Remodeling Corporate Japan

Dan Carullo

Dr. Sullivan

INT 200-01

April 17, 2005

Remodeling Corporate Japan

The prolonged recession that Japan has been fraught with since the 1990’s has impacted Japan as a nation in several ways. Foremost among these are the decline of wages and inflated cost of living. To cope with rising expenses, a company only has a few options. What is often seen in the United States is a series of lay-offs, and often older employees are pressured into early retirement. When positions need to be filled, lower salaried younger workers are employed. Due to the traditions of the Japanese business culture, this is not the method of choice.

Traditionally Japanese firms grant promotions and raises based on loyalty to the company, rather than a merit based system as in the US. As such, from a financial standpoint, it would seem even more reasonable to use the US approach. However, the sense of loyalty to the elder employees is too strong for this to be the immediate course of action. Instead, have chosen to cease hiring at entry-level positions, and when necessary lower wages. There are two significant effects caused by this: the workforce’s age concentration is shifted significantly upward (See figure 1-A, 1-B), and the younger generation is further disillusioned from the idea of joining a firm.

To further complicate matters, there is a purely cultural reason for young Japanese not to begin careers. Japan’s emerging generation post-university youth is often likened to America’s Generation X, a generation of ‘slackers’. This generation of free-spirited, idealistic,