There’s a lot of serious pondering to be done over all the recently announced redundancies in the UK and elsewhere. But for some reason the scale of layoffs among UK workers at Nissan is particularly shocking. Honda workers get an enforced four-month holiday on reduced pay, though none will be sacked since Honda has a car launch coming up. But Nissan in Sunderland has actually made 1,200 redundant. We were always told a Japanese job was a job for life: what went wrong?
Nothing. While it seems true that the Japanese revere age and reward seniority more western societies do, dig back far enough and you discover that the roots of the lifetime employment ‘tradition’ wend all the way back to the end of the First World War, less than a century ago. Then, skills shortages in the employment market led skilled workers to job-hop furiously, ramping up pay and bonuses as they went. A recession in the 1920s led to surplus labour and a fall in pay and bonuses. Then another fall in the labour supply as workers’ mobility suffered.
Firms started hiring school-leavers and training them up. Though this led employers to hold on longer to the recruits they’d invested so much training in, says Anne Hornsby of Spelman College, Atlanta, USA: “employers were still prone to terminate workers during periods of slow business.” Firms would even fire older workers if their skills declined, she says.
The Japanese labour market was volatile throughout the 1930s. Poaching was so rife that legislation forced employers to seek permission from the previous employer before taking someone on. Even so, illegal job changes carried on throughout World War II.
Millions lost their jobs in massive layoffs after the war. There was massive labour unrest and the allied occupation forces allowed the formation of unions and made strikes legal before they left Japan in 1951. The employment-for-life idea was a social compact to prevent renewed outbreaks of what will be familiar to those in the UK with long memories as ‘winters of discontent’.
Labour disputes in these company- rather than sector-based unions had a rather different look to those we’re used to in the west. The employees would take over a factory, pay themselves and suppliers, and put the rest in the company account. Some 255 such ‘turnover strikes’ were recorded in the first six months of 1946, says Hornsby. The occupation did an about face and had some strikes banned.
The social compact that had emerged by 1950 was fashioned to stem labour unrest in the cause of economic stability. Employers extended special privileges to a ‘favoured’ category of employees and made up the numbers with (mostly female) temporary workers who could be hired or laid off as economic conditions warranted.
Parliament and case law reinforced this two-tier pattern. By the 1960s employers who wished to cut staff had to show an economic case for doing so, demonstrate that they had exhausted all the other possibilities, and consult the workforce. Large firms further embedded labour immobility by refusing to hire skilled employees from their rivals. Further, the development of the keiretsu structure, which clustered businesses round a major bank, meant that, if one of the keiretsu members had to lay people off, the other members would find them work.
All this fostered a management union bond that almost rivalled that of family ties. But the ties weakened as economic conditions worsened, particularly during Japan's ‘lost decade’ of zero-interest rate economic stagnation in the 1990s.
The system’s key vulnerability was succession planning. When demand fell, employers were unable to either lay off workers or hire new blood to ensure future growth. According to the FT, Honda hired over 2,000 graduates in 1990, but only 250 four years later. Fujitsu, similarly dropped its graduate hire from 2,000 to 300.
Satoshi Shimizutani and Izumi Yokoyama of Hitotsubashi University’s Institute of Economic Research in Tokyo claim that, after 1990, the average tenure of lifetime employees actually extended, but the number of temporary workers increased. What’s more, by 2003 they found two classes among full-time workers: those with long and short tenures.
The developing pattern was that long-term permanent workers were a privileged, highly-paid few supported by an ever larger number – it quadrupled between 1990 and 2003 – of short-tenure, lower-paid permanent and part-time workers. There’s a resonance here with western ‘staff’, hourly-paid and part-time, contract or casual labour.
Now there is a move towards hiring on the basis of experience, and basing pay grades on merit rather than seniority. And as the idea of life-work balance takes hold, increasing numbers of Japanese workers opt for flexi-time.
After just 50 years, the sun is setting on Japan’s experiment with employment for life.
Categories: Commentary ,
Comments
All comments
You need to be registered with the IET to leave a comment. Please log in or register as a new user.