Vol.32-No.05 May 1,1993
The world economy is deep in the doldrums, creating the term "a worldwide recession." In this situation, when compared with Western nations, Japan is relatively less harmed by the severity of the current downturn, although the tempo of falling growth has further slowed from 1991. Unlike the recession of 1974, which was triggered by the first oil crisis of 1973, and the slump of 1986, which was a reaction to the swift climb of the yen, as far as employment indicators are concerned, the present slump has yet to develop signs of turning into a severe recession. It seems certain, however, that the Japanese economy has developed some growth-restrictive factors that have yet to surface.
One major characteoristic of the current downturn may be that white-collar workers and midlevel managers, in particular, have fallen prey to rationalization and streamlining plans. This is not just a temporary phenomenon, as it is predicted that the age of ordeals for middle managers, will continue well into the coming years. Thus, how voices of midcareer management will be heard amidst slow economic growth will pose a problem in the not-too-distant future.
In this paper I will expound first on the realities of treatment of midlevel white-collar managers during the course of slow growth. Then I will discuss the extent to which this issue will acquire significant meaning for future Japanese society.
2. Quantitative Importance of Those in Managerial Posts
First, it is necessary to clarify who are those in management positions supposedly victimized by corporate rationalization and streamlining eff;orts in recent years. Many of Japan's baby-boomers known as the dankai, or lump, generation-those born from 1947 to 1949-are in management posts. This fact, it is pointed out, is also related to rationalization plans. Although the distorted population distribution and the age-structure of the in-house labor force structure largely coincide with each other, the share of those in company managerial posts is another matter. Accordingly, it is necessary to probe the actual situation of the age structure of corporate managers apart from the population structure by age and to get deeper insights into the quantitative importance of those in management positions.
The 1990 Basic Survey of Wage Structure is available for this purpose, and let us briefly look at the figures given in this survey. The survey, covering private firms with 100 and more regular employees, classifies job statuses in a fairly strict manner. Here I will broadly define managerial posts as follows.
(1) Department manager-a person generally called "bucho," or department manager, or "kyokucho," or bureau chief, at an establishment, which he heads and which consists of two or more sections or 20 or more members.
(2) Section manager-a person generally called "kacho," or section chief, in an establishment which he heads consisting of two or more duties or 10 or more members.
(3) Chief clerk-a person generally called "kakaricho," or chief clerk, who leads in the performance of duties' a group consisting of 4 or more members.
(4) Other job statuses-deputy-department manager, assistant deputy-department manager, vice-department manager, deputy-section chief, assistant deputy-section chief, or other staff;ers like "chosayaku", or branch office general manager, branch office manager, plant general manager, business office general manager.
I would like to note the following points before referring to Table 1. In Japan women are continually advancing into society as employed workers. They account for about 40 percent of total employed workers. But the majority of those in supervisory and managerial positions are men. For instance, of male workers, about 30 percent hold managerial posts defined above, versus only five percent of women workers. Therefore, major attention is focused on male workers. By peak age, men aged 35-39 are chief clerks, those aged 40-44 section managers and those aged 50-54 department managers, thus representing a typical distribution.
Table 1 shows the structure of managerial posts by company size in 1980 and 1990 for comparison. It can be observed as a whole that while the number of those in managerial positions decreases, that of department managers, section managers, chief clerks and others has been rising considerably in the past 10 years. In addition, the Table also shows the fact that Japan's managers make up about 30 percent of all the male workers as noted above. Thus, the issue of treatment of this group is not at all negligible, quantitatively. Even department and section managers alone at firms with 1,000 and more employees represent approximately 10 percent of total male workers. Many others categorized into "other job statuses" in large companies, together with chief clerks, would bring the total to 30 percent.
3. Issue of Rationalization and Streamlining of Those in Managerial Posts
Next, let me point out how those in management positions are forced to "bear the burden of adjustment costs arising from the economic downturn," while taking full-fledged employment adjustment currently underway, for instance. Cuts in executives' remuneration have been receiving wide press coverage, but what is more notable and serious is asking for early retirement of mid-level managers.
One steelmaker announced a plan to cut its white-collar work force in the steel division by about 20 percent, or 500. Some electrical appliance makers have set forth plans to slash unwanted workers by asking managers, particularly those aged 50-59, to retire early on condition that the company will pay additional retirement allowances. Also, they plan to lay off; employees 50 years and older and make them wait for business recovery while off;ering them 90 percent of their salaries.
One major precision-equipment maker is to ask for 300 voluntary retirements from its 1,700 employees 40 years and older, who have also worked for the company 20 years or more. Even firms in the finance and insurance sector are taking such payroll-cutting measures among redundant managers. One city bank plans to slash over 1,000 jobs in the next few years; and one major securities house, it is said, plans to shunt 100 managers aged 35-55 to less important subsidiaries and affiliates. Headlines alone indicate that the number of payroll-cutting measures targeted for managers is quite large. At the same time, what has begun to pose a problem is how voices of middle managers can be made heard in the process of personnel cutting, to be reflected organizationally. This problem can no longer be solved by classic labor-management relations discussions, in other words, by the dualistic machinery of negotiations on disputes over the clash of interests between labor and management, for managers themselves are cooped up in the "chasm" or "vacuum zone" of corporate hierarchy since they are not union members.
The top-priority for unions is to "assure union members employment." Accordingly, employment of non-unionists is beyond their scope of influence. Besides, they do not oppose payroll-cutting as long as it comes from automated retirement and restraints on empolyment of new recruits. A giant auto manufacturer announced its restructuring plan to include closure of a major vehicle plant in two years and reduction in work force by 5,000. However, labor should not oppose the plan since it is based on the rule of automatic retirement and restraints on employment of new workers and does not directly infringe on "assurance of employment of union members."
