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BusinessWeek: January 11, 1993 |
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International Business
LAND OF THE RISING JOBLESS As the personnel manager has discovered, the lingering economic slump is producing the biggest blow yet to lifetime employment, the core of Japan's social contract. Small and midsize manufacturers, as they have in the past, are already axing staff, and so are hordes of troubled real estate and software companies. But now, even the least vulnerable group--male employees at blue-chip companies--are watching their backs. And the pressure to tighten up will only intensify as companies try to squeeze more profits and productivity from operations. With the economy contracting just as Japan's baby-boom bulge is rising into the managerial strata, there aren't enough posts to go around. Nearly 17 million workers, 14% of the work force, are in their forties, near their peak earning years. The ratio of labor costs to sales ballooned to 12.4% this year, higher than after the oil shock and the mid-'80s yen surge. "Companies ultimately will have to jettison the lifetime employment system to sustain profitability," says Chiharu Shima, an economist with UBS Phillips & Drew International Ltd. KEY CLUES. Certainly, Japan's labor troubles pale by U.S. standards. Unemployment is still a mere 2.3%. But the key offers-to-applicants ratio, which measures activity at employment agencies, dipped below 1.0 in October--the first time since May, 1988, that applicants outnumbered positions (chart). Yet the numbers disguise the depth of the pain. On a recent Friday in one of Tokyo's 18 Hello Work employment offices, dozens of people cluster around lists of job offers for males or females, above or below age 45. "Nothing here," grumbles one 44-and-under, flipping through pages labeled "sales--general." Another applicant, fiftyish, unemployed for several months, comes so often he buys monthly train passes. To help Japanese workers navigate this unfamiliar terrain, crisis telephone lines are cropping up. In a bustling office of the Japanese Trade Union Confederation, two people counsel some 300 callers a month on the "Consult About Anything Dial." Traffic at recruiting agencies has abruptly shifted from part-timers, who are always the first to be let go, to middle-aged white-collar types. Software salesman Susumu Ohashi, 39, is a typical client. In November, his company advised its 360 employees to start looking for new jobs. Trouble is, Ohashi is knocking on some well-worn doors in an industry hurt badly by cutbacks at financial institutions. To avoid the stigma of being the first to announce flat-out layoffs, many top companies are resorting to such gimmicks as transfers and early retirement. They now have departments with names such as Human Development Office--a euphemism for Pink Slip Central--that find spots for the paper shufflers, often by placing them with affiliated companies. Managers who get the dreaded kata-tataki, or tap on the shoulder, have the right to refuse, but they rarely do. Staying means being stripped of a job title, the 25% extra pay that goes with it, and one's dignity. SO LONG, SENIORITY. More companies are signing up with outplacement agencies, such as Drake Beam Morin Japan. In the past two years, its client base has boomed fivefold, to 500. One leading department-store chain recently called on Drake to help it dump 300 managers, while a sewing machine company asked for help in eliminating 60 workers. The Japanese are slowly moving away from another labor practice, seniority-based pay and promotion. Honda Motor Co., closely watched by personnel officers nationwide, recently introduced an incentive system that will make job performance--not seniority--the basis of bonuses for its 4,500 managers. Corporate penny-pinching aside, lifetime employment is also eroding from the bottom up. A recent survey found that 75% of those in their twenties would change jobs if a better challenge came along, compared with 44% of total respondents. It has reached a point, says Shinji Yazaki, executive vice-president of Japan's largest wire-harness maker, Yazaki Corp., that "if I said: `Work for me, and I'll take care of you for life,' people would laugh and call me crazy." It has become a tricky balancing act for manufacturers. They've got to cut out the office flab and, as the birthrate plunges and disdain for manual labor swells, struggle with a blue-collar labor shortage. In addition, the government is aiming for a 40-hour week to boost the quality of life. Companies can legally lay off workers in Japan, but it must be as a last resort. And the courts tend to be strict in their enforcement. But even Ohashi, the almost-unemployed software salesman, is rooting for more freedom for workers. "The company isn't a god anymore," he says. Still, at times like this, a little divine intervention couldn't hurt. | |
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