shimazaki
Current changes in the Japanese employment system
professor Owen
Theme Writing
29 January 2008
Ⅰ. Introduction
The Japanese employment system is strictly peculiar to Japan and difficult from employment systems in other countries. For Japanese people it is usual to work in one enterprise permanently and to increase their wage in proportion to their age. However such employment system is unusual for foreigners. The Japanese employment system was fixed in rapid economic growth period. Although the traditional Japanese employment system was rational in the rapid economic growth stage, there are many problems under the present Japanese social situation, therefore Japanese government and companies must adapt to changing condition. After examine current problems stemmed from Japanese employment system, this paper would try to provide possible solutions for these problems. For long time, Japanese social situation is extremely change therefore traditional Japanese employment system must change and adjust to a current social situation immediately.
Ⅱ. Explain 3 main points of the Japanese employment system
There are three features typical of the employment systems.
A. Permanent employment
The permanent employment system has been one of the three core employment practices in Japan, along with seniority-based wage system and enterprise unions. In general, permanent employment means that a person who joins a company immediately after graduation from school will work for the company until worker mandatory retirement age, during which time the employee has almost no fear of dismissal. Therefore, most of Japanese workers carry on with their work by mandatory retirement age. For, enterprises, especially large Japanese enterprises, employ workers on the premise that permanent employment, since Japanese government controls companies by the law such as company can not fire employee without effort to avoid redundancies by taking measures such as cutting overtime, hiring freezes and so on. On-the-job training or firm-specific training is one of the constituents of Japanese permanent employment. Japanese companies emphasize the training and retraining of workers, and much of the training is specific to the company. Most of the companies prefer to hire new graduates and train them within their organization. In addition, in company there is job competition among workers. (Due to the growth of firm-specific skills, the tenure-earnings profile of the workers becomes steeper, which results in longer attachment between the workers and the company.) as in the given below
B. Seniority-based wage system
Second unique system is related pay system. In general, the seniority-based wage system is a system in which an employee’s wages rise in proportion to the length of worker’s employment and age. (There are three sets of explanations for why wage increases with job tenure. The first is that workers are paid wages equal to their marginal product, and their wages rise because their productivity increase. The second explanation is given by the firm-specific human capital hypothesis. The third explanation is given by the incentive hypothesis. Companies give workers an incentive to work harder by delaying their compensations until later in the work cycle.) For, young workers can not be got wage fit their productivity.
C. Enterprise-based union
Finally, it is enterprise-based unions. Japanese labor unions are based in the enterprise. This system is not connected with following problems.
Actually, three systems connect tightly and these are called Japanese employment system.
Ⅲ. Current socio-economic situation in Japan and related problems
A. Problems existed from early times
1. Overwork
As mentioned in explanation of permanent employment system, companies can rarely fire employee and have to try to not fire their employees by some means. As one of means is cutting overtime, companies use overtime for one of tools to avoid redundancies. In other words, when company is quite good condition, company would increase worker’s overtime and when company is bad condition, company would decrease their overtime instead of dismissal. Although it seems that this overtime as means is satisfactory to employees, it is misunderstanding. Actually overtime problem is one of the serious problems in the Japanese labor market. The Labor Force Survey reported that the average Japanese in non-agricultural industries worked 46.1 hours per week in 1990 and 42.4 hours in 2001. Widespread working of overtime is partly due to the weakness of the labor union, but is also a direct consequence of the competitive tournaments that are used to determine promotions in Japan. Although overtime is necessary system to keep permanent employment, there is a situation that some people die due to work too much. Moreover, karoshi, death from overwork, is one of Japan’s serious social problems related to overtime. Furthermore, it is not good for children to not spend time with their parents. This overtime problem should be improved soon.
