Top Picks || Arts & Entertainment || Business & Economy || Education & Society || Science & Technology || Sports & Fashion || Search || Back Numbers NEW WAYS TO WORK: Diversification of Japan's Employment Systems November 26, 1998 Forms of employment in Japan are rapidly diversifying. With the combination of low economic growth and an aging population, Japan is seeing growth in such systems as voluntary retirement and annual wage plans, as well as in the number of temporary workers, which has grown more than fivefold during the last ten years. In addition, due in part to requests from the industrial sector, many restrictions on the employment of temporary workers are scheduled to be scrapped in July 1999. In the future, the number of these workers is expected to grow enormously. Japanese-style Employment Practices Wavering In 1997, one major hotel chain introduced a non-regular employee system. Work categories include guest relations, restaurant operations, and special events planning: Working conditions and fringe benefits are the same as those of permanent employees, but the longest term of employment is three years, and contracts are renewed every year. Furthermore, these non-regular employees cannot become permanent employees. Even so, the number of applicants for these positions in 1997 was 10 times greater than the approximately 25 people the hotel planned to hire. In spring 1998 a major electronics maker took a slightly different approach, hiring engineers and researchers as fixed-term contract employees and paying them greater compensation than regular employees. This wave of diversification in the employment system has reached into the senior levels. The past several years have seen an increase in the number of firms with systems that encourage voluntary and early retirement: When employees reach a certain age, they can choose to step down before the usual retirement age and receive an extra retirement benefit. There has been striking growth in recent years in the number of companies introducing annual wage plans. Under these plans, yearly employee compensation is decided by how well an employee fulfilled occupational objectives in the previous year. In the past, most firms limited this system to managerial positions, but recently it has spread to rank-and-file employees. When a major newspaper conducted a survey of 200 leading firms in spring 1998, 65 firms, or one out of three, said they had introduced annual wage plans. Part of these changes in employment and wage systems are due to a weakening of the Japanese-style practice of lifetime employment, where the longer a worker stays with one company, the better his or her situation becomes. Especially in the 1990s, with low economic growth caused by the bursting of the economic bubble coupled with the rapid aging of the population, lifetime employment and seniority-based wage systems became difficult to maintain in terms of salary costs, hiring ability, and internal personnel structure. Growth in Number of Temporary Workers One symbol of the growing diversification in employment systems is the increase of temporary employees. One man who registered with a temporary agency upon graduating from college five years ago is now at his third workplace, a Tokyo-based computer software firm. As for why he chose this path, he explains: "I don't want to be tied down to one company, and I also don't want to have to worry about organizational hierarchies." His salary is somewhat lower than that of regular employees, and he does not receive the fringe benefits or company insurance that full-time employees do. But he sees it in a positive light, saying that he prefers this over being stuck with one company for his entire life. The number of temporary employees started to grow in the 1980s, and this growth accelerated in the 1990s. According to a Ministry of Labor survey, as of the end of March 1997 there were approximately 720,000 temporary employees, whereas 10 years earlier there were 140,000. Added to conditions on the part of employers, this growth was spurred on by a growing desire among the younger generation to adjust their work patterns to their own preferences as much as possible. At present, the hiring of temporary workers is limited to 26 occupations that require specialized skills, including software development, interpreting, translating, stenography, and secretarial work, with the aim of guaranteeing a sufficient worker base in what are seen as supplementary fields. The government plans to propose legal revisions to liberalize these restrictions, however. It hopes for approval at the Diet convening in January 1999, so that the revisions can be implemented by July. It seems certain that this will lead to a huge increase in the number of temporary workers. The flip side of increased hiring freedom on the part of employers, however, is the loss of advantage for workers. The revised law will add a new condition obligating employers to make efforts toward directly signing employment contracts with temporary workers whom they have employed for one year or more. Ways to ensure steady employment for a wider range of workers should become a major issue in the future. Back to Main Index Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government. Ministry of Foreign Affairs   Japan Information Network