Nova crash adds to ‘eikaiwa’ wage woes

It’s said that the bigger they come, the harder they fall, and it’s difficult to imagine a harder fall than Nova’s.

Following Nova Corp.’s well-documented troubles over the last few months, Japan’s biggest language school chain is now in the hands of administrators, and is likely to be declared bankrupt next month unless a backer is found. Students and teachers have been left in the lurch, unsure of when or if they will ever receive money they are owed by the company.

But how long has the crash been coming? If the company’s pay policy is any indication, for quite a while. According to instructors who were with Nova around 2000, annual raises of ¥10-15,000 a month were handed out almost as a matter of routine. However, this has changed in recent years; while pro rata starting salaries have remained unchanged, most new instructors were hired on reduced-hour contracts (34 or 37 lessons a week, rather than 40) with a lower base salary to match. Annual raises were also cut back, to generally no more than ¥5,000, usually less.

Wages at Nova have fallen, and while specific statistics on foreign teachers’ pay are unavailable, the evidence of job Web sites and recruitment ads, as well as the general feeling among teachers, point to a significant and continuing downturn in wages across the whole “eikaiwa” (conversation school) industry.

Teachers who have lived in Japan for a number of years say they have seen the average salary drop substantially, a result they put down to the end of the bubble economy, changes in employment law, and an increase in the number of teachers. One Australian instructor who has been living and working here for 15 years noted that for the first few years after he arrived, “most teachers were taking home a minimum of ¥350,000 per month.”

In addition, “there were always well-paid part-time jobs, some well over ¥10,000 an hour, so it was quite simple to supplement your salary and take home well over ¥400,000 to ¥500,000 per month.”

These days, while there are still entry-level teaching jobs that pay ¥250,000 per month or more, it’s not uncommon to see others paying as little as ¥200,000.

Hourly rates for part-timers have seen a similar decline ? ¥4,000 appears to be the ceiling, with the average being somewhere between ¥2,000 and ¥2,500.

Salaries go down and workers complain ? it happens in every country and every industry. In fact, since the turn of the century in Japan, average wages have fallen from around ¥305,000 per month to ¥284,000. However, this is a much less dramatic drop than that of foreign teachers’ wages, and the trend in Japan is starting to reverse, with salaries up almost 1 percent on last year.

Usually, employers are happy to be in such a position ? it’s a buyer’s market and they can hire for less. However, the old adage that “you get what you pay for” also applies. As wages have dropped, say school owners and recruiters, so has the quality of teachers.

“As a school owner for many years and involved actively in recruitment, the quality of resumes I get is exceptionally poor,” complained Ash Warren, who runs a number of schools in Tokyo. “Very few people have actual qualifications as a foreign language teacher, such as CELTA, DELTA or an MA in TESOL.”

Whereas in the past there was a wealth of qualified teachers, Warren rued the fact that now “most resumes are from people who have no experience at all or who have worked for one of the major schools like Nova for a few years.”

His feelings were echoed by others involved in teacher recruitment. Lack of qualifications and experience were the most common complaints, but other HR staff spoke of applicants who seemed to be looking for little more than a visa, and carbon-copy resumes that had obviously been sent out en masse.

Those who suffer most from a lack of quality teachers are inevitably the students. Most school owners and administrators interviewed said that this was one of their biggest problems.

“As the dearth of qualified ? or at least highly experienced ? teachers increases, the quality of training students receive is bound to get worse,” said Warren.

Ken Worsley of Japan Economy News sees Nova’s downfall in the context of a move by students away from the big “eikaiwa” chains and the expansionist, wage-cutting model Nova boss Nozomu Sahashi took to its extreme.

“As the ESL industry grows, the share that goes to large-scale English conversation schools continues to shrink,” explained Worsley. “They have relied on cost-cutting strategies, which may be effective to some degree, but ultimately fail because they do not address revenue-side issues.”

There’s good reason to imagine that Nova’s bankruptcy would have a negative impact on wages, at least in the short term. Though many teachers would likely leave Japan, there would still be hundreds ? possibly thousands ? of newly unemployed teachers joining those already looking for work.

“I think we’ve been seeing a stream of teachers looking for new work over the past couple of months, and that market is only going to get more competitive,” said Worsley. “It is quite likely that we will see somewhat lower wages over the next year, although if a significant number of teachers were to leave Japan, there could be a shortage of teachers and wages might stay the same.”

The scenario in the event of a Nova recovery could be even bleaker for teachers’ pay packets.

“If Nova finds a backer, I doubt that they would assume responsibility for Nova’s unpaid wages,” warned Worsley. “Assuming responsibility for this cost is not a requirement of the trustees who have been appointed to find a buyer for Nova. It is quite possible that a buyer could decide to terminate all existing employment and re-hire a crew of teachers, though there are of course costs associated in doing this.”

This would allow the new firm to re-hire an entire workforce at entry-level wages, so that former Nova teachers might find themselves having to take a pay cut to get their old jobs back, for lack of any other opportunities. The negative effect this would have on wages throughout the industry is easy to imagine.

On the other hand, some dare to believe that the disappearance of Nova from the scene could have a positive effect.

“This might actually be a good thing in terms of making the market a bit more savvy about where to go for an English lesson,” said Warren. “People are finally beginning to look past the idea of investing in a big chain school, and thinking more about who is actually teaching them. Hopefully, people are realizing that the teacher is the most important thing.”

If this is the case, schools will have little choice but to hire well-qualified and experienced teachers, and the only way they will be able to do so will be by offering a genuinely attractive salary.