Remodeling Corporate Japan

Dan Carullo

Dr. Sullivan

INT 200-01

April 17, 2005

Remodeling Corporate Japan

The prolonged recession that Japan has been fraught with since the 1990's has impacted Japan as a nation in several ways. Foremost among these are the decline of wages and inflated cost of living. To cope with rising expenses, a company only has a few options. What is often seen in the United States is a series of lay-offs, and often older employees are pressured into early retirement. When positions need to be filled, lower salaried younger workers are employed. Due to the traditions of the Japanese business culture, this is not the method of choice.

Traditionally Japanese firms grant promotions and raises based on loyalty to the company, rather than a merit based system as in the US. As such, from a financial standpoint, it would seem even more reasonable to use the US approach. However, the sense of loyalty to the elder employees is too strong for this to be the immediate course of action. Instead, have chosen to cease hiring at entry-level positions, and when necessary lower wages. There are two significant effects caused by this: the workforce's age concentration is shifted significantly upward (See figure 1-A, 1-B), and the younger generation is further disillusioned from the idea of joining a firm.

To further complicate matters, there is a purely cultural reason for young Japanese not to begin careers. Japan's emerging generation post-university youth is often likened to America's Generation X, a generation of 'slackers'. This generation of free-spirited, idealistic, and often lazy group counter-culture citizens does not look wistfully upon a future in business. Like Generation X, Japan's youth would prefer to work part rather than time than take on an entry-level position to start a career. On top of this, youth receive little pressure from the family to get out of the house and start their own life; "The economy may be wounded, but today's Japanese are still extraordinarily well off. Families can support unemployed adult children at home nearly indefinitely," (Economist, 2). This leaves Japan with a workforce consisting primarily of middle aged to elderly men, from the post war generation, with the up and coming generation having neither a great opportunity nor great interest in the paths their parents took in life.

Another cause for concern in Japan's workforce is the unemployment rate of women. In examining the demographics of national employment (refer to figure 1-B) one can see that more than one third of women ages 20-60 are unemployed. Some of this can be explained as a result of the 'glass ceiling' that is very evident in female workers' wages, some can be wrote off to postwar generation of shufu - or housewives - that managed domestic affairs while the Japanese males worked to rebuild the economy. However, another factor is responsible for the other half of the female workforce's difficulties (ages 20-40). While young men can get away with living with their parents far into young adulthood, it is typical for young women in Japan to remain living at their parents' home until they are married. With the rising cost of raising children youth are taking longer than ever to marry, and are succumbing even more than males are to the lure of furiitaa - part-time - work.

In their "Students, Slackers, Singles, Seniors, and Strangers: Transforming a Family-Nation", Kelly and White predict, "The furiitaa and other irregulars portend changes to work place relations, corporate human resource policies, and individual career tracks," (Kelly/White 13). There are several ways in which both Japanese firms and workers can attempt to resolve the current situation. The first thing required is also the most obvious: the ability to adapt. Japanese culture is very tradition oriented, and throughout history they have been slow to begin changes, yet very rapid in executing them. Thus, the Japanese are very capable of adapting to this new socio-economic problem; they simply