Helen MACNAUGHTAN, Peter MATANLE, Arjan KEIZER and Jun IMAI
Rethinking Japan's Lifetime Employment
for the 21st Century
Japan’s practice of so-called lifetime employment is well known. This system arose out of labour unrest in the early post-war years and was the result of both collective bargaining and recognition by bureaucratic and corporate leaders that Japan needed to secure a committed workforce and a stable labour market if it was to pursue long-term economic growth. The system was constructed around three central pillars which were viewed as distinctly Japanese - implicit long-term employment for a core regular workforce, seniority-based wages and enterprise-based unions - and this focused employment strategy was heralded as a key factor driving Japan’s subsequent economic advancement. It was also founded upon a more universal concept at that time - the male breadwinner model. This meant a distinctive female employment system developed alongside the better known lifetime employment system which was predominantly applied to male employees. Japan was able to reap the social and economic benefits of a gendered division of labour that harnessed the strong commitment of a core male workforce while effectively making use of a growing non-regular female workforce as a buffer to ensure stable employment for males.
Since the 1990s, the stagnation of the Japanese economy, the ageing of Japanese society and changes in the international economic environment have led to a re-evaluation of many key domestic institutions, including Japanese management practices. As a result key changes in employment have been observed, such as a relative growth in unemployment, new and expanding categories of atypical employment, declining prospects for youth employment, weakened unions, and moves towards individualistic and performance-based employee rewards. This led to a renewed rush of articles and books in the popular business and academic presses proclaiming the imminent demise of the Japanese lifetime employment system. We argue, however, that such judgments are to a great extent misplaced. To be sure, Japanese companies have been restructuring their portfolios and their corporate strategy since the 1990s, including key adjustments to employment, and a perceived outcome of this is that the Japanese labour market is now less stable than in previous decades. However, it would not be correct to proclaim the end of the Japanese lifetime employment system. Indeed, lifetime employment remains not only largely intact but has demonstrated enormous resilience under the pressures that have been exerted upon it over the last two decades.
In the current decade, debates on demographic change, the globalization of Japanese business and the pursuit of Abenomics to revive the sluggish economy all mean that it is now crucial to re-examine the mechanisms of Japanese-style management and HRM practices in order to consider how and why evidence points to the enduring support for core lifetime employment practices, while at the same time the system fragments into a proliferation of employment types offering neither stability nor opportunity, and a consequent widening of socio-economic inequalities between regular and non-regular employees. Japan, once lauded for the distinctive use of its one true natural resource, its people, and for its egalitarian growth model, appears caught between two schools of thought. From the perspective of reformists Japan appears sluggish and resistant to change; yet others feel Japan has already gone too far in converging towards Anglo-American market fundamentalism.
With this in mind, we are in the initial stages of a joint research project that examines the resilience of the Japanese employment system as personified by the core institution of lifetime employment, despite decades of pressure for change, and its corollary in the fragmentation of employment stability and opportunity at the periphery as market oriented reforms are implemented and gather pace. We aim to answer the following key questions:
1. Why does lifetime employment remain the core institution of the Japanese employment system, despite more than half a century of research claiming that it has either collapsed already or is on the verge of disappearing?
2. Despite remaining the core institution of the Japanese employment system, what kinds of changes have occurred to the system of lifetime employment since the end of the postwar era, and why have these changes occurred?
3. To what extent, in what ways, and why has the rest of the Japanese employment system changed since the end of the postwar era, and how do these continuities and changes relate to developments in the lifetime employment system?
4. How do our answers to the above questions inform us about the distinctive characteristics of the Japanese employment system and Japanese capitalism in the 21st century?
