The Transformation of the Japanese Employment System

The 1990s have witnessed significant change in the Japanese employment system and in the work organization of Japanese firms. This article gives a broad overview of the changes taking place in Japanese employment and compensation practice, recruiting and promotion, and corporate organization. More than in previous postwar downturns, Japanese firms are going to great and creative lengths to reduce workforce size and costs without resorting to formal layoffs. Yet the restructurings and adjustments designed to provide this flexibility often prove under scrutiny to be less substantial than media accounts or public corporate pronouncements suggest. Frequently the changes seem in large part symbolic—signaling to the workforce the need for change in the corporate culture and for diminished expectations in a more severe economic environment.