Loss of the importance of labor unions in the classic labor-management confrontation theory is ascribable not only to the social theory itself but also to the fact that the dualistic confrontation between management and the worker has ceased to off;er an eff;ective solution to subtle personnel matters within the corporate organization. Union leaders of the workshop, who may be called middle managers of the labor union, are said to be in a difficult position. The problem is particularly serious when union workshop leaders simultaneously hold supervisory posts. Those in managerial posts who are highly promotion-oriented do not try to report to their superiors the complaints voiced at the work place as this will adversely aff;ect their future. This is because their ability to perform jobs as responsible persons in the workplace is evaluated. Also, their heavy workload does not allow them enough time for grievance handling at the workplace. This is perhaps a difficult situation of the same nature as experienced by middle managers under the classic corporate machinery of confrontation between labor and management. Middle management, pressured from above and below does not have channels to voice their opinions regarding their own lives, working conditions and personnel treatment. This is also related to the issue that the scope of union members as provided for under Japan's Trade Union Law (TUL) is narrow as compared with that provided for under European trade union laws (Note).
Note: In Japan as well, there is a "labor union consisting paticularly of those in supervisory and managerial posts" which is qualified as a union as provided for under the TUL. Material on a trade union consisting of those in management positions at one local bank was obtained by this author. This is reportedly the first such union in Japanese banks. Inaugurated in 1978, the labor union is intended to cope properly with an increase in non-union members resulting from promotion of workers to management posts. It has succeeded in realizing the 60-years-of-age retirement for members.
Although a number of members is not large, the union, authorized under the TUL by the Prefecural Labor Relations Commission, holds collective bargaining. It is predicted that the number of this type of union will gradually increase in future years.
4. Issue of Evaluation of White-Collar Workers and the Annual Pay System
Various other issues regarding white-collar workers as a whole have surfaced. Here the annual pay system and the issue of the length of service will be discussed. With the nature of work shifting gradually from manual and skilled to knowledge-intensive ones, jobs demanding adequate judgement are occupying center-stage at most any workplace. In the traditional direct-production division of the manufacturing sector, workers' knowledge and skills could be measured, to some extent, through visible data in terms of how the quantity of high-quality products churned out. It is increasingly difficult, however, to individually measure and fairly evaluate the amount and quality of such "invisible work" as is required in white-collar jobs and where the element of teamwork is combined. Accordingly, it becomes necessary to seek systems under which just-the-average rule and the merit-rating rule are combined to give an incentive to middle-ranking employees. One automaker has introduced the following annual pay scheme. Applicable to managers who account for 10 percent of total employees, the company assures them the same salary as before, off;ering them a bonus as pay for evaluated achievements twice a year. This is not "pure" annual pay system under which the employee is evaluated not by the length of work done but by the contribution made. Rather, it is a type of in-between system which is shifting from seniority-based wages of the long-term evaluation type to the annual pay of the short-term evaluation type. Sources at the automaker note that there is a gap in annual wages-twice the size of the former diff;erential of about 2 million yen-between workers of around 40 years of age.
Not a few corporations have adopted "annual pay schemes" for those transferred to subsidiaries and affiliates who are department managers or above. However, the greater number have switched back to wage schemes used at the head office once those transferees return to their home offices. Perhaps out of some kind of fear of the annual pay system of the short-term evaluation type, it has met with no specific opposition.
To be sure, attempts at introducing such an annual pay scheme must be signs of slightly more pronounced elements of short-term evaluation. But it will still be a long time before the system will broadly take hold in Japan. One hears the talk of crisis-"the collapse of lifetime employment" or of "the fluidity of the job market." However, at the moment there remains unchanged the structure that people who will be the nucleus of the company, will be fostered inside the company and take firm control for many years. Notable phenomena, such as rising numbers of peripheral workers or those of an auxiliary nature, cuts in middle-aged and older workers of middle-management and the turnover of young workers, give one the impression that the Japanese labor market as a whole is becoming more fluid. Statistically (not shown here), however, years of service at the same firm for Japan's workers as a whole are lengthening.
It is true that the turnover rate among young workers is growing year by year. The percentage of new school graduates who entered the work force and left their initial job within one to three years is high also in Japan. In addition, it has been pointed out that these same workers are staying longer at their second jobs. Such trends, it seems, have grown stronger with the increase of white-collar workers. Data on this will be given at the end of this paper.
5. Permanence of New School Graduates
Generally, the degree of permanence and the rate of job separations are affected by the conditions in the external job market, or stated simply by, business conditions. Therefore, a direct comparison of time-series figures alone is not possible. Table 2 shows the rate of job separations by year of service for 1980 and 1988 both being years of economic recovery in terms of employment indicators. The 1980 data are not available for college graduates, but from this data can be seen an even higher rate of new school graduates. Nearly 50 percent of high school graduates left work within three years after they graduated, although the industries can not be specified. This shows how difficult it is for them to fit in to their first job. It is common knowledge that once they clear the hurdles of the first few years, they get over problems of adaptation to their jobs to a certain extent, and settle down at a surprisingly high rate.
Table 3 represents the degree to which school graduates settle down in two of the service sectors with many job hoppers. Needless to say, the extent to which school graduates settle down diff;ers depending on the types of business in the same service sector.
From the data shown above, one may predict that the fluidity of Japan's white-collar workers will rise in the years to come. However, even though the rate of job separations and job changes is growing for what are called "flow workers", such as professionals, temporary and part-timers, as well as young workers who are "job hopping in search of their final position," practices under which the company fosters "core" workers over the long term are least likely to give way. The recent slash in mid-level managers, dubbed "restructuring," is due largely to a slowdown in the economy, and it seems that those who stay at the company will further extend their years of service.
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