Permanent Employment in the Japanese Labor Market

Paper Summary:

The concept of lifetime employment is a striking example of the Japanese habit of developing new, but tradition-based, customs to suit the needs of the moment and discarding them when they no longer serve a purpose. Although the idea of a promise of permanent employment strikes foreigners as either an excellent example of social justice or a ludicrous imposition on businesses, it is poorly understood in the West. The paper shows that the idea is of recent origin and was a practical means of facilitating the various surges of industrialization and industrial change in Japan throughout the twentieth century. In Japanese fashion, however, the concept had roots in the past and was developed as a complement to a whole set of Japanese concepts (such as the emphasis on group membership and family) that enabled its rapid rise to the status of a widely accepted facet of the social order. The paper shows, however, that since the downward slide of the nation's economy began in the early 1990s this "custom"--which only applied to a portion of Japanese workers--has come under attack and is gradually being dismantled since it now works counter to the interests of those who instituted it and to the interests of the nation as a whole.

From the Paper:

"Lifetime employment arose at a time when Japan was making a rapid transition to industrialization and companies based their ideas (and their appeal to prospective employees) on traditional notions, such as family and the uchi group--two entities from which the individual is never expelled. Lifetime employment for white-collar workers continued to be a drawing card as companies competed fiercely for the best potential workers in each upsurge of activity in the nation's industries. The idea of permanent employment eventually became a standard benefit of many jobs which was further encouraged by the nature of organized labor in Japan. Unlike almost every other place in the world Japan's unions are organized on the basis of employment within a firm rather than across firms by job specialization."

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