A new employment category, the ‘limited permanent employee’ has emerged in locations such as Singapore, where there are many locally hired Japanese employees, according to Diamond Online. They feature an interview with an anonymous former ‘limited permanent employee’, Mr A, of a major Japanese securities house’s Singapore subsidiary. According to Mr A, the category was somewhere between a contract worker and a permanent employee, and involved being treated in a way that resulted in him leaving.
Diamond journalist Norifumi Yoshida believes this category looks like to catch on in Japan too, to keep a cap on the ever expanding, insecure and badly paid “contract staff” category, in accordance with the government strategy for revitalising economic growth, while at the same time being easier to lay off than the traditional permanent, lifetime employee.
Mr A had been working for a major Japanese manufacturer, and was posted to their Singapore operation. He left the company while still in Singapore. He tried to start up his own IT company, but that failed. Then he heard that the Japanese securities company was looking for an new IT manager so interviewed for the position and was appointed. He was 35 when he joined the company, on around Y3.5m (US$28K) which was at the higher end for Singapore. However the Japanese expatriate IT manager, also 35, was earning around 3 times this.
There were around 150 expatriates from the Japan headquarters, including around 20 general managers who were in charge of the front and back offices, aged around 35 to late 40s.
These 20 had graduated from Japanese universities and joined the securities house straight after graduation. They had worked in Japan for 10 or more years and spoke good English. They initiated sales of securities or bonds and negotiated with local Singaporeans. They were also in IT or accounting or finance. They were good all round players but not professionals or specialists.
There was a second group of people amongst the 150 or so ‘permanent staff’, the front office people – 40 or so traders. They were ‘Anglo Saxon’, types who had worked for American or British firms previously, usually having been transferred to Singapore with those firms. They frequently changed employers, in some cases up to 10 different employers. There were a few Japanese traders, but most of them were not, and they were mostly rewarded through commissions and were often paid more than the Japanese expatriates – several hundred thousand dollars on average.
Mr A is not against this as such – in fact he points out that without these kinds of salaries, it would not be possible to hire highly skilled people, and if the company tried to stick to old ways of equal pay for all, it would surely collapse. Yoshida wondered whether Japanese companies aren’t using this as an experiment, and soon this system will be imported back into Japan.
Mr A felt the unfairness was more around how the third group of ‘permanent staff’, the ‘limited’ permanent staff, were treated. These people were mostly locally hired Singaporeans, on low level jobs, and accordingly paid low wages, with no prospect of promotion or transfer. At such low wages, it was not possible to hire high quality local staff anyway. The head of the IT department was Singaporean, and of the 12 staff in the department, 2 were Japanese expatriate staff and of the remaining 10, Mr A was the only locally hired Japanese. “Locally hired Japanese don’t last long. After 6 years I felt I was turning into an idiot, so I left”.
Both Mr A and the interviewer agree that treating all limited permanent staff the same way, without opening up any opportunities or pay rises to the more high potential or high performing staff will result in more dissatisfied and overworked locally hired specialists, who will keep quitting their Japanese companies. Mr A clearly feels very bitterly about generalist lifetime employees, who have no specialist knowledge of IT, being paid three times as much as him, plus expatriate allowances. “Globalization means the company has to become more focused on competency.”
Personally, I’m not so sure this is a new thing for Japanese companies in the global financial services sector. I remember a friend of mine from university being warned after he joined a Japanese securities house in London in the late 1980s, that locally hired staff were either “whores” or “coolies”. And locally hired staff in Japanese companies in quite a few sectors will ruefully recognise the “no prospect of promotion or transfer” limited permanent staff category.
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