Vol.31-No.02 February 1,1992
Keisuke Nakamura
Associate Professor of Economics
Musashi University
Senior Researcher
The Japan Institute of Labour
1. Features
Seniority based wage system
with merit, long-term employment, systematic in-house training and flexible
transfers within and between workplaces and so on. All this is said to
constitute the components of Japanese-style personnel administration typical
of many Japanese large corporations. In addition to this, hiring management
is still another component which serves to form Japanese-style personnel
administration.
The first feature of Japanese-style
hiring management is that basically, companies employ new school leavers
at a specific period of time. "Hiring new school graduates" means
employing in April of each year inexperienced recruits just out of school
in March, as regular full-time employees. Hiring in midcareer, on the other
hand, refers to employing, as occasion demands, those who change jobs or
who are jobless, at any given time.
It is fair to say that the fundamental
employment policy of many Japanese firms, regardless of size, is hiring
new school graduates at a specific period of time. In actuality, however,
except for the largest corporations, it is difficult to fill all vacancies
with new graduates because of the limited supply of new graduates. The
smaller the company's size, the more the difficulty. Normally, the smaller
the firm the less satisfactory are working conditions and job security
at all stages of working life, thus keeping new school graduates away from
small companies. In fact, large numbers of small-sized firms exclusively
employ midcareer persons due to lack of ability to hire new graduates.
Therefore, the most companies,
except for the largest companies, must hire midcareer people in order to
fill vacancies. Meanwhile, many younger persons quit firms they have joined
immediately after graduation from school. It is thus common for companies
to give the first choice to young persons with little work experience when
they need midcareer recruits. But once again small businesses are put at
a disadvantage in the context of midcareer employment of youths.
As we have observed, the fundamental
hiring policy of many large and middle-sized companies is to employ new
graduates at a specific period of time and young persons in midcareer at
any time they became available. To put it in another way, their first choice
is for young people with little or no work experience. Even small firms,
it is safe to say, have the same ideology, although putting this into reality
is extremely difficult for them.
The second feature is that putting
newly hired young people into specific positions is not a precondition
for hiring. Young people are employed by specific companies, not for specific
jobs. Therefore, the screening criteria used by firms for selecting recruits
are not professional knowledge nor technological skills useful for specific
jobs, but general knowledge and culture, eagerness for work, the will to
work, understanding and judgement, cooperativeness, health and physical
strength. In other words, what is emphasized is whether the recruits can
efficiently improve their abilities through systematic education and training
systems, to what extent they possess trainability, and furthermore, whether
they can work in cooperation.
The aforementioned two features
of hiring administration, coupled with various other ones, constitute what
is known as the Japanese-style personnel administration system, which will
be discussed below. Japan's large and middle-sized firms employ young and
highly adaptable workers with not a little work experience and let them
acquire broad knowledge and technological skills by giving on-the-job and
occasional off-the-job training through flexible inter-workplace transfers.
Their wages rise gradually corresponding with their performance improved
with length of service, while being based on the merit system. The employees
thus will stay with the same company for many years until reaching the
mandatory retirement age.
2. Issues
These features of hiring administration,
on the other hand, create the following two problems. One is concerned
with employment of new graduates, especially, new college graduates, and
the other involves the underdeveloped labor market for those hired in midcareer.
From April through July we see groups of male and female college students
wearing conservative suits on campuses. Most of them, who are seniors,
do not attend class, however. In the wake of job hunting they are on campus
to exchange information with friends or on their way to and from job interviews.
Some make the rounds of 10 or more potential employers, some even as many
of 50. During the job hunting season they have no time to attend class.
The large corporations many of these seniors aspire to join, employ new
graduates only at specific times during the year. If they miss their chance,
they cannot enter their desired firm. Furthermore, once they join the company,
they are naturally expected to continue to stay with it until the age of
mandatory retirement. Accordingly, they need to be very cautious about
choosing the firm. This is a matter of great importance which largely determines
their working career. Perhaps it is quite natural to pump all their energy
into job-seeking activities.
Large companies, on their part,
must screen in order to get the right personnel, based upon the before-mentioned
criteria, from among those college seniors who come in great numbers during
the specific season. Firms must also be caraful about who should be hired,
since it is taken for granted that new recruits will be on the payroll
untill they reach the mandatory retirement age, in other words, since it
is difficult to fire them even if they turn out to be unfit for the companies.
In addition, trainability and cooperativeness are the key elements in the
screening criteria, which cannot be discerned objectively and easily in
quality. As a result, companies need to take time in choosing the right
persons.
The needs on both sides, in
other words for the students and the firm, require that job determing process
be extraordinarily intense during the period of April to July. The frenzy
over job hunting begins to subside around August when companies finish
screening recruits and start promising them employment from April of the
following year, through offers of naitei, or informal guarantees of employment.
College and universitities, on their part, see their functions as halls
of learning to be seriously impaired by this type of process with seniors
hardly attending class. The academic side therefore has to ask businesses
to delay the start of recruiting. Businesses, on the other hand, need to
control their frenzied recruiting. If no specific measures are taken, they
may even need to compete for recruiting juniors or even sophomores. Thus,
an agreement on when recruitment can start has been reached between the
schools and businesses. In reality, however, this has produced no substantial
results since it remains a gentleman's agreement without penalty. In fact,
the 1990 agreement stipulated that August was the month in which hiring
activities would commerce; but company recruiting, in actuality, began
around April and was finished in August at the large corporations.
