Structural Changes and Long-Term Employment Practices

    Employment and unemployment conditions continue to be severe. Normally, improvements of the employment and unemployment conditions lag behind an economic recovery, and there is concern about a further rise in the structural and frictional unemployment rate going forward. For these reasons, people are more uneasy about unemployment than they were in the past (Fig. 66).
    Conceptually speaking, there are two aspects to long-term employment practices. One aspect is the idea of a worker working at a single company or corporate group continuously from entrance after graduation (from high school, university, etc.). Another aspect is a corporate philosophy that sees employment as part of a long-term strategy, and does not undertake employment adjustments in response to short-term fluctuations in the economic climate.
    These two aspects are related to each other, but are not entirely the same. For example, the former approach can easily lead to uniform working conditions and human resources development, and conservative practices. The latter approach has no direct causal relationship to these. Rather, the fact that employment is protected allows employees to pursue a variety of ideas and decisive challenges. In addition, it provides adaptive capability and flexibility to undertake new businesses resulting from technological innovations or business transitions.

The Advantages and Disadvantages of Long-Term Employment Practices

    For society, a system of long-term employment practices reduces employment fluctuations and provides stability for the economy as a whole. On the other hand, it can obstruct rapid transitions in the industrial structure. There are advantages and disadvantages both for companies and workers (Table 67).
    For an approach based on long-term employment practices, essentially it is the company that bears the costs of employment maintenance to ensure employment stability. For an approach based on the external labour market, the costs of rising unemployment are borne by unemployed persons and society. In the former case, the costs to the economy as a whole are small in terms of near-term employment instability. However, with this approach, delays in the recovery of profitability and other factors can delay an economic recovery, consequently worsening the employment conditions. Furthermore, when employment adjustments are centered around controlling accessions, severe employment conditions will persist for persons who become unemployed as a result of company bankruptcies and the like, as well as people who are trying to re-enter the labour market. Conversely, in the latter case, it is likely that employment instability will increase temporarily, with the risk of inducing a vicious cycle of economic recession as people reduce their consumption due to employment instability. However, this approach provides the possibility that the corporate restructuring will be accelerated, and that structural adjustments will be encouraged as workers acquire new occupational skills while unemployed, and then become re-employed in new and growing industries.

Changes in long-term Employment Practices and Principles behind Employment Maintenance

    Trends in long-term employment practices show that the average number of continuous working years has increased through the stable growth period (Fig. 68). An analysis of cohorts by age group shows that the average number of continuous working years has lengthened for the baby boomer generation and the generation immediately following it, but has not changed much since.
    However, this situation is likely to change gradually. Such factors as changes in younger people's attitudes about job changes and the growing diversity in employment patterns will have a significant impact on employment practices. Also, the continued decline in the number of children will make it difficult to fully compensate for structural changes through traditional adjustments at the labour market's entrance and exit. Instead, job changes will play a greater role than they have in the past. In addition, the lowering of the expected growth rate and the globalization of operations are likely to have the effect of weakening long-term employment practices.
    Nevertheless, support for long-term employment practices currently remains high among both companies and workers (Fig. 69). Long-term employment practices will continue to be highly effective with respect to jobs in which teamwork is important, and in relation to vocational abilities that require a buildup over time. For Japanese companies and the Japanese economy and society as a whole, it will be important to focus in particular on stabilizing and maintaining employment, thereby improving employee morale and securing the flexibility needed for corporate growth. Hasty employment adjustments could cause companies to lose credibility and make it more difficult for them to obtain required workers. On the macro level, the employment system is closely related to the conditions in a particular country and national identity. In this sense, it is unnecessary for Japan to have the exact same employment system as the US, where the labour market is fluid and employment adjustments are made easily.

Adapting to Gradual Changes in Long-term Employment Practices

    In order for long-term employment practices to adapt to gradual changes and to ensure job stability, it is important to support smooth labour mobility. Firstly, with respect to the development of occupational skills, it is necessary to focus on improving employability instead of limiting functions to a single company. Secondly, with respect to job referral services, there is a need to establish an efficient and effective labour market while maintaining collaboration between the government and private sector. Promoting modes of labour mobility that do not involve unemployment is also important, and there is a need to study pension plans, etc. from a perspective that is neutral on the issue of job changes. Thirdly, it is important to establish a safety net. Furthermore, it is important to enhance job training for separated workers while establishing a job referral system, in addition to establishing an employment insurance system serving as the foundation of an employment safety net. Fourthly, it is important to create jobs through the promotion of expansion into new businesses by companies and by cultivating new industries and companies. In addition, it is important to maintain an appropriate level of economic growth so as to reduce mismatch unemployment. Fifthly, it is important to pursue improvements to working conditions and employment management, and to establish a labour market for various types of workers.

Support for Employment Maintenance Efforts

    All such efforts to adapt long-term employment practices to changes are based on a medium-term perspective. They need to be initiated quickly, but they will not be effective immediately. From the perspective of economic and lifestyle stability and efforts to improve labour productivity, it would be preferable for long-term employment practices to change under good economic conditions rather than poor ones. In addition to this, it is essential to support companies' employment maintenance efforts which are based on long-term employment practices in order to address the current severe employment and unemployment situation. In doing this, it will be important to concentratedly support groups that have especially urgent needs and not to obstruct structural changes.

Consideration to Middle-aged Workers Is Important

    Middle-aged workers have traditionally had a strong tendency for stability and a low job change rate, even in Europe and the US (Table 70, Fig. 71). In Japan, middle-aged workers have enjoyed a low unemployment rate and stable employment. Now, however, they are facing the most severe conditions ever. In order to eliminate unease about employment among middle-aged workers, it is of course important to steadily pursue improvements to employability, as well as job creation and the establishment of a labour market that facilitates reemployment. In addition to these efforts, however, there is a need for initiatives that utilize the vocational abilities that middle-aged workers have built up over time. It is also important that middle-aged workers be utilized in a way that maintains their connections to their traditional workplace or job (e.g., company or corporate group).
    At the same time, there is a need for modes of work that focus on workers' individuality and autonomy, even as they continue to work for the same company or corporate group. Likewise, with respect to occupational skills development, individual workers need to consciously seek specialized expertise and flexibility based on a review of their professional career extending into the future. When changing jobs, it is preferable that workers do so to where they can take advantage of the skills and experience value they have built up over time. These are important issues for blue collar workers as well as for white collar workers.

Enhancing Development of Occupational Skills

    There are a number of challenges for occupational skills development. Firstly, it is important to secure and strengthen occupational skills development investments for Japan as a whole (Fig. 72). Secondly, it is important to develop occupational skills that are adapted for real-world needs and worker requirements, which are continually changing and becoming more sophisticated. It is also important for individual workers to make efforts under their own initiative based on a lifetime career plan. The third challenge is to establish a system for occupational skills development and evaluation criteria.Improving employability requires that a system for cultivating skills that are useful both inside and outside a company is shown, as well as criteria for evaluating those skills. In addition, it is important to establish a system that can be used to properly evaluate targeted skills and the results of skill development efforts. Also, there is a need to enhance the system for providing workers with consultation services and information on self-directed skills development. The fourth challenge is the development of the occupational skills of younger people. It is important that workers be supported in making appropriate choices so as to reduce unneeded job changes while allowing workers to enhance their careers even if they do change jobs.