Japan’s Faltering Employment System

By
On April 1, 2015

Photo by jamesjustin

It has been just over seven years since the 2008 Lehman Shock, and while the Japanese economy continues to trundle onwards, a rising debate about longterm employment security dominates the business and op-ed sections of leading newspapers. What has long been a tightly structured hierarchy of strict employment practices is gradually being eroded by economic uncertainty and aging demographic shift.

Japan’s employment system is broken down into several roles. Seishain constitutes regular, full time employment, while haken (dispatch/temp), keiyaku (short-term contract), and arubaito (part-time) make up the bulk of “irregular” employment.

Irregular employment positions are easily dispensable, without any guarantee of long-term job security, pay raises, bonuses, or severance pay. As companies increase the number of haken and keiyaku work, available seishain positions are decreasing, and young Japanese people are finding it more and more difficult to find secure, meaningful jobs.

Japan was built on the infallibility of its institutions.

According to a government survey released this past January, 38.2% of the Japanese workforce in 2014 comprised non-regular employees, a 16.5% increase over the last two decades, and the first time that non-regular employees in the country topped the 20 million mark.

Part-time work is most commonly found in the retail industry (24.6%), while dispatch workers are employed most often in the manufacturing industry (36.1%), and contract workers in the information and communication (7.9%), and real estate industries (7.4) (figures taken from 2011 JILPT report).

Meanwhile, according to the same 2011 report, dispatch and contract workers express a desire to find full-time employment with 37.1% and 34.9% respectively responding that lack of opportunity to work as a regular employee as the reason for their current employment status.

The increasing volatility of Japan’s employment system is not an isolated economic phenomenon. In a largely homogenous culture (98.5% of the country is ethnically Japanese), the nation’s employment system is tied to specific social values revised and reinterpreted since the Meiji period, and especially since the post-war period (1945 to present). And so it is important to examine what implications the changing conditions of the employment system suggest about contemporary Japanese society as a whole.

Japan was built on the infallibility of its institutions. Students go to public schools, exposed to the same curriculum in the country towns of Kyushu as their peers in Tokyo. From ages six to eighteen, regimentation, repetition, and ritual are the order of the day. Then on to a university system that’s judged on ranking over academic rigor. By their third year in college, 20-year-old kids are expected to don suits and find office jobs at corporations that will hopefully hire them for lifelong seishain positions, with plenty of overtime and comfortable bonuses. It’s in these offices, that, just like school, day-to-day life will be governed by the three Rs mentioned previously.

The millions of Japanese who traverse this institutionally-dependent path are referred as shakai jin (lit. translation: “society person”). The expectations of the shakai jin are simple: follow the path dictated by Japan’s institutions, emulate the values of one’s superiors, and, with some luck, life will turn out just fine: a spouse, a nuclear family, a superfluous insurance plan, a new TV, all in a freshly built apartment complex.

Indeed, this Japanese dream is not dissimilar to the dreams held by many throughout the developed world. But the discerning factor of the Japanese dream is its intersection with the impenetrable, self-censoring nature of the country’s national discourse, which purports that shakai jin values are the very essence of Japaneseness.

job-huntingPhoto by Dick Thomas Johnson

Over the last two decades, and especially in the aftermath of the 2008 recession, we see this system faltering. Not because of top-down political decisions or bottom-up reforms, but because corporations can no longer bare the risk of hiring employees for full-time positions.

And so those third year college kids, stuck in the throes of job hunting season, are finding it harder and harder to meet societal expectations of them, unable to attain the shakai jin Japanese dream. There are of course those who do find coveted office jobs. On the other hand, women fresh out of university are working at departments stores, men are bouncing around temp jobs while living at home, and many are unsure of what to do when the institutions that have raised them fail to live up to their ideals.

Politicians and economists meanwhile strategize methods of restoring this system. This is the only system known since the end of the war, and so it must be restored. “Restoration before reformation” is perhaps the best framing of this conversation. Reforming the system, innovating a new, more flexible system requires change, and change is risky. So the topic of debate is focused on restoration.

