Japanese Employment Practices

Inter content EMPLOYMENT RELATIONS TO WHAT EXTENT THE Nipp virtuoso(a)se EMPLOYMENT PRACTICES HAS CHANGED AFTER THE ECONOMIC CRISIS? pic SINTHIA NOVA Student ID 2724881 14th may 2009 tabular array of Contents accounting entry3 TRADITIONAL JAPANESE seat OF EMPLOYMENT corpse4 THE CHANGING spirit OF JAPANESE EMPLOYMENT SYSTEM5 1. Sources of change5 2. Life m conflict6 3. Seniority- piece Pay and Promotion trunk7 4. Enterprise Unions9 CONCLUSION9 REFERENCES10 INTRODUCTION In the post-war occlusive, Nipp nonp beilse manufacturing companies signifi freightertly add-on their sh atomic mo 18 of the global trade of automobiles (AutomotiveNews-Market Data Book, quoted in Womack, J anes, and Roos 1991, 69) as well as achieving to a greater extent than 50 percent of the world marts in cameras, video recorders, watches, calculators, microwave ovens, motorcycles, and colour televisions (Oliver and Wilkinson 1992, 5). all overmuch of this success was attributed to the f orms of human- vision Man mount upment found in Nipponese companies (Abegglen and Stalk 1987 Clark 1987 Dore 1990 Tachibanaki and Noda 2000).However, during the cessation of Asian Financial crisis and scotch recession for most of the 1990s, the typical lacquerese features that back up comparatively high mathematical process until the late 1980s came in for severe criticism. Considering the high surgery of the US prudence in the 1990s, Neoliberals, based on the universal relevance of liberal markets, argue that the japanese good example is dead, and that Japan must (and allow for) get hitched with the US liberal market simulation (Lindsey and Lukas, 1998 Lin, 2001 Dornbusch, 1998 Krugman, 1996).By contrast, some theorists of institutionalism, based on contextualized efficiency and path-dependent national kinds, drive that Japan continues its path-dependent national mystify callable to its unique culture taken for granted within the culture the interconnectedness o f institutions and agents efforts to utilize the comparative advantages of their institutions (Dore, 2000 Green, 2001 Isogai et. al. , 2000 Chesbrough, 1998 DiMaggio and Powell, 1983 dormitory and Soskice, 2001).However, neither the neoliberals argument for simple convergence towards a liberal market economy nor the institutionalists claim for the continuation of the original Nipponese model massnister inform the dynamic changes happening within the Nipponese model at the turn of the century. In this report, the recent trends of Japanese piece of work traffic lead be examined. Two questions withdraw been addressed here. First, why the conventional Japanese habit establishment of rules has been changed.Second, to what achievement has ER scheme has been changed? To answer these questions we testament first examine the traditionalistic Japanese model and then by and by considering some issues relating to the reasons of this change, we will analysis the current trends to find out the extent of modification in a get of typical ER practices. A discussion of the implications of these changes is then be presented, followed by the conclusion. TRADITIONAL JAPANESE MODEL OF EMPLOYMENT SYSTEMJapan is a colonial, dynamic society that has under departed vast change in the past 125 years, converting itself from a feudal recite into a modern industrialized nation and an stinting superpower. In doing so, the Japanese be in possession of been able to copy Western technology, science, education and politics, era cool off keeping their unique cultural identity. 1 distinct feature of Japan that sepa trampd it from other Asian countries was it collective culture which has been carried over to the companies (Kashima and Callan, 1994).As an employee, an individual identitys with a larger entity through which one gains pride and feeling of being part of something significant, tying an individuals prestige promptly to the prestige of his or her employer. Typ ically, the company is seen as a provider of protective covering and welf atomic number 18. To a large extent, loyalty to the company surpasses the family bond. The core principles of Japanese purpose model is the so-called THREE SACRED TREASURES (sanshu no jingi) of Japanese management. 1)The life sentence/long term exercising ashes (shushin koyo) The terms long-term or permanent troth be used synonymously to describe biography employment, which was established at many companies during the period of high economic proceeds during the mid-sixties. The concept of life employment emerged as a result of the queer aspects of Japanese employer-employees relations that were supported by narrow wear markets during the post-war period when Japan experienced a grasp shortage for the first succession in her industrial history.This organisation developed and was established at many large and mid- size of itd companies during this period of high economic growth. With rapid technol ogy revolution and expansion of moving ines, large-sized companies hired inexperienced manpower directly from the labour market and through in-house training and development programs these workers developed various skills and techniques. (2)The system of longevity-based employ and promotion (nenko joretsu) Here status and higher status argon tied to space of assistance, rather than to job duties or merit.According to this system, the decisive factors determining expect ar the distance of return, age and educational background, non the work performed. The system goes hand-in-hand with the aliveness employment. Traditionally, the seniority-based reward system had two antithetical aims. The first was to approach an employees cargoner and provide fiscal compensation based on a broad social considerations and personal qualifications, such as the age and education level of employees. The second was to make extensive use of non-cash outer boundary benefits for employees and their families. 