Difficult for non-new graduates to get a job
According to study of OECD, the length of employment for Japanese male workers is longer than in other developed countries. (OECD employment outlook) Japanese worker rare left their first employer because although it is a well-organized entry market for new graduates to obtain jobs, for non new-graduates it is quite difficult to obtain new job. The reason why Japanese companies tend to not accept non-new graduates is that as mentioned above in Japanese company it is quite important to do job training, especially firm specific training. Companies believe that by going through various trainings, employees become ace workers. Therefore, it is convenient for company to employ young workers in one time. However, this system is disadvantageous for non-new graduates. In fact, people who lived from 1993 to 2004, generally these days is called shushoku hyougaki, when they were new-graduates, confronted difficult condition to get job. This generation continues to experience the same problem in now days because of limited of employment. Government and companies must consider to this generation and should act to solve this problem.
B. Recent socio-economic situation
Above two problems have existed even in old days. However, there are several problems connect to current social situation. Between 1950 and now, Japanese social situation extremely changed. There are two current social situation and these cause following problems.
Recently, the social status of women rises gradually. Female worker have increased in number in labor market. According to The center for the advancement of working women, although female worker was 1703(ten thousand persons) in 1955, it increased to 2725(same unit) by 2006★. This phenomenon is good for Japanese economy, and for female. Although female worker increase, many female worker quit her job before forced retirement because of marriage and pregnancy and child care and so on. In fact, the reason of female worker retirement is that marriage is 33%, pregnancy and child care is 30%★★. As seeing this data, it is clear that it is unpleasant working environment for female worker to keep her job. This problem relate to Permanent employment. As mentioned above, on the job training is important for promoting to worker’s rank, VMP and wage.
As result, ex-female worker tend not to return labor market.
Why only female should quite job for household? In the past, most of Japanese people believe that women have to do housework and support her husband. However times have changed and people must get rid of their gender stereotype. Moreover, Japanese company and government should be female worker-friendly.
In addition, there is another problem. Declining birth rate and aging is one of serious problems Japan have.
The Japanese employment system is strictly peculiar to Japan and difficult from employment systems in other countries. For Japanese people it is usual to work in one enterprise permanently and to increase their wage in proportion to their age. However such employment system is unusual for foreigners. The Japanese employment system was fixed in rapid economic growth period. Although the traditional Japanese employment system was rational in the rapid economic growth stage, there are many problems under the present Japanese social situation, therefore Japanese government and companies must adapt to changing condition. After examine current problems stemmed from Japanese employment system, this paper would try to provide possible solutions for these problems. For long time, Japanese social situation is extremely change therefore traditional Japanese employment system must change and adjust to a current social situation immediately.
Ⅱ. Explain 3 main points of the Japanese employment system
There are three features typical of the employment systems.
A. Permanent employment
The permanent employment system has been one of the three core employment practices in Japan, along with seniority-based wage system and enterprise unions. In general, permanent employment means that a person who joins a company immediately after graduation from school will work for the company until worker mandatory retirement age, during which time the employee has almost no fear of dismissal. Therefore, most of Japanese workers carry on with their work by mandatory retirement age. For, enterprises, especially large Japanese enterprises, employ workers on the premise that permanent employment, since Japanese government controls companies by the law such as company can not fire employee without effort to avoid redundancies by taking measures such as cutting overtime, hiring freezes and so on. On-the-job training or firm-specific training is one of the constituents of Japanese permanent employment. Japanese companies emphasize the training and retraining of workers, and much of the training is specific to the company. Most of the companies prefer to hire new graduates and train them within their organization. In addition, in company there is job competition among workers. (Due to the growth of firm-specific skills, the tenure-earnings profile of the workers becomes steeper, which results in longer attachment between the workers and the company.) as in the given below
B. Seniority-based wage system
Second unique system is related pay system. In general, the seniority-based wage system is a system in which an employee’s wages rise in proportion to the length of worker’s employment and age. (There are three sets of explanations for why wage increases with job tenure. The first is that workers are paid wages equal to their marginal product, and their wages rise because their productivity increase. The second explanation is given by the firm-specific human capital hypothesis. The third explanation is given by the incentive hypothesis. Companies give workers an incentive to work harder by delaying their compensations until later in the work cycle.) For, young workers can not be got wage fit their productivity.
