The Japanese Employment System


One of the unique and well known features of the Japanese 
employment system is permanent employment for workers. Japanese 
corporations responses to recessionary periods provide an opportunity 
to sort out the myths from the realities of the Japanese permanent 
employment system. 
 During recessions Japanese companies forced to reduce their 
costs achieve reductions in several ways. First, they reduce the 
number of women and temporary workers they employ. During the 
recession that followed the 1973 oil shocks female employment dropped 
by eleven percent; more then five times the drop in male employment. 
It was easy to reduce female employment because women even if they 
hold permanent positions are thought of as transitory workers who will 
leave the workforce when they get married. Female and temporary 
workers are a safety valve for Japanese companies that allow
them to reduce costs in the short-term without firing permanent male 
workers. The second way Japanese companies reduce costs is by giving 
early retirement to senior workers at the company. Many of these 
workers forced into early retirement then take up farming as is the 
custom in Japan for retires. Getting rid of senior workers is one the 
most effective tools companies have of reducing costs because these 
workers have more seniority and thus make more money then the average 
worker. Japanese companies also are able to cut costs during 
recessions by reducing or eliminating bonuses paid to workers, cutting
down on hiring of new workers, eliminating the farming out of work to 
subcontractors, transferring workers internally with in the company to 
subsidiaries, and reducing profit margins to levels that many American 
companies would find intolerable. 
 Japanese companies response to recessions shows the benefits 
and disadvantages of their employment system. Some of the benefits are 
that loyalty and labor relations are very good. This is due to the 
fact that for non-temporary male workers not yet near retirement age 
companies make a great effort to continue the permanent employment 
system even during recessions. Most young male workers once entering a 
company stay with it for their entire life and for them Japans 
permanent employment system serves them well. These workers come to 
view their company as almost a benevolent parent; the company leads 
them through fitness drills, training camps, and retreats. A workers 
identity is shaped not by their individual title but by the company
they belong to. But, female, temporary, and senior workers wind up 
paying the price of this permanent employment system. Women who want 
to work in a long-term position for a company lose their jobs when 
recession hits. And because many women who lose their jobs become 
housewives and don't apply for unemployment insurance they become the 
invisible unemployed, uncounted by labor department statistics. The 
"permanent" employment system in Japan is only a permanent
employment for non-temporary male workers not near retirement age, 
during recessions when companies are forced to cut costs mostly 
female, temporary, and elderly workers wind up loosing their jobs.


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