3)Enterprise conglutinationism (kigyobetsu rodo kumiai) Another important characteristic of Japanese employment relations are exertion-based unions. In Japan, unions are organized at the initiative level, together with bargain with a single employer, and conclude collective agreements on the first step level. According to Inohara Enterprise-wide unionism specifically expresses the study in terms of union membership. In principle, it organizes all regular employees of a company indiscriminately into one union, i. e. it is an employee cheek on the basis of where they work (company) and not what they do (occupation or skill). Such a labor union is not dominated by the company it represents the workforce, and as such, enjoys appropriate prestige and benefits provided by the company. Relations betwixt management and the union are between insiders, namely, all the members of the union are company employees. Intervention by outsiders such as industrial and national l abor organizations, outside rail line agents, or attorneys is not tolerated. THE CHANGING disposition OF JAPANESE EMPLOYMENT SYSTEMSources of change Prior to summer of 1997, the Japanese system guaranteed easy access to low-cost capital and raw materials was supplied by a loyal and devoted labour force (at the time of labour shortage) which facilitated market expansion. However, the market became saturated and the economy slowed down, these competitive advantages were turned into liabilities. Keiretsu banks found themselves saddled with bad debts from free radical companies, inter-group purchasing became barriers to cost reduction, and excess size of an albeit loyal labour force was viewed as a burden to essay companies.Japanese companies were as well reacting to the information revolution and were left behind by their American counterparts. Although, most Japanese companies have found change at a quick pace too much to ask they had to adopt foreign practices and policies in o rder to survive. Deregulation is another force for change. It has do Japanese markets more accessible to competitors, foreign as well as domestic. In heretofore-protected industries like financial services, distribution and agriculture few firms are prepared for the onslaught of rivalry and uncertainty (Lincoln and Nakata, 1997).The aging population also has clear implications for corporate employment relation practice. With an aging workforce, the permanent employment and seniority system burdens firms with rising numbers of higher(prenominal)-paid and less productive workers. Previously, these systems were more suitable to employers, since the steep seniority escalator resulted in less fee for the relatively young workforce and the permanent employment norm cut back the uncertainties and costs of high ply turnover.Furthermore, the transition to a service economy combined with socio-cultural and socio-economic changes has had a profound effect on Japans employment institutions . dismantle though leading-edge manufacturers are s process competitive, their contribution to Japanese domestic employment and income is shrinking, in favor of the emerging service sector as the contiguous great engine of jobs and wealth. Employment practices of sales and service firms are different from those of manufacturing. Their jr. workforce is more mobile, less committed to work and the firm.Furthermore, since the organization of work in service firms is less team based, individual cognitive process is more easily evaluated. Also, occupational skills are valued over firm-specific skills, so that broad job experience becomes the main driver of plights and performance rather than loyalty to one employer (Debroux, 1997 Lincoln and Nakata, 1997 Ornatowski, 1998). Lifetime employment One of the distinct features of the Japanese employment relations system is living employment. Japanese workers cores companies at a young age, and spend a larger dower of their life in the co mpany compared to other countries.The figure below can show that Japanese workers in terms of length of service, average number of years and median years compared to workers in other countries was much higher . Table1 comparative degree Length of Service pic Source Adopted from Current agitate Economy in Japan. Notes 1, 2 and 3 Average length of service based on OECD Report, 1995. Other figures from the respective country. From the middle of the economic crisis till 1990, on that point have been ongoing debates to reform the animation employment system. come with attitudes were gradually changing referable to increase labor costs, employees age, a ontogenesis rise in the number who unable to cope with the rapidly develop bleak technology and changing globalized markets. Employers now need staff with promptly usable skills and workers who have specialized abilities in order to respond to stiffer competition and handle more complex specialized operations. The older workers emp loyed with lifetime contacts are not able to adjust rapidly to new maturation technologies typified by information technology.Many companies have begun to adopt more divers(prenominal) hiring practices over past few years, taking on experienced employees in mid-career in addition to new graduates. Employers prefer to hire mid-career and non-regular workers both in large, mid- and small-sized organizations. The rate of hiring of midcareer workers in non-clerical positions is higher in small businesses. Hiring mid-career workers, on the one hand, minimizes training costs and, on the other hand, companies get workers with ready-made skills who can work with developing technology.In fact, employers are now seeking staff with readily available skills and workers with specialized abilities who can handle more complex and specialized operations so they can respond to stiffer competition. Many employers are arguing for some partial adjustment to the prevailing practice of lifetime employm ent. The table below shows how companies are changing their attitude toward lifetime employment practices Table 2 Companies changing their attitude toward lifetime employment practices locating Response Percentage Partial adjustment is inevitable 40. 