Despite all the skills, values and knowledge taught so rigorously to such a large proportion of the population, there’s one key component lacking: the ability for improvisation. In a country where individuals regularly employ first person plural nouns (eg “We Japanese think…”), citizens lack the vocabulary to directly challenge this manufactured Japanese narrative – to improvise their own version of success based on the skills and knowledge they’ve acquired through years of education.

While Japan has all the tools to live up to its status as a top three global economy, it lacks the improvisational tools to do it. Meanwhile, Japan’s newly graduated youth are climbing to the top of the diving board, looking down at the pool several meters below, uncertain whether they’re ready to jump yet.

Living creatively in Osaka, Japan.
  • Bevan Jones says:

    One key weakness with the author’s analysis is that other top economies such as the US and Europe also share the characteristic of inflexibility that the article cites as a particularly Japanese failing. The status quo is king everywhere, or at least the aspects of the status quo that serves the short term ambitions of the people who hold the economic reins, even when it is obviously failing everyone else and will even fail them in the mid- to long term. That’s why banks get bailed out without imposing any real reforms to keep them from repeating a universally acknowledged failure that was completely predictable (and was predicted) in the first place. That’s why economies all over the world are stagnating as the world’s wealth is increasingly concentrated and the middle class shrinks. That’s why we continue to inflict environmental damage that is fast becoming irreversible, and has been talked about and predicted for decades now but seem committed to continuing on more or less the same track for decades to come. Reforms are widely acknowledged as necessary but so far no country, not just Japan, has found the will to make any such reforms materialize. Japan has problems. Inflexibility is definitely one of them. However, it isn’t a Japanese problem. It’s your problem and it’s my problem too.

  • Bennett Charles Kuhn says:

    Brilliant!

  • Rol says:

    Great article, more from this writer please. A well written analysis of an important and complex issue.

  • nouveau_ukiyo says:

    I remember meeting a college student who studied English literature in college. She couldn’t tell me the title of one book she read for school. After graduation, she was lined up to start working as a bank teller. This is not uncommon in Japan and it’s a result of Japan’s caste-like education system and life time employment. Companies recruit kids based simply on school name recognition. They are much less interested in skills and knowledge because they have rigorous training and education programs in place to mold new employees into whatever they wish them to be. Students and Japanese higher education institutions know this, so higher education standards are lax and students graduate with few skills or knowledge.

    Now the life time employment system is disappearing. This also erodes the bargaining position of new grads. With few or no practical skills, why should companies make them full time employees? To make things worse, there isn’t even an incentive for Japanese students to make themselves more attractive to employers since career advancement is based on seniority, not talent or skills.

    I don’t think you can blame Japanese firms for what’s happening. Like employers everywhere, Japanese firms want to be more efficient. Life time employment means firms have to retain employees even if they are not needed. For instance, Sharp is having a difficult time exiting the TV market because of lifetime employment. Korean and Chinese firms have stolen Japanese market share, so Sharp would like to divert resources away from its loss making TV segment to other areas of the company. Lifetime employment means that Sharp has to retain engineers and other TV staff until they retire, or pay them to retire early.

    What’s to be done? I’m not sure (I guess I should have taken more economics classes). Japan is not unique; this trend is seen across the OECD. It could be worse; youth unemployment in some southern European countries is as high as 50%. In the United States, tertiary education that is out of touch with market needs is creating graduates with few useful skills; and high tuition costs are saddling these no skill kids with thousands of dollars in debt.

    Access to education in Japan is decreasing, due to costs. Similar trends are seen in the United States and other developed countries. Only middle-upper and upper class families can afford juku, private school tuition, and other supplemental education needed to ensure good career prospects. Career success is increasingly being determined by a family’s ability to pay for access to education resources, rather sheer hard work and talent. Escalating educational costs and a rising proportion of part time work is a sign of increasing inequality in Japan. Unless the Japanese economy undergoes more structural reform (Abe’s Third Arrow), only those who graduated from the best universities (and went to the best jukus, private schools, etc.) will have seishain jobs at top corporations.

