Permanent-VS-Temp

When the Second World War ended in 1945, Japan’s economy was on the verge of collapse. But they overcome all these economic difficulties within two decades. In the 1950s and 1960s, Japan entered a period of rapid economic growth, as was well known as the economic miracle and their economy continued to grow afterwards. Although Japan’s economy was in recession since the 1990s, they are still a powerful economic power in the 21st century, as evidenced by their being the fourth largest economy in the world. With Japan’s economic success in mind, one is sure to ask, what are the reasons behind their economic triumph? In fact, there are both external factors and internal factors. The external factors include the help of the US government, the impact of Cold War, the revival of world trade after the Second World War. These external factors are important but are not the focus of this article. As for the internal factors, they include the Japanese government guidance and efficient enterprise management. By efficient enterprise it means to a very large extent life employment system. And this article seeks to explain how life employment system would solve the some of the problems arising from the precariat class.

Guy Standing (2011), the economist, argues in his publication ‘The Precariat: The New Dangerous Class’ that there is the emergence of a new class called the Precariat class. And people who belong to the class are experiencing a sense of precarity, partly resulting from employment insecurity.

Nowadays not many companies are implementing life employment system. Let alone the small sized enterprises, not all of the large and medium sized enterprises have offered life employment to all of the employees. The reason for this phenomenon is because the companies believe it would be much easier to deal with economics ups and downs if they have contract workers, as they are lay off workers easily. The heads of the companies may think they are maximizing their companies’ benefits by doing so. However, the truth speaks otherwise. In fact, there are many benefits to be gained by both employees and employees through the implementation of lifetime employment. A win-win situation.

Since the post-war period, many Japanese companies had the lifetime employment system. It is a system designed to minimize the discharge of regular employees. The wage system of lifetime employment is quite special, as it rewards employees according to their age and length of service in the companies. As a result, most, if not all, permanent workers will work in the same companies until they reach the retirement age, which, according to Japanese regulations, is 55. Moreover, even these workers have reached their retirement age, some companies may rehire these workers as ‘special employees’. Their employment then will be contract-based with reduced wages (Robert E., 1972). Because the employees will be working in the companies for their entire work careers, the companies are thus more willing to invest a great deal of money and other resources in educating their labour force, which they believe would favour the development of the companies due to an increase in the cohesion and competitiveness of the companies. Morever, the system also helps to foster loyalty of the employees towards their companies, and more importantly, the employees will feel more secure about their jobs and see prospects. And will sure to workers’ anger, anomie, anxiety and alienation – the four A’s suggested by Standing (2011).

Japan would still be regarded as one of the powerful economies in the world. Their success must contribute to their lifetime employment, which is a very efficient management practice. Below is a table comparing the number and ratio of employees by sex and type of employment between 2007 and 2015.

Screen Shot 2014-12-09 at 10.53.23 pm

As could be seen from the table above, although the ratio of regular workers has dropped slightly from 64.4 to 61.8, regular workers remains to be the largest proportion of the Japanese work force. This is one of the reasons why Japan’s economy triumphs.

Of course, solving the problem arsing from employment insecurity would not completely solve the problems of the Precariat class, as there are other problems like migration. But lifetime employment will definitely helping the case.

Venus Chan

Reference:

Guy Standing, The Precariat: The New Dangerous Class, Bloomsbury Academic, 2011, pp. 1 – 25

Cole, Robert E., Permanent Employment in Japan: Facts And Fantasies, Industrial & Labout Relations Review, Vol. 26, Issue 1(1972) : 615-630. Print.

Matanle, P. and Matsui, K. (2011) Lifetime employment in 21st century Japan: Stability and resilience under pressure in the Japanese management system. In S. A. Horn (ed.) Emerging perspectives in Japanese human resource management, Berlin: Peter Lang: 15 – 44.

Japan’s Employment Status Survey, Statistics Bureau. [online] Available at: http://www.stat.go.jp/english/data/shugyou/pdf/sum2012.pdf [Accessed 28 November 2014]

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