This paper describes the labor market in the sector of small and medium-size firms1) in the service industry. Japanese-style employment practices are often described as involving long-term employment. However, such employment occurs mainly in the large-scale sector. However, the realities of the labor market relevant to Japan's small and medium-size service enterprises (which employ the majority of Japan's employees and in recent years have exhibited remarkable resilience in terms of employment) have not so far been very well studied. This paper consists of the following two parts. The first simply compares workers at Japan's small and medium-size enterprises with those at Japan's larger enterprises in order to identify what characterizes the labor force currently employed in smaller-scale service enterprises. The second part describes the labor market for small and medium-size services and the career development of workers, including their employers, of small and medium-size services while utilizing the outcome of a 1997 survey conducted by the Japan Institute of Labour (JIL)2).
A breakdown of the labor force of people who have changed jobs by firm size reveals that 12.7 percent are employed at firms with 1,000 or more employees; 9.3 percent at firms with 300-999 employees; 15.6 percent at firms with 100-299 employees; 22.8 percent at firms with 30-99 employees; and 36.2 percent at firms with 5-29 employees. By sector, 0.1 percent are in mining; 14.2 percent are in construction; 21.0 percent are in manufacturing; 0.2 percent are in electricity, gas and heat supply; 9.0 percent are in telecommunications; 21.3 percent are in the wholesale and retail trade, and eating and drinking establishments; 3.1 percent are in finance and insurance; 1.1 percent are in real estate; and 29.8 percent are in services. This indicates that small and medium-size enterprises and services employ many of the people who have changed jobs (Ministry of Labour, Employment Trends Survey 1996)3).
Comparing workers at large enterprises with those at small and medium-size enterprises (Table 1), several points may be made. First, for male regular employees in nearly all age groups, the proportion of those who changed jobs was slightly less than 20 percent at large enterprises, but slightly more than 70 percent at small and medium-size service enterprises. As for the number of job changes, workers at smaller-scale service enterprises changed their jobs more often than did their counterparts at large enterprises. Second, regarding tenure for the same employer, employees have longer tenure at large enterprises and shorter periods of tenure at small and meium-size enterprises. Overall, it is fair to say that smaller-scale service enterprises have fewer workers on their payrolls who are likely to settle down.
These facts suggest workers in Japan's small and medium-size service enterprises may have a different labor market than their counterparts in Japan's larger firms. What career paths have those in the small and medium-size firms followed? What do they think about their working life in the years to come? These questions are considered below.
Workers are the major actors in the labor market. One career option for some workers is to become their own independent boss. More than 90 percent of proprietors before becoming entrepreneurs were employed workers. About three-quarters are ex-employees of small and medium-size enterprises having 299 or fewer employees. Moreover, 47.6 percent said their last job was in the same industry as they are currently running their business, 40.2 percent said they were engaged in the same job as they presently perform as an entrepreneur. Thus, not a few developed their present know-how and skills in a business or job similar to that in which they are presently engaged.
How did they become entrepreneurs? The largest number (38.3 %) said they switched from being employed to establish their own business; 18.5 percent succeeded in a family business; 10.7 percent started their businesses as a related firm or a subsidiary tied to a parent company; 9.9 percent started their own businesses distinct from their family's business; and 9.5 percent were promoted within the firm or special corporation to head the operation. What motivated these entrepreneurs to run their own business? About 44.3 percent said they wanted to utilize more fully their own ability; 35.3 percent said they wanted to give full play to their skills and expertise; 17.7 percent noted they could earn more income. That factors involving self-realization exceeded economic considerations deserves much attention.
Table 1: Job Change Experiences and Tenure (for male regular employees)
|Average age||Previous change of job||Number of job changes||Years of continous employment with present employers|
|Large Enterprises (N=63)1)||38.9||19.0||80.8||66.9||19.9||13.2||15.2 (16.2)|
|Small and Medium-Size Enterprises (N=4774)2)||38.8||71.0||29.0||43.0||23.8||30.5||9.6 ( 9.0)|
|Notes:||1)||Data for the large enterprises are taken from Ministry of Labour, Nihonteki Koyo Seido no Genjo to Tenbo (Current Situation of the Japanese-Style Employment System and its Prospects) (1995). The enterprises for which employees work have an average of 3,700 employees.|
|2)||Data for small and medium-size service enterprises are taken from Japan Institute of Labour (JIL), Sabisugyo no Kei-ei Kakushin to Jugyoin Fukushi (Management Innovation and Well-Being in Services) (1997). The enterprises have an average of 50 employees (including part-timers). As the data on employees at large enterprises are available only for male regular employees, the data presented here on small and medium-size service enterprises are also for just male regular employees.|
|3)||The parenthesized figures are from the Ministry of Labour, Chingin Sensasu (Wage Census) (1996). Data on large enterprises are for all male employees at enterprises with 1,000 or more employees. The data on small and medium-size service enterprises are for all male employees in enterprises with 10-99 employees.|
The first thing to be mentioned regarding the career paths of workers in the small and medium-size service sector is the fact that few new employees in the small and medium-size service enterprises are being employed for the first time. In other words, those who started working life at their current job immediately after leaving school are in the minority. This means that the majority of workers experienced some kind of job before finding their present job. They had changed jobs 2.2 times on average. Where did they work immediately before taking their current job, and why did they quit their previous job and change to their current job?
|Notes:||1)||Under the Basic Law on Small and Medium-Size Enterprises, small and medium-size enterprises mean firms capitalized at ¥100 million or less and having 300 or fewer employees in manufacturing, and firms capitalized at ¥10 million or less and having 50 or fewer employees in the retail trades and services.|
|2)||In its 1997 Survey on Management Innovation and the Well-Being of
Employees in Services, the Japan Institute of Labour received replies from
5,307 firms (22.6%) and from the 9,467 employees (22.3%), in small and
medium-size service enterprises with 1-299 employees across the country.
Those in 18 service areas were surveyed. The areas include private tutorial
schools, barbershops and beauty salons, advertising agencies, waste disposal
services, machinery repair services, software services and hospitals.
Employees'fundamental attributes were as follows.|
There were 4,884 males (51.7%) and 4,550 females (48.1%).
The educational spread was college education or higher (28.0%), vocational school education (20.4%), technical senior high-school and junior college education (11.5%), senior high-school education (35.5%), and junior high-school education (4.2 %).
Regular employees accounted for 94.2 percent of the sample, part-timers and arubaito (temporary workers) accounted for 4.8 percent.
Except Tables 1 and 2 (which are data for regular male employees), data in the text denote totals for the entire sample. Breakdown by industry and job are omitted.
|3)||The Ministry of Labour's Koyo Doko Kanri Chosa (Employment Trends Survey) is carried out twice a year among establishments with five or more regular workers. Those who are counted as having had another job are those who were employed elsewhere during the year before joining the current employer.|
|4)||Further study will be necessary in the years to come. When considering a labor union or changing jobs as a means of maintaining and improving their working conditions, it may be that some form of labor mobility will prove to be the better option for those at Japan's smaller enterprises. Incidentally, of the enterprises surveyed, only 4.7 percent had a labor union.|
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