  • maulinator says:

    I don’t know if faltering is the appropriate word for the
    employment system. The reality is that the economy of Japan is changing but the
    employee pool is not keeping up. Part of the problem is institutional. The
    education system has not kept up to date and continues to pump out salaryman
    robots for the economy, ie corporations to consume. However, the nature of the
    economy has changed. While manufacturing is still the biggest portion of the
    economy in real yen terms, the economy is actually changing to a service
    economy. The needs of corporate Japan are changing and the populace needs to
    realize that. The manufacturing sector gets more and more efficient, and that
    means less and less people are needed. What is needed in maunifacturing
    therefore are designers and engineers- people with marketable skills prior to
    getting the job. No corporation is going to teach graduate level engineering as
    training for their employees. These engineers and designers are not really
    lacking for jobs, maybe not jobs they want but they will alwyas find jobs.

    The service ecomony also requires more flexibility in the
    work force. That is why software engineers, strong people skills and ingenuity
    are more sought after than before. The general population in Japan however does
    not have these skills. Computer science is not taught at the elementary level,
    and the class room rote exercises do not promote individual thinking etc. That
    is why you see more parents trying to get their kids into English speaking
    schools and alternative schools rather than the public system. This gives these
    kids a natural edge int he forthcoming economy.

    With a service economy,
    flexibility is de rigeur. Employment is based on projects and man power needs
    based on demand rather than supply. There is no need for dead weight.
    Corporations that hire a pool of people and try to find specific tasks for them
    are going to be less lean than the other way around- hire people for specific
    tasks. Everyone is a specialist. However, Japan is a society of generalists,
    from a economic usefulness perspective. It’s not that the populace is stupid,
    but ill prepared for the new economy. There are still many people that thrive
    and distinguish themselves from the pack and excel. It would be nice though if
    th education system was set up in such a fashion that the populace was better
    prepared to become specialists rather than generalists. Then the corporations
    could hire with longer term objectives. However, if the employee pool does not
    learn to adapt, they can always get cut.
    If people think that once you get a job in this economy the learning is
    over, they are definitely mistaken.
    Innovation happens every day and if you are not aware of it you are
    going to be in the makeinu, loser group.
    You constantly have to reinvent yourself in this economy and the people who
    cannot do that are the ones who cannot get full time employment.

    There is no need for
    generalists except to do mundane jobs and those types of jobs are not worthy of
    full time employment. If you can be
    easily replaced why invest full time in you?
    The needs of the economy do not match the skills the people have in
    general and therefore the general populace suffers for jobs. The generalists have to be satisfied with non
    full time work until they can become specialists that are harder to
    replace. And to the ones who cannot
    adapt- the world always need ditch diggers.
    It won’t be full time work but every economy needs them.

    • tnsi says:

      Even outside of CS at the primary school level, I noted a pathetically weak level of computer proficiency when I was in Tokyo as a university student (I won’t name the university). My Japanese peers had problems navigating Windows and office suite software. I’d say with some level of confidence that casual users in the US, who might only use their computers for entertainment or email were more proficient in computing than my peers.

      • s4p says:

        Happens in the US and many other OECD companies as well… Certainly not unique to Japan. Your sample set might have been skewed by your peer group here in the US. Moreover, those skills are pretty easy to secure in a short amount of time. Navigating Windows? MS Office? Those are pretty basic… and really outside of perhaps MS Excel, what Japanese person has use for MS Word, Powerpoint or Access (many competing products…)?

      • Anthony Joh says:

        I’ve heard this from other teachers as well. Their students were experts at using their smart phone but clueless on how to use a computer.

        • s4p says:

          A big reason why we are seeing interfaces morphing towards what people see on their phones. The user base is forcing OS developers to adapt more so than the developers forcing users to acclimate…

    • opinyonado says:

      A very thorough reply worthy of an article on its own.

    • Winnie the Pooh says:

      Very well articulated.. many thoughts that I share here. Yesterday was April 1st–the start of Japan’s fiscal year (and ironically April Fools’ Day), which means an explosion of bright-eyed new grad employees flooding companies that operate under these hiring practices.

      It makes me sad to see young individuals wearing suits and handing out pamphlets for who-knows-what on the street, because they are given no better work by their companies, and they probably have only marginally better skills. The first several years are a test of loyalty.

