In this column, we aim to provide visitors to our website with a variety of topics related to Japan. In this inaugural piece, we would like to offer a broad overview of the changes in Japan’s employment systems and work styles.
What image comes to mind when you think of a “Japanese employee”? Not too long ago, employment systems based on “lifetime employment” and “seniority-based promotions” were known as “Japanese-style employment” and were prevalent, especially among large corporations. This framework was established during Japan’s post-war economic boom in the 1950s and 1960s, with companies hiring new graduates in bulk and expecting long-term employment until retirement. This structure influenced work practices, as promotions and treatment were heavily influenced by years of service and loyalty, making it commonplace for employees to pour their heart and soul into their work. Consequently, long working hours became the norm, and the rate of taking paid leave remained low at around 50% for many years.
However, this employment system began to undergo changes following the bursting of the economic bubble in the 1990s. Companies facing deteriorating business conditions implemented restructuring measures including personnel reductions. Furthermore, deregulation led to the expansion of non-regular employment such as temporary work. During the same period, some companies began introducing “performance-based” systems, where promotions and salary increases were determined by job performance rather than years of service or age. Thus, the foundations of Japanese-style employment, centered on lifetime employment and seniority-based systems, gradually started to crumble.
With societal progression, the labor market faced further challenges. A declining birthrate and aging population made the decrease in the working-age population increasingly pronounced. Issues such as long working hours, low rate of taking paid leave, and disparities in treatment between regular and non-regular workers became significant concerns, prompting the government to seriously embark on “work style reform” legislation in the mid-2010s. Related laws were enacted in 2018 and have been implemented in stages since 2019. These laws included comprehensive reforms, not only addressing longstanding g issues such as excessive working hours, mandatory paid leave, and equal pay for equal work, but also promoting diverse work styles including telework, side jobs, and concurrent employment.
In 2019, when a CEO corporation publicly stated that “maintaining lifetime employment is difficult”, it heightened public awareness of the wavering Japanese-style employment system. While elements of this system haven’t completely disappeared and many companies still maintain some aspects, it’s undeniable that over the past few decades, it has ceased to be the “social norm.”
As evidenced by the increase in mid-career recruitment and job-based employment (which clearly defines job responsibilities), employers’ mindset has shifted from “hiring fresh graduates and taking care of them for life” to “flexibly recruiting necessary talent.” Similarly, employees’ attitudes have evolved from “lifelong dedication to one company” to “developing personal skills and building career experience.” Various work styles such as side jobs, freelancing, and gig work have become more widespread than before.
While work styles in Japan have become more diverse, traditional employment practices and their associated challenges still remain. In future columns, we look forward to exploring these changes and challenges with you as we continue to examine Japanese work styles.
