The tragic limitations to Japan’s lifetime employment system

shukatsu-seminarSince the suicide of a young female employee at advertising giant Dentsu in December 2015 was deemed to be due to overwork, there has been a rash of articles in the Japanese media asking whether it’s time to change Japan’s lifetime employee “seishain” (regular or proper staff) system (previously blogged about here).

Nikkei Business described the main characteristics of the seishain system as:

  • No job role boundaries
  • Long work hours
  • Pay increases based on seniority

Which results in:

  1. Strict terms of employment, so when there is an an economic downturn, the employee can be reassigned
  2. Seishain as fixed costs, so it is difficult to transfer over non-regular staff into the system
  3. Seishain not being hired into a role, but into the company, so you do not have transferable skills which will enable you to work elsewhere
  4. Irrational human resource allocation because of features of the system such as retirement from line management at 55
  5. Difficulties in utilising seishain who have household or elderly care duties
  6. A reduction in pension and health insurance benefits because of transferring to a smaller company from a larger company
  7. The risk of losing the element of salary that was based on seniority if you change employers
  8. A lack of workers shifting from dying industries to growth sectors

There is still a big pay gap between seishain and non-seishain, and yet the real average pay of all employees in Japan has fallen since 2005 (with 2002 as the base=100, 2015 = 95).

30% of Japanese men and 10% of Japanese women work more than 49 hours a week, compared to 17% in the USA, 18% in the UK for men/6% for women, 16% of German men/4% German women, 15% of French men and 6% of women and 10% of Swedish men and 4% of Swedish women.

The percentage is even higher for Japanese seishain – 40% of men, 20% of women.

A Nikkei internet survey of 1343 Japanese employees revealed that the biggest reason (70%) for overtime was that there was such a volume of work. Just under 40% said there was a lack of people to do the work.  Other reasons were that there were particular features of their work requiring overtime, that there were too many meetings, that it was expected of them, that it was difficult to go home if others were working and the least popular reason was “in order to increase pay”.

But as one of the participants said in one of my seminars last week – Japanese employees are very expert at stretching their work out so that overtime becomes necessary.  The urge for 100% perfection in the tiniest details is also a root cause I would say.

There are signs of change – some companies have started paying part timers and contract workers exactly the same as seishain and many companies are trying to improve productivity and reduce working hours.

Prime Minister Abe announced in September a Council for the Realization of Work Style Reform – to tackle 9 areas – listed here – in an attempt to address the limitations of the lifetime employment system.  Interesting to see that “the issue of the acceptance of foreign personnel” is #9.

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