On September 12, the Japanese gig work platform provider Timee held its first earnings call since being listed on the Tokyo Stock Exchange in July. CEO Ryo Ogawa lauded the company’s growth, headlined by 72.6% and 60.6% YoY rises in sales revenue and gross profit, respectively.
Highlighting the platform’s 1.2 million and growing membership, Ogawa touted future partnerships with rural regions and industry associations, ranging from restaurants to security guard providers, as a way to fundamentally solve Japan’s growing labor shortage.
Investors, however, are increasingly skeptical. After rising as much as 28% after the IPO, Timee’s stock price has since steadily fallen to a level nearly 40% below the IPO price.
Rather than blaming Timee’s fundamentals, analysts attributed the decline to the prospects of Timee facing stiff competition in the future from larger, more well-resourced internet giants like Mercuri jumping into the line of business and rapidly poaching Timee’s clientele.
In other words, the success of Timee’s business model may be its very downfall.
Rise of the precariat
Indeed, Timee’s success speaks to some dramatic changes in the Japanese labor markets. While “irregular employment,” including part-time, contract and freelance workers, represented less than 15% of the Japanese labor force in 1985, the figure soared to 37% by 2023, numbering more than 21 million.
Among these, an estimated 7-10 million are gig workers, dependent on a steady stream of small projects from different clients for survival rather than consistent work with a single employer. At the bottom of this gig work population lies Timee’s workforce.
The platform provides work that requires no interview, no background check and immediate wage payment upon gig completion, attracting workers in dire need of immediate income but who are not consistently available.
The immediateness of work is offset by its low quality – due to the employer’s inability to assess the worker beforehand, the worker would be entrusted with only low-paying, menial, repetitive work that requires little thinking and does not allow for much long-term professional development and learning.
The low quality of such gig work is increasingly leading to a population of “precariats” dependent on the gigs for survival, yet, due to the inability to grow professionally, are permanently “stuck” in low-quality gigs.
The precariousness is clear from the statistics of Timee’s user base. More than 60% of Timee’s registered users are over the age of 30, 88% earn less than 5 million Japanese yen (US$33,700) per year, and more than half are “core workers” using the platform at least eight times per month.
Rather than serving youths looking for some spending money outside of their study hours, Timee has increasingly become a platform for aging workers who, for whatever reason, derailed from the full-time employment track in corporate Japan.
Salaryman of the past
To be clear, the emergence of a precarious social class of gig workers is by no means a phenomenon unique to Japan. However, in the Japanese context, the rise of an underclass gig worker visibly goes against the prevalent view of the Japanese labor market in that its rigidity hampers economic growth.
After all, during the recently concluded elections for the ruling Liberal Democratic Party’s presidency, several candidates proposed loosening regulations designed to discourage the firing and hiring of regular employees, thereby perpetuating the prevalence of the “one-company salaryman” due to the sheer cost of job-hopping.
Analysts in both Japanese and international think tanks blamed Japanese workers’ propensity for something close to lifelong employment as a root cause for the country’s underwhelming productivity by rich-world standards.
The rise of Timee and its army of older gig workers drives home a new reality: the rigidity of full-time formal employment represents an ever-decreasing portion of the Japanese labor market.
As more and more Japanese workers live outside formal employment, the country’s inequality will continue to rise, intensifying a trend where the Gini coefficient increased by nearly 60% in the four decades until 2019. Timee and its future competitors in the gig work space are poised to drive that divide further.
