What are Japanese-Style employment practices? In general, a life-time employment system and seniority wage system are cited. Enterprise unions supporting these systems are also mentioned. However, these have been featured as compared to American-Style practices. Neighboring Asian countries, such as Korea, share common features with Japan, such as “life-time employment”, “seniority wage system”, “enterprise union” and others.
What is the true characteristic of Japanese-Style employment practices? It is “Single Status”. More specifically, white-collar and blue-collar workers are integrated under the equal status. My book, ‘Single Status’ and Japanese Employment Practices, reveals the historical process of its formation. This Single Status enabled labor and management to cooperate, made the innovation system in workplaces function through the workers’ participation, and became a driving force for productivity improvement and its fair distribution.
However, intensifying competition worldwide, and a short-term revenue-focused management style, led to transformation of the Single Status. As the scope of Single Status shrank, another status was created outside the Single Status. That is the “non-regular” status. As is well known, this is causing some disparity issues. This “core-periphery” structure of employment is not only an issue in Japan. As explained in my book, Management and Labor in Korea, similar phenomena are spreading in Asian countries such as Korea and China, and worldwide. However, the legitimacy that creates “walls” between hierarchies, like “status”, is deemed to be questioned. Asia is now a world’s driving force for growth, but in order to look toward a sustainable Asia, it is urgent to analyze the characteristics of Japanese-Style employment practices and their problems.
A. Analysis of present state
While the growth of Japanese companies is slowing, numbers of non-regular workers increase, and a disparity issue emerges.
B. Historical research
The problem is derived from the state where maintaining the “Single Status” is becoming more troublesome for the companies.
C. Comparative research
Core-periphery structure of employment is also spreading in foreign countries. However, the degree of solidity of “status” varies.
D. Challenging issues
The institutional problem (the seniority curve being too steep) and the policy-related problem (the proactive labor market policies being unsuccessful) are to be critically analyzed.
E. Design of Systems/policies
Institutional improvement, job creation, and disparity adjustment by the formation of “new public”, based on the revise of each role of labor, management, and government.
Change in regular and non-regular workers
The number of non-regular workers has increased rapidly since the late 1990s due to the after effects of the bursting of the bubble economy, and to the effects of intensifying competition by globalization. This tendency was reinforced by a shift to shareholder-focused corporate governance, and a deregulation policy that upheld employment flexibility. (Figure 1)
Transition of regular, non-regular workers (Figure 1)
Wage disparities between regular and non-regular employees
Increasing non-regular employment caused social disparity. This especially showed up in the wage curve. Japanese regular employees usually enjoy an upward wage curve in accordance with seniority, by accumulating experience in a company. However, the wage curve for non-regular employees who lost their chance to become regular employees remains flat for a lifetime (Figure 2)
Wage gap between regular and non-regular employment (Figure 2)
Postwar “Single Status”
The Japanese white-collar worker’s wage was seniority-based, even before the war. However, the Japanese blue-collar worker’s wage became seniority-based after the war. Japanese labor unions requested “elimination of status gap” in a storm of democratization during the immediate postwar period. For example, the “Single Status” system was pursued by evaluating the work value of a “chief mechanic” higher than that of “railyard manager”. (Table 1)
Job evaluation chart for Nagoya Electric Railyard (Table 1)
Change in non-regular employees in Korea “Single Status” brought prosperity to Japan by achieving a good balance between productivity improvement and fair benefit distribution through a cooperative relationship between labor and management However, the sluggish growth made management feel that Single Status is a burden. Management shrank the scope of Single Status and created another status outside Single Status. That is, “non-regular” status was created. This “core and periphery” structure of employment also progressed in other countries such as Korea. (Figure 3)
Public expenditure on labor market programs
In general, when employment becomes insecure, integration into the labor market is promoted. On the other hand, the safety net programs will be urgently improved in order to save groups of people excluded from the labor market. However, Japan has not been active in labor market policies and lacks a mechanism to support employment security. In particular, the mechanisms for vocational training and job seekers’ support are weak and should be enhanced quickly. (Table 2)
Job security is no longer the responsibility of the central government only. Employment policies based on the regional ingenuity are required. This cannot be solved only by administrative power. Not only workers and employers, but also educational institutions and stakeholders need to build a network, and to form “new public” by sharing each other’s knowledge and ideas with the government to solve employment issues.
Faculty of Economics
Professor, Employment Relations
Biography
Born in Korea in 1961
[Academic background]
1990 Graduated from the Faculty of Social Sciences, Seoul National University
1999 Left school without completing doctoral course at the Graduate School of Economics, University of Tokyo
2002 PhD (in economics) (at the Graduate School of Economics, University of Tokyo)
[Professional background]
1999 Full-time lecturer in the Faculty of Economics, Saitama University
2001 Assistant professor in the Faculty of Economics, Saitama University
2002 Visiting researcher in the Graduate School of Management (Anderson School), UCLA (until March 2004)
2005 Professor in the Faculty of Economics, Saitama University
Major Achievements
‘Single Status’ and Japanese Employment Practices – Case Study of Japanese National Railways, Nihon-Keizai-Hyoron-Sha, 2003 (received Okinaga Award, Encouragement Award of Japan Association for Social Policy Studies (JASPS))
(edited) Management and Labor in Korea, Nihon-Keizai-Hyoron-Sha, 2010
(edited) For Reconstructing the Japanese Kaizen Power of the Workplaces, Nihon-Keizai-Hyoron-Sha, 2014
“Evolution of Human Resource Management in Japan: Continuity, Change, and Enduring Challenges”, in Kaufman, B. (ed.), The Historical Development of HRM Across Nations: Unity and Diversity, Cheltenham, UK: Edward Elgar, 2014
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