The End of Jobs for Life? Corporate Employment Systems: Japan and Elsewhere

"It is not only in Japan that traditional employment systems are being called into question. It has become conventional wisdom on the OECD conference circuit that we are entering a new era of intensified global competition in which only the most and quot;flexible" firms can survive. 'Flexibility' and the elimination of rigidities, particularly labour market rigidities, became, in the mid-1980s, the keynote of prescriptions both for lack of competitiveness and for rising unemployment. Even earlier reservations about the desirability of preserving a "core" of stable, long-serving, committed workers, differentiated from a flexible "periphery" have given way to prescriptions for wholesale 'down-sizing.' There is a flexibility trade off. Concern with labour market flexibility -- especially managers' ability to hire and fire at will -- is strengthened in the Anglo-Saxon economies by the inflexibility of the financial markets they face. Japanese firms, being more insulated from the short-term demands of shareholders, have hitherto been able to afford more 'rigid' employment systems from which they gain the advantage of employee commitment and cooperative and flexible attitudes to work. But today the competitiveness/flexibility concern grows in Japan too. The lifetime employment/seniority-constrained pay and promotion system is under attack. Advocacy of change is common; assertions that wholesale change has already taken place almost equally common. The reasons are to be found partly in the objective situations of many firms after four years of recession, partly in a loss of self-confidence and a 'resurgence of the American model.' Actual change seems in fact to be marginal, but there are a number of grounds for expecting change in the future: value change -- greater affluence, diminished work ethic, and diminished egalitarianism; the possible resurgence of shareholder power; the declining influence of unions; the declining 'intellectual quality' of blue-collar and routine white-collar workers; increased inter-firm competition and the reduction of industry cartel understandings; slower growth; low wage competition, particularly in future from China, and the "hollowing-out" response thereto. Those who have a stake in Japan's "employee sovereignty" jimponshugi, and would be reluctant to see it slide into just another version of "shareholder sovereignty" Anglo-Saxon capitalism, might be expected to be proposing legislation to bring company law in line with current Japanese reality. No one seems to be doing so."