The Japanese Employment System
The Japanese Employment SystemOne of the unique and well known features of the Japanese
employment system is permanent employment for workers. Japanese
corporations responses to recessionary periods provide an opportunity
to sort out the myths from the realities of the Japanese permanent
employment system.
During recessions Japanese companies forced to reduce their
costs achieve reductions in several ways. First, they reduce the
number of women and temporary workers they employ. During the
recession that followed the 1973 oil shocks female employment dropped
by eleven percent; more then five times the drop in male employment.
It was easy to reduce female employment because women even if they
hold permanent positions are thought of as transitory workers who will
leave the workforce when they get married. Female and temporary
workers are a safety valve for Japanese companies that allow
them to reduce costs in the short-term without firing permanent male
workers. The second way Japanese companies reduce costs is by giving
early retirement to senior workers at the company. Many of these
workers forced into early retirement then take up farming as is the
custom in Japan for retires. Getting rid of senior workers is one the
most effective tools companies have of reducing costs because these
workers have more seniority and thus make more money then the average
worker. Japanese companies also are able to cut costs during
recessions by reducing or eliminating bonuses paid to workers, cutting
down on hiring of new workers,...
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