To manage the flow of human resources within organizations, some large and prestigious Japanese firms have adopted the policy of “lifetime employment” (Fisher et al, 1990).
There have never been any official rules concerning implementation of lifetime employment, but there has been a convention of long-term employment among the large corporations. It is based on the concept that if an employee devotes his life to his company, the company will in return provide him with a guarantee of lifelong employment, housing and other things to take care of his needs. In a sense, this commitment means that the employee ceases to be an individual and becomes a part of the company (Osamu, 1995).
Fisher et al (1990) found the employees covered by this policy comprise 22 to 30 percent of the full-time work force. Many are white-collar and some are blue collar workers.
They are guaranteed job security from the time they hired-upon graduation-until they reach the retirement age of fifty-five. Why do the firms adopt the lifetime employment? Firstly, one of the important reasons to adopt the lifetime employment system is the system which provides certain categories of staff with employment that lasts throughout their working life (Beard well & Holden 1997).
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Once employed by one company, an employee might expect to work uninterruptedly until retirement age in the knowledge and expectation that work, training and, quite often, housing and education for dependants would be provide. These companies have recruited at graduate-level and as an employee you have often experienced an annual wage increase, more or less automatic promotion with age and it has been highly unlikely to be dismissed because of a recession. As a result of this people have often identified strongly with their company and stayed with the same company for a long time, since they have not benefited from changing jobs. The system has thus been mutually beneficial.
Secondly, another important reason is the lifetime employment is the desire of Japanese employers to inhibit the mobility of highly trained workers. For instance, if an employee wants to resigns from a major company, he has to seek a lower-paying position at a small company or join a foreign-owned enterprise doing business. That means the employee lost his status and would get a low salary. Therefore, the mobility almost exits. Finally, Japanese personnel planners should find it relatively easy to deal with short-term shortages and overages of labor (Fisher et al, 1990).
Because when business is good, major firms contract out a great deal of work to smaller firms When times are hard, this work is done in-house by small core of lifetime blue-collar employees.
Individuals unfortunate enough to be working fir subcontractors during those times lose their jobs; many small companies go bankrupt. Because of the unrestricted workers, it seems that Japanese personnel planners should find it relatively easy to deal with short-term shortages and overages of labour. In addition, if the majority of workers retire at the same age, it is simple for human resource planners to predict the future supply of this rather static work force. It is undoubtedly that the lifetime employment system has been benefiting Japanese organisations in some extend. However it brings some difficulties to the organisations that implement the policy as well. Firstly, the demand for workers is tied to the market’s demand for firms’ products or services.
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If Japanese firms had to retain all employees at all times, they could not survive economic depression. Therefore, many employees do not receive lifetime employment. For instance, firms expect female workers to retire upon marriage or the birth of their first child. Most firms also rely on large numbers of temporary, seasonal, part-time employees. In fact, blue-collar workers often sign six month labor contracts, and farmers take short-term labor contracts during the winter season. Secondly, Small and medium-sized companies have not been able to guarantee their employees work from graduation to retirement, because they are less powerful and more adversely affected by market shifts and deteriorating economic conditions.
It has therefore been less desirable to work for these companies. As the reasons mentioned above, in the early 1990 s Japan entered a deep recession and companies were no longer able to just keep on hiring more graduates and training them in-house, expecting the investment to pay-off in the long run, instead they are relying on mid-career workers. Since Japan is not experiencing the growth rates as earlier employers are no longer able to offer their employees the same security as they have been doing up to recently. As companies are unwilling to keep expensive workers, they try to solve the problem by implement “early retirement schemes”, in which they are encouraged to retire early with extra money. But finding a new job is often very difficult.
Furthermore they are transferring staff within the companies to avoid in-house unemployment, which has arisen in some firms as a result of reluctance of laying-off workers.
