Every week in central Tokyo, a group of middle-aged men gather to shed their old corporate identities. Most were managers in large Japanese companies, but were either let go or have taken early retirement. The Institute of Social Human Capital, a business school, helps them reset their lives. In lesson one, old job titles are banned: out with bucho (middle manager); in with nonsense names like chiroriro.
For years, these men rode a career escalator in big companies that rewarded them less for skills than for loyalty and hard work. With that system contracting, they must rekindle their ambition and talent. The experience is akin to emerging from prison and casting off the institutionalised habits of a lifetime. In effect, the school tries to cure them of big company disease.
The cliché of jobs for life in Japan has rarely been less true. Fewer than 10% of Japanese companies retain lifetime employment now, according to Diamond business magazine. Reforms introduced by former Prime Minister Junichiro Koizumi a decade ago liberalised the labour market, accelerating the growth of part-time and casual work. Current Prime Minister Shinzo Abe continues supporting that trend.
Since Abe took office in December 2012, the number of irregular workers — often earning less than half the pay of their full-time counterparts with permanent employment contracts — has jumped by over 1.5 million people, according to statistics by the Ministry of Health, Labour and Welfare. Casual and part-time employees number nearly 20 million, almost 40% of the current Japanese workforce.
For international recruitment firms, this is good news. “We are major advocates of temporary, flexible workers,” says Jonathan Sampson, managing director at Hays Specialist Recruitment in Japan, whose parent company operates in 33 countries. The growth of the temporary workforce is a sign that people want to take advantage of rising business confidence but are not yet confident of making long-term decisions, he adds.
“In an economy where there is positivity but uncertainty, it is allowing businesses to respond to the opportunities that are here at the moment,” says Sampson.
The driving forces of workforce casualisation are complex. Rather than being saddled with the costs of keeping workers on payroll for life, corporations are demanding more flexible employment arrangements. Some firms are rewarding workers for merit, rather than length of service; Hitachi, Toyota Motor and Sony have all recently announced a shift away from seniority-based pay scales.
On the supply side, young professional Japanese are increasingly shying away from the job-for-life security sought by their parents (and grandparents) at big firms, say recruiters. For the professionally mobile, the recovering economy offers opportunities: there are 1.2 positions for every jobseeker in the country. Professionals with bilingual skills are in particularly short supply.
Recruiters are helping to fill the gap in payrolls, especially in Japan-based foreign organisations, and in Japanese companies looking for bilingual staff, says David Swan, managing director, Japan & Korea, at Robert Walters. His firm has enjoyed three years of “solid double digit growth” in the country; and Swan expects that to continue, saying, “There is enormous potential for growth in our business.”
Most observers support a system that better rewards talented young workers and that recalibrates the balance away from Japan’s overprotected middle-aged male workforce. Some warn, however, that a more flexible labour market means more winners and losers. Sociologists blame the low quality of new jobs being created under the Abe Administration’s policies for feeding the growth of Japan’s working poor.
Last year, the Japanese government recorded 16% in relative poverty rates — defined as the share of the population living on less than half the national median income. That is the highest on record. Poverty levels have been growing at a rate of 1.3% a year since the mid-1980s. Along the same definition, a study by the OECD in 2011 ranked Japan sixth from the bottom among its 34 mostly rich members.
Casualisation is contributing to a less egalitarian society, concludes Kaori Katada, a sociologist at Hosei University. At the moment, millions of young casual workers still live at home, rent-free, with mum and dad, whose generation drove Japan’s post-war boom. Once that generation passes, she adds, underlying poverty will become more evident.
Swan of Robert Walters says Japan cannot go on overpaying people who don’t deserve to do well and penalising those who do. “One of the problems with the labour market now is that permanent employees are overprotected, and the age-based system means payment-and-reward is stacked in favour of those who are older,” he says. “Deregulation means you get to a point, hopefully, where the rewards are more equality-distributed to young people and to women.” (He underscores that his company has a high placement rate for women.)
Few firms would disagree with that. One problem with the changes taking place, however, is that they may result in less equality by rewarding a minority of skilled high-fliers. Another dilemma is that such corrections work against the government’s inflationary creed. Inflation-adjusted real wages have actually fallen during most of Abe’s tenure, complicating his administration’s plan to raise consumption and end years of overall deflation. As a result, part-time workers have been earning less money.
The outlook for students at the Institute of Social Human Capital encapsulates some of these issues. Few of its graduates can expect to enjoy the same pay, or conditions, that they enjoyed as corporate warriors, now that they have become foot soldiers again. Yet, some alumni with niche skills may do well in a deregulated market, says a director of the institute. “They have to find their own way.”
Recruiters today favour labour reforms that create a truly merit-based system. The biggest change needed, however, is not legislative but cultural, says Sampson of Hays: “We have to work past the stigma that’s associated with temporary contract employment here.” He says any discussion on casualisation must account for two different types of people: “Those who genuinely see the value, the flexibility and lifestyle of being a temporary worker”; and others who desperately want a full-time job.
The latter will take a part-time job for different reasons, he says: to earn a living, “or to gain insights or opportunities that they wouldn’t get [otherwise] — a foot in the door,” explains Sampson. “We speak on behalf of the professional skilled and qualified — people with very niche skillsets.”
On average, he points out that 26% of his company’s temp jobs become permanent positions over two years’ time. “If that’s your real goal — a full-time job — a one-in-four chance is not bad.”© Japan Today