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| Japanese lifetime employment
How did it come about?
| Summary: This is the
thirteenth part of the
Japanese corporate organization study. I started
off with a perspective on the
Japanese corporate restructuring and
potential scenarios for the future of Japan. Then I
provided a brief outline of the
history of modernization of Japan. I also alluded
to the
transition underway in Japanese business and society.
Then I discussed how the
Japanese employers are reconsidering traditional
compensation systems and replacing them for young
workers with more performance oriented models. After
that I pointed out all the
new trends in employment and labor and how this is
upsetting the traditional corporation. That has led to
redefining of the
employer employee relationship in Japan and I have
argued that
Japan is at crossroads. That is why I
discussed the
case of Pioneer Electric Company that failed in efforts
to become more efficient and profitable because it could
not layoff workers. Subsequently I went into the details
of the
Japanese management system,
how it developed, and why managers behave the way they
do, followed by the
highlights of
Japanese management principles
and
history of the Japanese management system. In
the paragraphs below you can read more about how the
life time employment system came to be in Japan. |
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The
effect of the
prolonged recession has been most remarked on
part-time workers, female employees and new hires, some
of whom have worked with these companies for years
together, putting in the same effort as lifetime
employees, but without the security (in most cases, with
much lower salaries than even their full-time female
counterparts, and no
retirement benefits). Cutting their jobs quickly
reduces staff costs without the problems of eliminating
lifers.
It
may come as a surprise to many that life-time employment
is a feature of only 30% of larger
Japanese companies. Small and medium-sized companies
do not guarantee lifetime employment. For the lifetime
employees in large companies, the effect of the
recession has been seen in many ways. For instance, they
have been given no or practically insignificant salary
raises, and bonuses that are normally equal to 4 to 6
months of pay have been either scrapped altogether or
drastically cut down. Overtime pay, that used to
contribute about 10 to 25% of the pay packet has been
eliminated or cut back. Employees can now be transferred
with little notice to branches or subsidiaries in other
parts of the country, sometimes having to leave their
families behind, or made to do
humiliating jobs that send a clear signal to the
employee that he is no longer welcome to stay in the
organization and should leave.
Employment
adjustments are also carried out arbitrarily. Companies
have no strategic or logical
plan for how to lay off workers or how to hire them
back. Until recently, both management and
labor were
content with the myth that Japanese business would
simply continue to grow indefinitely. As a result, both
sides lack guidelines for dealing with the current
crisis. A great deal of bitterness has been generated in
the
employer-employee relationship simply because both
of them were not fully prepared to meet the crisis. |
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Continued:
Labor relations in Japan |
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