To be accurate, the picture must be qualified with such facts as the following:. But, while job security and compensation are quite favorable for Japanese workers as a whole, the picture does not have the implications a Western businessman might expect.
Instead of a rigid labor cost structure, Japan actually has remarkable flexibility in her labor costs and labor force. What no one ever mentions—and what, I am convinced, most Japanese do not even see themselves—is that the retirement system itself or perhaps it should be called the nonretirement system makes labor costs more flexible than they are in most countries and industries of the West. Actually, most Japanese companies, especially the large ones, can and do lay off a larger proportion of their work force, when business falls off, than most Western companies are likely or able to do.
Yet they can do so in such a fashion that the employees who need incomes the most are fully protected. The burden of adjustment is taken by those who can afford it and who have alternate incomes to fall back on. Official retirement in Japan is at age 55—for everyone except a few who, at age 45, become members of top management and are not expected to retire at any fixed age.
Many companies, strongly backed by the government, are now installing supplementary pension payments, but by Western standards these payments are still exceedingly low.
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Considering that life expectancy in Japan is now fully up to Western standards, so that most employees can expect to live to age 70 or more, this bonus seems wholly inadequate. Yet no one complains about the dire fate of the pensioners. More amazing still, one encounters in every Japanese factory, office, and bank, people who cheerfully admit to being quite a bit older than 55 and who quite obviously are still working.
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What is the explanation? This means that he can be laid off if there is not enough work.
The rationale of this situation is fairly simple. As the Japanese see it, the man has something to fall back on when he retires—the two-year pension. This, they freely admit, is not enough to keep a man alive for 15 years or so. But it is usually enough to tide him over a bad spell. And since he no longer has, as a rule, dependent children or parents whom he has to support, his needs should be considerably lower than they were when he was, say, 40 and probably had both children and parents to look after. If my intent were to describe the Japanese employment system, I would now have to go into a great many rather complicated details, such as the role of the semiannual bonus.
But I am concerned only with what we in the West might learn from the Japanese. For us, the main interest of the Japanese system, I submit, is the way in which it satisfies two apparently mutually contradictory needs: a job and income security, and b flexible, adaptable labor forces and labor costs.
Let us look at the way this is done and draw comparisons with the U. There is, for instance, the Supplementary Employment Compensation of the U. Indeed, it may well be argued that labor costs in U. Increasingly, also, we find in the heavily unionized mass-production industries provisions for early retirement, such as were written in the fall of into the contract of the U.
Still, unionized employees are laid off according to seniority, with the ones with the least seniority going first. As a result, we still offer the least security of jobs and incomes to the men who need predictable incomes the most—the fathers of young families who also may have older parents to support.
Once he has opted for early retirement, he is out of the work force and unlikely to be hired back by any employer. In short, the U. But we get very few tangible benefits from these practices. Also, we do not get the psychological security which is so prominent in Japanese society—i. Instead we have fear. The younger men fear that they will be laid off first, just when the economic needs of their families are at their peak; the older men fear that they will lose their jobs in their fifties, when they are too old to be hired elsewhere. In the Japanese system there is confidence in both age groups.
The younger men feel they can look forward to a secure job and steadily rising income while their children are growing up, the older men feel they are still wanted, still useful, and not a burden on society. In practice, of course, the Japanese system is no more perfect than any other system. But the basic principle which the Japanese have evolved—not by planning rationally, but by applying traditional Japanese concepts of mutual obligation to employment and labor economics—seems to make more sense and works better than the expensive patchwork solutions we have developed that do not come to grips with the problem itself.
Yet we have not obtained what the Japanese system produces, the psychological conviction of job and income security. Today there is talk—and even a little action—in U.prehtioupliconun.tk
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Under current conditions, these men may be expected to be laid off when they qualify for early retirement. Why not give them the right to come back out of early retirement and be rehired first when employment expands again? Some such move that strengthens the job security of the younger, married employee, with his heavy family burdens, might well be the only defense against pressures for absolute job guarantees with their implications for rigid labor costs.
Even more important as a lesson to be learned from the Japanese is the need to shape benefits to the wants of specific major employee groups. Yet practically all these benefits have been slapped on across the board whether needed by a particular group or not. Underlying our entire approach to benefits—with management and union in complete agreement, for once—is the asinine notion that the work force is homogeneous in its needs and wants.
As a result, we spend fabulous amounts of money on benefits which have little meaning for large groups of employees and leave unsatisfied the genuine needs of other, equally substantial groups. This is a major reason why our benefit plans have produced so little employee satisfaction and psychological security. That it may be the wrong one here is indicated by the fact that acceptance of change is by no means general throughout Japan.
This is in sharp contrast to our usual Western practice of training a man only when he has to acquire a new skill or move to a new position. Our training is promotion-focused; the Japanese training is performance-focused. Second, the Japanese employee is, for the most part, trained not only in his job but in all the jobs at his job level, however, low or high that level is.
To illustrate:. It would take a fat book on Japanese economic and industrial history to explain the origins of this system—though in its present stage it is just about 50 years old and dates back to the labor shortages during and right after the First World War. It would take an even fatter book to discuss the advantages, disadvantages, and limitations of the Japanese system. The limitations are very great indeed. For example, the young, technically trained people—scientists and engineers-resent it bitterly and resist it rather well. They want to work as scientists and engineers and are by no means delighted when asked to learn accounting or when shifted from an engineering job into the personnel department.
Moreover, there are exceptions to the rule. Such highly skilled and highly specialized men as papermakers and department store buyers usually are not expected to know other jobs or to be willing to fit into them. But even these types of workers continue, as a matter of routine, to perfect themselves in their own specialty long after any training in the West would have ended. One result of the practices described is that improvement of work quality and procedures is built into the system. A Japanese employer who wants to introduce a new product or machine does so in and through the training session.
As a result, there is usually no resistance at all to the change, but acceptance of it.
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A second benefit is a built-in tendency to increase productivity. Then we conclude that he has mastered the job and will need new training only when he moves on or when the job itself is changed. When a learning curve reaches the standard, it stays on a plateau. Not so in Japan. The Japanese also have a standard for a job and a learning curve leading up to it. Their standard as a rule is a good deal lower than the corresponding standard in the West; indeed, the productivity norms which have satisfied most Japanese industries in the past are, by and large, quite low by Western measurements.
But the Japanese keep on training.
In the West we are satisfied if the older worker does not slacken in his productivity. Declining performance is a problem, too, in some Japanese industries; young women assembling precision electronics, for instance, reach the peak of their finger dexterity and their visual acuity around the age of 20 and, after age 23 or so, rapidly slow down. This is one reason that the Japanese electronics industry works hard to find husbands for the girls and to get them out of the factory by the time they are 21 or But on the whole the Japanese believe that the older employee is more productive; and their figures would bear this out.
With pay based on seniority, the output per yen of wages may be much higher in a plant in which the work force is largely new and young. But output per man-hour is almost invariably a good deal higher in the plant that has the older work population—almost the exact opposite of what we in the West take for granted. In effect, the Japanese apply to work in business and industry their own traditions.