Top recruiter expresses belief that artificial intelligence can solve Japan's labor shortage problem

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The head of Japan's largest recruitment agency says artificial intelligence will solve the country's labor shortages, but warns that its usefulness will be limited until people gain more trust in the technology.

Recruit Holdings CEO Hisayuki Idekoba told the Financial Times in an interview that Japan “needs to go all out on AI,” pointing to the success of employers using its AI tools to attract more job seekers.

But he added that adoption of AI in advanced economies would be slower than expected, with deep-seated public distrust holding back progress.

“It’s not just about technological progress, it’s also about how humans feel about having technology enter their lives,” Ideko said in an interview in Tokyo.

With reports of worker shortages across industries across the country due to an aging population, Recruit is betting big that the use of artificial intelligence will make it faster and easier to match job seekers with companies looking to hire.

“The way people find jobs has not changed over the past few decades, and I’ve always felt the need for innovation,” Idekoba said, citing examples of people applying for jobs with incorrect skills and that companies could use artificial intelligence to improve job profiles.

“I think people will be more receptive to using AI on the back end to make recruiters more efficient.”

The Japanese group, a pioneer in digitizing travel, restaurant and hair salon bookings, acquired U.S. job site Indeed in 2012 and has been expanding its artificial intelligence services for job search and matching.

Idekoba said employers using its AI tools saw an average increase in applications of about 16%. He added that job seekers are 55% more likely to apply for jobs recommended by AI than for positions found in search results.

In January, Recruit launched Indeed plus, a service that uses artificial intelligence to more effectively distribute job ads across various job sites, enabling faster matching between recruiters and applicants. In Japan, about 11% of Recruit service users applied for jobs recommended by artificial intelligence.

“I'm finally starting to achieve my goal of acquiring Indeed,” Idekoba said, adding that he would consider bolt-on technology acquisitions but would not make a large-scale acquisition aimed at increasing revenue.

Last month, the group said it expected annual net profit to rise 31% from the previous year to 354 billion yen ($2.4 billion), while revenue was expected to slip 0.9% to 3.4 trillion yen.

Across Japan, worker shortages are forcing companies to rethink their entire business models. With 30% of the population aged over 65, the quality of basic services and public infrastructure is under increasing pressure.

Japanese Prime Minister Fumio Kishida has sounded the alarm about shrinking labor force and overall population, warning last year: “Japan is on the verge of being able to continue to function as a society.”