Without employment security, much of the effectiveness of Japanese employment relations would be undermined

I associate this question with the negative effects employment security has on Japanese employment relations and the opportunity that can be realized by a move away from the practice. Labor mobility is inhibited in Japanese employment relations and dependency is created on the firm. Firm specific skill sets and unemployment threaten the Japanese workforce. A relatively small proportion of Japanese workers actually experience employment security, but the perpetuation of the practice currently requires firms to make decisions that impact employment relations throughout the workforce.

The consequences for the younger segment of the working age population are particularly salient. This essay will show that without employment security Japanese employment relations will be more effective. Employment security can be associated with inflexibility and high labour costs in addition to increasingly disillusioned younger generations of the workforce in Japan. Nikkeiren – the Japanese Federation of Employers’ Associations points to the current inflexibility in employment conditions as a cause for preventing Japan from realizing a greater role in the global market (Nikkeiren cited in Benson and Zhu 2005 p53).

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The high cost of labour in Japan is forcing organizations to move operations overseas and Nikkeiren associates these costs with the practices of employment security and nenko (Nikkeiren cited in Benson ; Zhu p. 53). If the traditional practice of employment security can be phased out and the public’s expectations of such altered, the labor market could see a healthier future. Appealing to younger generations of the Japanese workforce is increasingly becoming a challenge for Japanese businesses (Kuwahara 2004 p. 294).

Today younger Japanese workers tend to not hold much faith in the investment of a career in a single firm (Dore cited in Debroux 2003 p. 59). Recent college graduates are making choices that do not support a positive future outlook for Japanese employment relations. Evidence of job-hopping and in many cases refusal to participate in the workforce leaves the Japanese labour market increasingly vulnerable to instability. Young people age 15-25 have the highest unemployment rate in Japan, around 10% (Gross & Weintraub 2004 p. 9).

Benson identifies high unemployment in this sector along with an internal labor market as a failure in the traditional employment system (Benson & Zhu 2005 p. 52). Employment security was sustainable in periods of high growth (Kumazawa & Yamada 1989 p. 120). However, in order to effectively meet the demands of market cycles, and appeal to the next generation of the workforce, a move away from employment security is needed. In actuality, only a small proportion of workers experience traditional employment security in Japan (Koshiro cited in Kumazawa & Yamada 1989 p. 118).

Employment security is primarily concentrated in larger corporate environments (Rebick 2005 p. 27) and only among regular employees. Non-regular workers constitute over 30% of total workers in Japan and do not receive the benefits that regular employees do (Gross &Weintraub 2004 p. 4). Medium and small firms have traditionally not operated with any form of employment security or even labor representation (Kumazawa & Yamada 1989 p. 104). The practice of hiring more and more non-regular employees is growing in Japan (Gross &Weintraub 2004 p. 4) as a means of flexibility for employers (Kuwahara 2005 p. 294).

Firms are employing the approach to save on costs that can be associated with benefits and long-term commitments (Kuwahara 2005 p. 294). A move away from employment security practices would not have a direct impact on the positions of a large number of Japanese workers but would instead be more associated with the adjusting of expectations of work in the culture as a whole. Such a change could allow large firms to more easily adapt to market fluctuations and provide labor with the opportunity to develop more robust skill sets and experience. In a global market place labour needs to move freely to respond to changes in demand and opportunity.

A career in a single organization makes for a firm specific skill set that is less transferable should an employee be made redundant (Rebick 2005 p. 15). Individuals who do find themselves in such a situation in Japan often find they have experience that does not easily translate to other organizations (Koike cited in Kumazawa & Yamada 1989 p. 116). In large organizations employees generally enjoy a high degree of on the job training, extensive career planning and guidance (Katz & Darbishire 2000 p233). When these individuals do find themselves out of work they will be without the direction or support they have come to rely upon.

The effect is experienced in a wide range of professions. Long tenured employees in both the blue collar and white collar sectors who have invested themselves in one company find their skills simply do not have a great deal of value outside of the firm (Salmon 2004 p. 71). These individuals can find it difficult to even communicate their experience to potential employers (Rebick 2005 p. 29) having previously focused on their association with the firm, not their profession (Kumazawa & Yamada 1989 p. 104). There is cause for concern here when the economy is calling for labor mobility (Rebick 2005 p. 29).

The concept of employment security in Japan is reinforced by labor law, making the conditions under which an employee may actually be made redundant very strict and difficult for organizations to respond to changes in the market (Rebick 2005 p. 19). Employment security would appear to have increasingly less appeal to firms and greatly impact their competitiveness. The framework of employment security does not appear to create conditions for effective employment relations on the supply or demand side of labor. Narrow skill sets coupled with organizational dependency contribute to the challenge Japan faces in employment relations.