The abovementioned features
of hiring administration indicate that it is advantageous for both college
seniors and companies to attempt to get a head start in job hunting and
recruiting over the others. Further-more various characteristics of personnel
management, such as hiring management, intrafirm education and training
programs and long-term employment, make it difficult for us to think that
this phenomenon will go away very quickly. The growing demand for college
graduates on the part of corporations, stems from their need to develop
business operations in the face of ongoing internationalization and innovation
in information technology. At the same time they face a predicted decline
in the number of college graduates resulting from slowing growth in population.
On the other hand, there is a symptom of change, as will be mentioned below.
The other issue involving feature
of hiring administration is the underdeveloped job market for midcareer
recruits. This means that the practice of evaluating the vocational abilities
of job hoppers and unemployed persons in order to actively employ them,
has not yet taken root at large and middle-sized companies, thus putting
midcareer employees at a disadvantage in the labor market. However, recent
years have witnessed the problem gradually being solved because the ballooning
of periodicals offering employment information. This has made job information
plentiful for those looking for midcareer jobs. These job-informatin periodicals,
however, mainly are useful for students and young people who change jobs
and who are unemployed. On the contrary they are not oriented toward middle-aged
and elderly women, who are re-enter the job market after completing childrearing
and domestic responsiblities, and older workers, who will continue to work
after they have reached mandatory retirement age. As we have seen, large
and middle-sized companies do not often hire middle-aged and elderly women
and older workers as full-time regular employees. Middle-aged and older
women are given part-time status, not full-time status, and come under
the application of the wage as well as education and training systems that
differ from those of regular full-time workers. Many middle-aged and older
women, however, want to work as part-timers with less heavy responsiblities
and shorter hours rather than regular full-time employees. Accordingly,
there may be no need to make the pattern of part-time employment a controversial
issue. One of the issues involving part-time work is that some persons
can only work part-time despite their desire to work full-time. The greater
problem invloving part-time employment is that there are several types
of part-time work and that the system of personnel management according
to these types has yet to be consolidated. But no further discussion will
be made of this here, since it oversteps the bounds of the main issue.
Many elderly workers, when they seek re-employment after they have reached
the age for mandatory retirement, are not duly evaluated in terms of their
vocational ability and experience and are forced to work in non-skilled
jobs. This is an extremely serious problem, if continued further aging
of Japanese society in the years ahead is taken into consideration.
3. Changes occuring in Japanese hiring practices
Japan's hiring practices and
several accompanying problems are undergoing gradual change. The first
of these changes is as follows. While adopting the fundamental policy of
employing new school graduates, increasing numbers of large corporations
actively employ young persons leaving work a few years after they have
initially entered the job market (the number of such young workers is not
small). Called daini-shinsotsu (literally, "second new graduates"),
or "another class of new graduates," these young persons are
employed by large corporations, together with new graduates. Against this
backdrop lie, it appears, the dwindling number of college graduates in
coming years, rising costs stemming from the overheated recruiting competition
and the growing percentage of young persons who change jobs. But here no
major changes are found in the characteristics of employment of young people
in particular with screening based on trainability and cooperativeness.
In other words, there are no changes seen which will provide a solution
for the issue of the premature labor market for midcareer persons. Yet
the following changes taken place are significant.
The second of these changes
is an increase in shukko, or transfers to subsidiaries and other related
firms from the initial place of employment. Shukko means a job pattern
in which the employee of a certain company signs an employment contract
with another firm to work there (in some cases the employee terminates
employment with the transferring firm). This form of employment is used
for a variety of purposes, such as education and training, improvement
of the management of other companies, strengthening of relations with other
firms, assurance of employment for the elderly and diversification of business
activities. Shukko, except for that of short duration, is a transfer between
firms, or a job change from one firm to another, and this may viewed as
a type of midcareer hiring used by those firms which receive transferred
employees. When the vocational ability of a transferred employee and the
needs of a company are both scrutinized to offer the transferee a job,
a position and treatment commensurate with his or her vocational ability,
the aforementioned disadvantages accompanying midcareer hiring will be
offset, to some extent.
The third change is the rising
number of corporations which promote part-time employees just as they do
regular full-time employees. This trend is observed in the supermarket
companies where there have emerged part-time employees who are promoted
to managerial and supervisory positions. This trend holds out the promise
of application of personnel management similar to that for regular full-time
workers, carrying with it the promise of regular short-time employment.
The fundamental policy of hiring young persons in particular as regular
full-time workers would thus undergo basic change.
The fourth change involves a
rise in the number of the workers engaged in temporary help supply service.
Firms which dispatch temporary staff to other firms contribute to the development
of the organized labor market for midcareer recruits in the following two
ways. First, temporary workers are normally employed to perform specific
jobs at firms to which they are sent, and wages paid are directly linked
to jobs. In employing such staff, dispatching companies place emphasis
not on trainability and cooperativeness, but on knowledge and skills for
doing specific jobs. They perform hiring management which is basically
different from that adopted at many Japanese corporations. Dispatching
firms, it is safe to say, offer those transferees and jobless persons who
may have otherwise been midcareer recruits a chance to fully utilize their
vocational abilities. Second, dispatched workers are classified into several
types, one type being the worker who has become a temporary staff because
of the unavailability of regular employment in the large and middle-sized
companies. The possibility is high that this type of worker is sent to
a firm to take relatively long-term assignments, and that the firm in turn
duly evaluates his or her vocational ability and will eventually want to
employ him or her on a regular basis. It is partly because the cost of
using temporary staff is quite high. Once again, the firm which dispatch
such workers functions as an organ which offers midcareer persons an adequate
job opportunity.
Lastly, it should be noted that
we are now also seeing in Japan, more of those in managerial or professional
posts being scouted or recruited away by other firms. This too prompts
organization of the job market for those hired in midcareer, although this
practice has not yet been popular.
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