n JapanThe Particular Features Of The Employment System In JapanOne of the unique and well known features of the Japanese employmentsystem is permanent employment for workers. Japanese corporations responses torecessionary periods provide an opportunity to sort out the myths from therealities of the Japanese permanent employment system. During recessions Japanese companies forced to reduce their costsachieve reductions in several ways. First, they reduce the number of women andtemporary workers they employ.
During the recession that followed the 1973 oilshocks female employment dropped by eleven percent; more then five times thedrop in male employment. It was easy to reduce female employment because womeneven if they hold permanent positions are thought of as transitory workers whowill leave the workforce when they get married. Female and temporary workers area safety valve for Japanese companies that allow them to reduce costs in theshort-term without firing permanent male workers. The second way Japanesecompanies reduce costs is by giving early retirement to senior workers at thecompany. Many of these workers forced into early retirement then take up farmingas is the custom in Japan for retires. Getting rid of senior workers is one themost effective tools companies have of reducing costs because these workers havemore seniority and thus make more money then the average worker.
Japanesecompanies also are able to cut costs during recessions by reducing oreliminating bonuses paid to workers, cutting down on hiring of new workers,eliminating the farming out of work to subcontractors, transferring workersinternally with in the company to subsidiaries, and reducing profit margins tolevels that many American companies would find intolerable. Japanese companies response to recessions shows the benefits anddisadvantages of their employment system. Some of the benefits are that loyaltyand labor relations are very good. This is due to the fact that for non-temporary male workers not yet near retirement age companies make a great effortto continue the permanent employment system even during recessions. Most youngmale workers once entering a company stay with it for their entire life and forthem Japans permanent employment system serves them well. These workers come toview their company as almost a benevolent parent; the company leads them throughfitness drills, training camps, and retreats.
A workers identity is shaped notby their individual title but by the company they belong to. But, female,temporary, and senior workers wind up paying the price of this permanentemployment system. Women who want to work in a long-term position for a companylose their jobs when recession hits. And because many women who lose their jobsbecome housewives and don’t apply for unemployment insurance they become theinvisible unemployed, uncounted by labor department statistics. The “permanent”employment system in Japan is only a permanent employment for non-temporary maleworkers not near retirement age, during recessions when companies are forced tocut costs mostly female, temporary, and elderly workers wind up loosing theirjobs.History