[Analysts say this is because lifetime employment is alive and well in Japan, with the state playing a big role in keeping it so... But Japan’s obsession with keeping workers employed — even those who are not needed — comes at a cost.
Companies slash wages, which reduces consumer spending. Businesses become more reluctant to take on new recruits, shutting young people out of the labor force. And productivity plummets, hurting Japan’s competitiveness in an increasingly aggressive international market.
“By helping to maintain excess employment, you face the risk of keeping alive businesses that are no longer competitive, and perhaps whose productive era is over,” said Hisashi Yamada, an economist at the Japan Research Institute, a private research group in Tokyo. “This could hurt employment in the long run. What you need is more structural change.”
The lifetime employment system, cemented in Japan’s postwar economic boom, bound dutiful workers and paternalistic employers together, producing a mutual loyalty (and labor harmony) rarely seen in the West.
Since Japanese workers are hard to lay off, companies have turned to temporary workers, who receive lower pay and fewer benefits, and can be cut more easily. Such workers now make up a third of Japan’s work force. In Japan, Secure Jobs Have a Cost By HIROKO TABUCHI
NYT: May 19, 2009]
This report has much to do with various worker related practices prevailing in Sri Aurobindo Ashram, Puducherry. [TNM]