      It’s a waste of human capability, and you’re right, the school system is probably the best place to improve this, by way of increased specialization, learning, individuality, etc. (It’s widely known and discussed that Japanese colleges may be difficult and competitive for entry, but have relatively underwhelming educational programs.)

    • leavesremix says:

      While I agree with most of what you say, one point stuck out to me. You say that mundane jobs are not worthy of full time employment? Every company has mundane jobs that need to be done, and why shouldn’t all employees expect full time? I think it’s a huge problem that companies are no longer willing to invest in their employees. I’ve seen it too much in my own country as well. They cut positions as much as possible, and hire part-time workers to do the same work as full-timers once did, and pay them less with no benefits.
      A lot of these problems are the very real negative aspects of capitalism and the ever increasing gap between the greed at the top, and the general populace trying to find meaningful work.

      • maulinator says:

        I agree with you on a moral level that the mundane jobs should also be full time, but the fact that the person is 100% replaceable with minimal training puts the corporation in a quuandary. The cost of keeping a full time employee is more than a temp, and the position can be filled by practically anyone. Then it does not matter for the firm if the position is filled long term by Jack, when Steve, Bob or Frank will come in and do the work for less money and still get the same output.
        Part of traditional Japanese society’s view on corporations is the social responsibility that corporations have. The well-being of their employees was one of the responsibilities of the corporation so one of the things they instituted was lifetime employment and pretty much guaranteed success with seniority. This was fine when short term profits and efficiency were not as importnat than long term planning and the ability to sacriface short term gains for long term prosperity. However, as Japanese corporations began to fail and more foreign investment (namely US) took place, the money people demanded that J-corporations adopt Western practices. Focus on short term growth, focus on the quarterly numbers. Make the corporation efficient and trim the fat. Essentailly forego the social responsibilites of the company in favor of it becoming a predominantly economic beast. The corporations ahave become thinner and more efficient, but the reality then is that many jobs were superfluous for the company and needed to be eliminated or made cheaper. This results in a more efficient economy (which is clearly good) but also loses some of the humanity of the companies and sociel responsibilites.
        In the past, the corporations would look after their own so the government could be inept without the social support structure falling apart, but now with the corporations moving away from the wetnurse role, the cracks in government are also plain to see and the incredibly poor results of government and education in preparing the populace for the new environs is painfully clear.
        It is only going to get more Darwinian in terms of jobs in Japan and each individual cannot rely on the education system to help it is going to be more individualistic going forwards and the trend will continue as such for the foreseeable future.

  • Mikey says:

    “the Japanese economy continues to trundle onwards”
    Trundle? The world’s third biggest economy? Hundreds of multinationals including the biggest car company in the world – trundling along? I doubt it.

    The Japanese economy certainly isnt as spectacular as it was in the 80s, but it is still a global powerhouse, dont you think??

    • maulinator says:

      IT it trundling alon gint he sense that growth has been basically zero for the past 20 years. Only in the past two years have you seen any spark of economic growth in Japan, and even that is tiny.
      However, if you think about the output per capita it is not trundling along. Think about it. China, just surpassed Japan as the second biggest economy in the world recently. This is not a surprise being that China has over a billion people. If we assume that the monetary size of output is about the same (back of the napkin calculations), then given that Japan has about 150mln people the per person output is 6.66 times greater than China. So per capita Japan is not trundling along at all. It’s in how you look at the numbers.

      • Adrian Buckles says:

        II’m not sure if China is a fair comparison. It too has seen its growth capped off because it grew without a real foundation in mind. China is coming to a brink where it is going to be forced to make hard decisions due to its staggeringly toxic pollution levels in major cities.

        As an American I’ve always been intrigued by the notion of a guaranteed job my whole life as long as I do as my boss asked. After the economic shock of 2008 I noticed similar trends in America regarding the usage of temporary labor. I have always worked in the manufacturing field, and saw the effects of the collapse up close. I was unemployed for a year and a half.
        I believe Japans acknowledgement and investment in “restoration before reformation” is a sign that the government is thinking long term.

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