The Particular Features of the Employment System in Japan

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The Particular Features Of The Employment System In Japan

One of the unique and well known features of the Japanese employment system is permanent employment for workers. Japanese corporations responses to recessionary periods provide an opportunity to sort out the myths from the realities of the Japanese permanent employment system.

During recessions Japanese companies forced to reduce their costs achieve reductions in several ways. First, they reduce the number of women and temporary workers they employ. During the recession that followed the 1973 oil shocks female employment dropped by eleven percent; more then five times the drop in male employment. It was easy to reduce female employment because women even if they hold permanent positions are thought of as transitory workers who will leave the workforce when they get married. Female and temporary workers are a safety valve for Japanese companies that allow them to reduce costs in the short-term without firing permanent male workers. The second way Japanese companies reduce costs is by giving early retirement to senior workers at the company. Many of these workers forced into early retirement then take up farming as is the custom in Japan for retires. Getting rid of senior workers is one the most effective tools companies have of reducing costs because these workers have more seniority and thus make more money then the average worker. Japanese companies also are able to cut costs during recessions by reducing or eliminating bonuses paid to workers, cutting down on hiring of new workers, eliminating the farming out of work to subcontractors, transferring workers internally with in the company to subsidiaries, and reducing profit margins to levels that many American companies would find intolerable.

Japanese companies response to recessions shows the benefits and disadvantages of their employment system. Some of the benefits are that loyalty and labor relations are very good....
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