Employees in smaller firms are free to focus on their skill attainment and enjoy greater flexibility when it comes to changing jobs (Kumazawa & Yamada 1989 p. 107). Such workers, it is suggested, may be motivated by the fact that they can even at some point work for themselves (Kumazawa & Yamada 1989 p. 107), an option seemingly quite unlikely for regular employees in large firms. As Whittacker notes, entrepreneurial activity is a major weakness in Japanese business but it could only be encouraged if there is considerable departure from current industrial policy (Whittacker cited in Benson & Zhu 2005 p54).

There have traditionally been strong mechanisms in place in large firms that discourage leaving jobs, such as the forgoing of valuable pensions and the high earnings that come later in a career under employment security (Rebick 2005 p. 18). Under these conditions those that are covered by employment security do not have a great deal of flexibility in their careers as it relates to choice of career paths or assignments (Kumazawa & Yamada 1989 p. 120). Employment security creates labor dependency on the firm and often can translate into coercive practices by employers (Rebick 2005 p. 8). To keep a position in a large firm employees frequently are required to relocate to assignments that are away from their families or are shifted to other operations within the organization (Rebick 2005 p. 16).

Transfers do not necessarily suit employees’ interests nor match their skill sets but are done at management’s discretion and to management’s advantage (Kumazawa ; Yamada 1989 p. 108, 121). Company housing is another example of how a dependency is developed in large enterprises (Rebick 2005 p. 8). Working and living in associated environments blurs the line between work and family life. Today’s younger generations, who have grown up with such commonplace scenarios as absent fathers in distant posts, and childhoods in company dormitories could likely see such conditions as less than appealing and impact their choices as they look to start careers. Today the younger segment of the Japanese workforce is faced with a challenging dilemma, one of where to make an investment.

Many young people in fact are choosing not to enter the workforce or to delay their entrance (Nomura 2005). The NEET population or those Not in Education, Employment, or Training is growing rapidly in Japan; the Japanese Ministry of Health and Labor estimates the NEET population to have been 520,000 in 2003 and expects that it will nearly double by 2010 (Nomura 2005). There is great concern over what the effect will be on economic growth and the impact it will have on the Japanese social welfare system (Koshoji 2005).

Younger workers harbor a great deal of mistrust in the employment system and are disillusioned with limited prospects that promise a distant payoff (Debroux cited in Benson & Zhu 2005 p. 52). Young college graduates are leery of jobs in big companies and more inclined than their parents to take risks and assert their individuality (Jacoby 2004 p. 11). The collectivist orientation of Japanese culture can be associated with Japan’s affinity for group membership identity with the firm (Rebick 2005 p. 18).

Yet today’s affluent Japanese of all ages are more individualistic than were affluent Japanese of earlier generations (Jacoby 2004 p. 11). The interest in mobility and building skills in a variety of environments could be contributing to the new category of workers that are known simply as “job-hoppers” or freeters, who number two million and growing in Japan (Nomura 2005). Kuwahara suggests, this labor mobility may be seen as “job shopping” but it still represents a major departure from traditional employment participation (Kuwahara 2004 p. 298).

Negative stereotypes persist when it comes to those who have frequent job changes, just as it does for those who leave large firms and get labeled as “deserters” (Dore 2000 p. 40). It is therefore not surprising that following a Ministry of Health, Labor and Welfare survey in 2004 that 30% of companies surveyed said that they would not look positively on job-hopper applicants and that they would see such applicants as lacking responsibility, not having specific or developed skills and unpredictable in terms of any commitment they would make to an employer (Gross & Weintraub 2004 p. ).

Perhaps with a shift away from the importance placed on employment security younger generations will see work as more attractive (Nomura 2005). The absence of employment security and fewer managerial opportunities may mean as Debroux suggests, that talented people will see an advantage in changing jobs rather than accruing skills that they see as perhaps unmarketable and too company specific (Debroux 2003 p. 226). It remains difficult for young people to begin careers and for firms to attract new talent when opportunities are limited to non-regular positions.

By perpetuating the practice of employment security, organizational dependence and a lack of labor flexibility may continue to exist in Japanese employment relations. While the practice only covers a privileged few an impact is felt throughout the workforce. Upholding employment security leaves large firms with little choice other than to create non-regular positions in the current economic environment. The cost has been limited opportunity and disillusion for the younger segment of the population, unemployment and a lack of entrepreneurial opportunity.

By moving away from the constraints of employment security labor and management could experience increased flexibility, more robust skills and less dependence. The younger generation of the Japanese workforce could in particular, realize a greater variety of skills and experience in a diversity of environments and perhaps better adapt to the ever-changing global market. Under the traditional model of employment security many have instead chosen not participate in the job market. Without employment security Japanese employment relations will be more effective.