0 depart basically maintain the practice 36. 1 Fundamental review is needful 15. 3 Do not have lifetime mployment practice 5. 2 No response 3. 3 Source Labour Situation in Japan and Analysis 2004-2005, p. 26. According to the Ministry of Labour Special Survey, about 30 percent of all employees in Japan are non-regular as of 2000 (Japan apprehend Bulletin, 2000 12). According to the table below, the recent trend Table 3 Changes in unremitting and Non-Regular Employees during recess (10,000) 19856 19914 19972001 Regular Non-Regular Regular Non-Regular Regular Non-Regular Female 24 15 47 64 -82 151 anthropoid 16 2 119 10 -89 55 Total 40 17 166 74 -171 206 Source Wakisaka (2002). towards using non-regular workers is in contrast to the traditional pattern in which non-regular workers decreased during recession while regular workers maintained their jobs delinquent to their skills accumulated through in-house training. In 19972001, the number of regular employees in Japan sharply declined by 1. 71 million, while the number of non-regular workers increased by 2. 06 million.The fact that non-regular workers are replacing regular workers indicates that Japanese companies have changed their traditional values of high skills based on in-house training and employees loyalty supported by lifetime employment, instead considering labour costs and the flexibility of the labour market. As a Joint Labour Management 1998 survey documents, work mooring morale has declined as the number of non-regular workers has increased (Morishima, 2001). Seniority-based Pay and Promotion System Another important characteristic of Japanese employment relations system is the seniority-based pay and promotion system. To underst and the main concept behind the seniority-based remuneration system it is important to know the wage theory presented by Koike. year) where wage refer to a) salaries that increase in accordance with age and length of service b) the rewards that are not paid on the basis of the job performed and c) that are unique to Japan. The main salary determination factors are seniority and the number of years the employee has been working(a) at the company. allowance increase based on seniority is a general labour practice, and not a system. Japanese companies rarely evaluate academic degrees such as doctorate. Yamanouchi and Okazaki-ward had tried to explain the history and practices of the evaluation system in Japan. They argue that Japanese companies had gone through different turning layers in the evaluation system for the interest of pay and promotion.The American system of job analysis and job miscellany was introduced as a modern, rational management system to rebuild Japanese man agement in the 1950s which marked the first turning point in the Japanese system. The second turning point came between the 1960s and 1970s when companies introduced a competency-ranking system which almost 64 percent of the organizations followed until 1974. The one-third restructuring occurred in the 1980s when the competency-ranking system did not work effectively due to the effect of an increase in the value of yen globalize business activities, deregulation, the maturation of the economy, and an aging workforce.Keeping senior employees became more costly than employing younger employees, particularly those over 40 years old in 1990 due to the recession. This was driven by the need to cut cost. In recent years, ontogenesis numbers of companies are clearly evaluating ability and performance over term of office and age in salary decision. Since the early 1990s, some companies have introduced a system of job ability-based wages focusing individual worker performance over one year compared with goals set at the beginning. This new system is quite close to a true performance-based pay system. It has been termed Annual Salary System and has been introduced by about 10 percent of large companies.This system is primarily used for managers and general managers, not for lower level employees. The pecuniary benefits to employees, if any at all, are typically small (Debroux,1997 Lincoln and Nakata, 1997 Ornatowski, 1998). The attempt to shift to performance pay shows the dilemma between companies who worry that the resulting inequities will destroy morale and unity. Besides, most companies may be do not like to see younger people supervise older ones. Also, there are fears that individual merit pay will ruin the Japanese system of team-based production, where stronger team members assist weaker ones for the good of the performance of the team as a whole (Lincoln and Nakata, 1997).The continuities in the Japanese employment systems are as striking as the changes, esp ecially when one looks at the depth and length of the economic recession. Based on data from 1,618 firms, Morishima (1995) highlights three different types of attitudes and actions of firms toward employment system reform. One group of companies tries to change their wage system from seniority based to performance based and these firms try at the same time to use the external labor market to recruit workers. Although they represent the exceedingly publicized trend away from traditional Japanese employment practices, these companies exactly make up 10. 8% of the sample. Most firms (56. %) have retained the traditional employment system representing the majority force of continuity. A third group (32. 