This project will offer a timely contribution to the scholarly literature because it stands against half a century or more of western orthodoxy on lifetime employment. We contend that adaptations in organizational practices are indications not of a diminishing system but of its continued resilience, even of its social and economic sustainability. Our project examines the depth and extent of lifetime employment within the Japanese employment system and within Japanese society more generally. The system shapes not only the working patterns and conditions of regular workers and the character of Japanese unions, but has determinative effects for those who are relative outsiders for reasons of gender (women), employment status (part-timers, arubaito, agency workers, unemployed), nationality (non-Japanese), and age (both the young entering employment and older workers continuing in employment after mandatory retirement).
Importantly, lifetime employment has deep cultural roots and elicits strong affective loyalties that ripple outwards beyond the firm and across society, impacting on the structure and nature of community and family life. In shaping the working lives of both insiders and outsiders, lifetime employment informs about some of the underlying problems bedevilling Japanese society, such as restricted life chances for women and minority groups, the inability of mainstream unions to represent non-standard workers, the difficulties faced by younger and older workers, the challenges to non-Japanese workers, and social phenomena such as the rise in 'working poor' and social inequality. This fragmentation appears to have progressed over recent decades and there is a renewed urgency to address it in relation to the persistence and resilience of lifetime employment as the fulcrum around which the rest of the employment system is arranged. Paradoxically, the enduring resilience of lifetime employment depends upon and contributes to the continuing fragmentation of employment stability and opportunity at the system’s periphery.
This research brings together four international established academics in the sociology and economics of work in Japan. Our project begins by investigating the theory and practice of permanent employment in large organisations. Utilising statistical data since the 1980s and qualitative research we measure the extent and changes in lifetime employment, showing that lifetime employment shows little sign of weakening. The project then explores personnel management in Japanese firms, in particular the introduction of performance-related criteria for appraisal and remuneration. We argue that, despite expectations to the contrary, such changes have not undermined the importance of firm-specific skills and long-term career concerns but confirmed lifetime employment as a dominant element shaping the internal labour market for regular employees. We consider the position of SMEs, noting the discourse on employment duality, and we explore the extent to which lifetime employment is in operation, either as a normative or ambivalent model, amidst a variety of personnel management tactics.
Importantly, our research re-examines gender within Japanese society and the economy by focusing on the premise that Japan’s lifetime employment is modelled on and supported by gendered practices. While noting the rising labour participation and expanded presence of women in the Japanese workforce, we question whether circumstances have changed for working women, by investigating the recruitment of women across different economic sectors, policy targets for gender equality, women’s access to career roles, social attitudes, and the impact of employment legislation. We also explore lifetime employment from the perspective of the diffusion of cultural practice and argue that the continued resilience of lifetime employment is deeply rooted in a culture of company citizenship which continues to shape the potential for changes in employment practices.
This project demonstrates that lifetime employment, in concept and in practice, continues to be a structural determinant for Japanese employment and Japanese capitalism, and by approaching lifetime employment from this perspective our project furnishes an opportunity to critique some of the embedded assumptions of Anglo-American political economy, including the Varieties of Capitalism discourse.
Preliminary arguments were presented in a panel at the 14th European Association for Japanese Studies (EAJS) Conference held in Ljubljana in August 2014. These presentations can be accessed on the links to the authors’ publications websites detailed below. The authors will also be presenting at the 11th Western Economic Association International (WEAI) Conference in Wellington, New Zealand, in January 2015. The authors welcome comments on their project.
Helen MACNAUGHTAN is Senior Lecturer in International Business and Management for Japan at SOAS, University of London. Her research interests are in the fields of employment, gender, HRM and social history of contemporary Japan.
Peter MATANLE is Senior Lecturer in Japanese Studies at the School of East Asian Studies, University of Sheffield. His research interests are in the social and cultural geography of East Asian development.
Arjan KEIZER is Lecturer in International and Comparative HRM in the Manchester Business School, University of Manchester. His research interests are in the comparative study of employment practices and industrial relations, with a particular focus on Japan.
Jun IMAI is Associate Professor of Sociology in the School of Letters at Hokkaido University. His research interests are in the fields of comparative employment relations, economy and organizations, and gender relations.
Publications : http://researchmap.jp/read0145764/?lang=english