C. Enterprise-based union
Finally, it is enterprise-based unions. Japanese labor unions are based in the enterprise. This system is not connected with following problems.
Actually, three systems connect tightly and these are called Japanese employment system.
Ⅲ. Current socio-economic situation in Japan and related problems
A. Problems existed from early times
1. Overwork
As mentioned in explanation of permanent employment system, companies can rarely fire employee and have to try to not fire their employees by some means. As one of means is cutting overtime, companies use overtime for one of tools to avoid redundancies. In other words, when company is quite good condition, company would increase worker’s overtime and when company is bad condition, company would decrease their overtime instead of dismissal. Although it seems that this overtime as means is satisfactory to employees, it is misunderstanding. Actually overtime problem is one of the serious problems in the Japanese labor market. The Labor Force Survey reported that the average Japanese in non-agricultural industries worked 46.1 hours per week in 1990 and 42.4 hours in 2001. Widespread working of overtime is partly due to the weakness of the labor union, but is also a direct consequence of the competitive tournaments that are used to determine promotions in Japan. Although overtime is necessary system to keep permanent employment, there is a situation that some people die due to work too much. Moreover, karoshi, death from overwork, is one of Japan’s serious social problems related to overtime. Furthermore, it is not good for children to not spend time with their parents. This overtime problem should be improved soon.
Difficult for non-new graduates to get a job
According to study of OECD, the length of employment for Japanese male workers is longer than in other developed countries. (OECD employment outlook) Japanese worker rare left their first employer because although it is a well-organized entry market for new graduates to obtain jobs, for non new-graduates it is quite difficult to obtain new job. The reason why Japanese companies tend to not accept non-new graduates is that as mentioned above in Japanese company it is quite important to do job training, especially firm specific training. Companies believe that by going through various trainings, employees become ace workers. Therefore, it is convenient for company to employ young workers in one time. However, this system is disadvantageous for non-new graduates. In fact, people who lived from 1993 to 2004, generally these days is called shushoku hyougaki, when they were new-graduates, confronted difficult condition to get job. This generation continues to experience the same problem in now days because of limited of employment. Government and companies must consider to this generation and should act to solve this problem.
B. Recent socio-economic situation
Above two problems have existed even in old days. However, there are several problems connect to current social situation. Between 1950 and now, Japanese social situation extremely changed. There are two current social situation and these cause following problems.
Recently, the social status of women rises gradually. Female worker have increased in number in labor market. According to The center for the advancement of working women, although female worker was 1703(ten thousand persons) in 1955, it increased to 2725(same unit) by 2006★. This phenomenon is good for Japanese economy, and for female. Although female worker increase, many female worker quit her job before forced retirement because of marriage and pregnancy and child care and so on. In fact, the reason of female worker retirement is that marriage is 33%, pregnancy and child care is 30%★★. As seeing this data, it is clear that it is unpleasant working environment for female worker to keep her job. This problem relate to Permanent employment. As mentioned above, on the job training is important for promoting to worker’s rank, VMP and wage.
As result, ex-female worker tend not to return labor market.
Why only female should quite job for household? In the past, most of Japanese people believe that women have to do housework and support her husband. However times have changed and people must get rid of their gender stereotype. Moreover, Japanese company and government should be female worker-friendly.
In addition, there is another problem. Declining birth rate and aging is one of serious problems Japan have.
still writing↓↓
1. Increase of female workers
2. Declining birth rate and aging
C. Current problems stemmed from recent social situation
1. Discrimination against female worker
①Difficult to return a job after paternity leave
②Difficult to hold chief and manager
2. Wage problem stemmed from wage system based on seniority
Ⅳ. Possible solutions
It is government and company responsibility to create convenient environment for all employee. Therefore they must solute above problems by changing traditional Japanese employment system.
