailed rules, while maintaining a mechanism to discipline violations.

While we do not expect direct management or performance benefits from a short-term perspective, external networking and work experience can be described as "human resource development without cash-out." There may be cases where skilled seniors find opportunities to be active outside the company. In the medium to long term, innovation can arise from diverse perspectives. If many companies follow suit, innovation across the entire industry can be expected. Diversification of work styles attracts excellent and versatile talent and contributes to the acquisition of human resources. We can also expect to accept highly specialized professionals, such as digital talent for whom supply and demand are tight and who do not necessarily seek long-term employment, as side-job workers.

The "formation of a free labor market," symbolized by the acceptance of side jobs, can be an effective measure against the increasingly serious labor shortage.

Dual and side employment are inevitable in the future labor market, and the aim is to anticipate this trend and actively derive benefits. In the future, we would also like to work on mechanisms to promote dual and side employment.

While the labor shortage progresses, changes and diversification in the industrial structure are accelerating. Holding onto human resources with fixed role expectations for a long period becomes a risk for an organization. Individual preferences are also diversifying, and fewer people are willing to entrust their entire lives to an organization.

Amidst a mix of diverse values, an era will come when labor liquidity—where the necessary abilities are utilized in the necessary places at the necessary times—will take root throughout Japanese society and even across national borders.

A society where individual value is traded in the market is free, but on the other hand, it carries the risk of creating harsh competition and disparity structures. If labor liquidity is an unavoidable choice, how should we sublimate it?

In various fields, regardless of the form of employment, there are opportunities for work that utilizes even a portion of an individual's diverse abilities—that is, opportunities to provide value. By allowing individuals to choose these freely, society as a whole functions as a safety net. Could dual and side employment be the key drivers that open up such a future? The hurdles to be cleared are high for both organizations and individuals, but it is a proposition that must be considered seriously.