Poor Working Environment

I suppose people demand not only wage, but also good work environment for working.  It can hardly be said that Japanese work environment is good because of law rate of spending paid vacation days and much overtime work hours.  According to the study of Reuters, Japanese take least paid vacation of about 16.5 days; moreover, they use only about half of it. On the other hand, French get most vacation of about 34.5, and they take almost of them. This is because that many companies in Japan or business manager are opposed to employee taking a vacation day.  For example, if a Japanese employee asks his boss to take a paid holiday, he would say “Do not trouble fellow workers, and your salary appraisal would get worse if you take vacation days”. 

In addition, Japanese working time is longer than that of other advanced countries. According to the research of OECD, the average working time of Japanese worker is about 1830 while that of Germany and France are about 1350, and this number does not include unpaid overtime working hour.  In Japan, the average annual unpaid working hour is about 250 hours, so the average total annual working hour is over 2000.  One of the reasons why the working hour is so long is that many companies recognize not only performance of employee, but also their working hour. Another reason is that Japanese society has a business culture which subordinate officers may not go off work before their boss leave the firm.

      The underlying cause of the problem of the Japanese poor working condition is Japanese collective society and Japanese culture which Japanese so not want to go against a person with power.

The labor market reform

In this week, I will talk about Japanese labor market reform under Koizumi administration; especially I will focus on the Dispatched Worker Law, which I researched in last quarter under Mr. Hoshi. 

Mr. Koizumi, prime minister of Japan from 2001 to 2006, amend the law about dispatched worker in order to response to demand for more flexible labor market from both employee and employer. The government said this amendment gave worker flexible worker environment; for instance, worker can choose their preferred hours of work, and this amendment made workers easy to change their job.  It means the collapse of the Japanese traditional employment system. In fact, the number of dispatched workers was increasing yearly since the amendment was promulgated in 2003.

However, there was unintended consequence. The amendment widened the gap between regular workers and dispatched workers because companies defended regular worker’s vested interest and dispatched worker did not get same remuneration for the same work and because the government did not correct the situation. In addition, employer does not recognize the career of a dispatched worker. It means if a worker is hired as a dispatched worker once, it is very difficult to be hired as a regular worker.

As a result, while the amendment was designed to respond the change of worker's demand for employment format, they work same as regular workers with lower wage and many of them want to be hired as a regular worker.  Thus the amendment caused more employment stability.  

While companies received benefit from expanding the use of dispatched worker because they minimized their loss during the global recession of 2008-2009 by firing dispatched workers. This result shows the flexibility of dispatched workers employment. 

   

The change of employment system

In 1950’s, many economists and foreign business people underestimated the Japanese employment system. They supposed the productivity of Japanese labor must be low because companies placed more importance on years on continuous employment of labors than on performance of them. However, their evaluation had been changed during a period of Japanese rapid economic growth, and Japanese management system was highly admired by them since they noticed guaranteed lifetime employment and seniority system generate high loyal sentiment and solidarity, which makes high productivity. Due to this background, Japanese companies and Japanese were proud of the advantage of these employment systems, and these systems took a root in Japanese society.

Go back to the first topic.

Which system is better for worker?

“Seniority system vs Pay for performance system”,

“Guaranteed long-term employment with job changing vs Short- term employment with job changing”

It depends on workers. Someone who place importance on lifestyle stability desire Japanese employment system and others who are confident of their ability choose American employment system.  In case of Japan, most workers were former.

However, the demand for the employment system has been changed as Japan gets richer, and it means people work not only for their life but also for their happiness in these days. In addition, companies also desire the change of the employment system because they faced to the problem of the lacking of flexibility of labor market.  It is one of disadvantage of the Japanese employment system and created serious damage on Japanese economy under the recession since the system prevented companies from corporate restructuring for financial reform.

Next, I will focus on the Japanese labor market reform.