1. Reduce irregular working hours(accept lay-off system)
2. Achieving a non-age-limit employment system
3. Provide opportunity for job training
4. Employ non-new graduates
5. company should estimate ability of each person
6. Improve day-care(female friendly)
7. Change working style(accept to work outside)
8. Convert traditional pay system into piece rate
9. worker don’t have to retire at 60
The delayed compensation model of Lazear (1979) rather explains why mandatory retirement is necessary. It argues that VMP (the value of marginal productivity) of a worker is greater than worker’s wage when the worker is young. As the worker stays in the company longer, worker’s wage grows faster, eventually exceeding worker’s VMP. Lazear notes that this delayed compensation contract with a steeper age-earnings profile gives workers an incentive to stay longer since they would not want to quit before the receiving the wage premium.
Ⅴ. Conclusion
(1299words)
Works Cited
Naohiro Yashiro nihonnteki koyoukankou no keizaigaku, Japan: nihon keizai keizaisha, 1997．
Naohiro Yashiro koyou kaikaku no jidai, Japan: chuukoushinsho, 1999
Naohiro Yashiro, et al. Japan’s Economy in the Year 2020, Japan: nihon keizai shinbunsha, 1995.
Subocz, Victor. “Training the Japanese Way.” Management Decision 26.1(1988): 59. Academic Research Library. ProQuest. ICU. 31 Dec. 2007
http://othmer.icu.ac.jp:2135/
★The center for the advancement of working women. 27 Jan.
http://www.stat.go.jp/data/roudou/longtime/zuhyou/lt01-01.xls
★★Ministry of health, labor and welfare. Figure 9. 27 Jan.
http://www.mhlw.go.jp/toukei/itiran/roudou/koyou/doukou/05-2/gaiyou.html
1. Increase of female workers
2. Declining birth rate and aging
C. Current problems stemmed from recent social situation
1. Discrimination against female worker
①Difficult to return a job after paternity leave
②Difficult to hold chief and manager
2. Wage problem stemmed from wage system based on seniority
Ⅳ. Possible solutions
It is government and company responsibility to create convenient environment for all employee. Therefore they must solute above problems by changing traditional Japanese employment system.
1. Reduce irregular working hours(accept lay-off system)
2. Achieving a non-age-limit employment system
3. Provide opportunity for job training
4. Employ non-new graduates
5. company should estimate ability of each person
6. Improve day-care(female friendly)
7. Change working style(accept to work outside)
8. Convert traditional pay system into piece rate
9. worker don’t have to retire at 60
The delayed compensation model of Lazear (1979) rather explains why mandatory retirement is necessary. It argues that VMP (the value of marginal productivity) of a worker is greater than worker’s wage when the worker is young. As the worker stays in the company longer, worker’s wage grows faster, eventually exceeding worker’s VMP. Lazear notes that this delayed compensation contract with a steeper age-earnings profile gives workers an incentive to stay longer since they would not want to quit before the receiving the wage premium.
Ⅴ. Conclusion
(1299words)
Works Cited
Naohiro Yashiro nihonnteki koyoukankou no keizaigaku, Japan: nihon keizai keizaisha, 1997．
Naohiro Yashiro koyou kaikaku no jidai, Japan: chuukoushinsho, 1999
Naohiro Yashiro, et al. Japan’s Economy in the Year 2020, Japan: nihon keizai shinbunsha, 1995.
Subocz, Victor. “Training the Japanese Way.” Management Decision 26.1(1988): 59. Academic Research Library. ProQuest. ICU. 31 Dec. 2007
http://othmer.icu.ac.jp:2135/
★The center for the advancement of working women. 27 Jan.
http://www.stat.go.jp/data/roudou/longtime/zuhyou/lt01-01.xls
★★Ministry of health, labor and welfare. Figure 9. 27 Jan.
http://www.mhlw.go.jp/toukei/itiran/roudou/koyou/doukou/05-2/gaiyou.html