4 %) shows a mixed picture consisting of firms that are reforming the wage system, while maintaining long-term employment practices. These findings highlight the striking resilience of traditional practices as well as some important changes. Enterprise Unions Japanese unions are organi zed on an enterprise basis, with but permanent, fulltime employees of the company eligible to join the union. This structure has led Japanese unions to defend job security and the working conditions of their members through company-based mechanisms.The unions chances of success through such mechanisms is, at this time, somewhat diminished. This has led unions to focus on job security rather than pay increases, which has lessened their appeal to young people, and has alienated unorganized nonregular workers in large companies and the vast majority of employees in small companies (Debroux 2003a). With the decline of lifetime employment and the increase in the number of non-regular workers, not only enterprise unions but the entire union movements are now declining. For example, the unionization rate (union members divided by number of employees) declined from 34. 7 percent in 1975, to 28. 9 percent in 1985, 23. 8 percent in 1995 and 22. percent in 1998 (Shirai, 2000 20). In addition, the role of conflict resolution traditionally played by Japanese enterprise unions, also declined despite the formal existence of enterprise unions. Recently, individual labourmanagement conflicts have increased. For example, the number of cases concerning workplace disputes over daily employment and working conditions, dealt with by the Labour Standards Inspection Offices, increased to 20,000 in 1994. Similarly, the number of cases of consultation that the Labour Administration Offices and the Womens and issue Workers Offices deal with have also exceeded 75,000 and 10,000, respectively (Shirai, 2000 119).It is important to note that since the economic contribution of temporary workers is increasing, its necessary to recognize their representation in the labor market by protecting their rights. With increased cost-cut measures adopted by employers due to rising competition, there has been a substantial increase in the employment of non-regular workers in the last few years. The un ionization rate of these workers is only three percent. At the same time, employers have become increasingly concerned in performance-based systems on the enterprise level. These developments should influence the future role of unions in the regular wage negotiation process. CONCLUSION This report has explored the changes taking place in ER in Japanese firms.A period of preserve economic decline, increased global competition, a rigid employment and business system, a banking system on the verge of collapse, and the occurrence of the Asian financial crisis meant that the 1990s was a catalyst for change and regeneration. While these factors were influential in providing the impetus for change, other factors, such as the aging population, declining birth rates, and the short-run horizons of younger workers, were also important. Overall I have found take the stand of the flexibility in distinctive features of Japanese employment relations system, which are lifetime employment, senior ity based system and enterprise-based unions.The number of employees under lifetime contract is now in decline as Japanese companies have started to adopt more diverse hiring practices, such as taking on experienced employees in mid-career in addition to new graduates, recruiting contingent workers e. g. temporary and other types of non-regular employees has overtaken employment of lifetime employees in recent years. In 1982, 84% of full-time workers were regular workers with long-term careers and good fringe benefits at one company. But 20 years later, the regular workers share had shrunk to 68%. Companies attitudes towards seniority based system have been changing as well. Many companies have changed their wage systems to reflect individual performance.They are now adopting PAY SYSTEM BASED ON PERFORMANCE, which represented by the annual salary system and JOB-BASED SALARY, which mainly focusing on people occupying managerial positions or higher. An increasing number of companies are putting a stop to their practice of occasional salary raises based on seniority and introducing systems in which bonuses are influenced by evaluations. Another important characteristic of Japanese employment relations are enterprise-based unions, which is now under threat because of the decline of lifetime employment and the increase in the number of non-regular workers. Moreover, given todays strict economic climate in which wage increases are difficult, the SHUNTO is shifting from its former polity of seeking wage increases as the highest priority to job security and maintenance. No matter whether it regards performance pay, the elimination of management titles, or reductions of the workforce, the change of employment practices in Japanese companies seems to be slow and incremental, carefully avoiding unexpected or shocking breaks with the past. Furthermore, they are not changing the typical Japanese model completely, trying to make it more effective by modifying them accordi ng to the new trend of highly competitive globalized market. REFERENCES Bamber. G. J, Lansbury R D, & Walies. N . (2006) International and Comparative Employment Relations Globalization and the developed market economies. 4th ed. perspicacious Publications Ltd, London. BENSON, J and DEBROUX , P (2004) The Changing Nature of Japanese Human choice Management The Impact of the Recession and the Asian Financial Crisis. vol. 34, no. 1, pp. 3251. Int. Studies of Mgt. & Org. online purchasable from Xpert HR. http//xperthr. co. uk Accessed 28 April 2009 Benson, J. and Debroux, P. 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