Japanese Work Environment - Smaller Companies

Smaller Companies

Not every worker enjoys the benefits of such employment practices and work environments. Although 64% of households in 1985 depended on wages or salaries for most of their income, most of these workers were employed by small and medium-sized firms that could not afford the benefits or achieve the successes of the large companies, despite the best intentions of owners. Even in the large corporations, distinctions between permanent and temporary employees made many workers, often women, ineligible for benefits and promotions. These workers were also the first to be laid off in difficult business conditions. Japan scholar Dorinne K. Kondo compares the status of permanent and temporary workers with Bachnik's distinctions between permanent and temporary members of an i.e. (see Japanese family), creating degrees of inside and outside within a firm. Traditions of entrepreneurship and of inheritance of the means of livelihood continued among merchants, artisans, farmers, and fishermen, still nearly 20% of the work force in 1985. These workers gave up security for autonomy and, when economically necessary, supplemented household income with wage employment. Traditionally, such businesses use unpaid family labor, but wives or even husbands are likely to go off to work in factories or offices and leave spouses or retired parents to work the farm or mind the shop. On the one hand, policies of decentralization provide factory jobs locally for families that farm part time; on the other hand, unemployment created by deindustrialization affects rural as well as urban workers. Whereas unemployment is low in Japan compared with other industrialized nations (less than 3% through the late 1980s), an estimated 400,000 day laborers share none of the security or affluence enjoyed by those employees with lifetime-employment benefits.

Japan's workforce grew by less than 1% per year in the 1970s and 1980s. In 1991 it stood at 62.4% of the total population over fifteen years of age, a level little changed since 1970. Labor force participation differed within age and gender groupings and was similar to that in other industrialized nations in its relative distribution among primary, secondary, and tertiary industries. The percentage of people employed in the primary sector (agriculture, forestry, and fishing) dropped from 17.4 in 1970 to 7.2 in 1990 and was projected to fall to 4.9 by 2000. The percentage of the Japanese labor force employed in heavy industry was 33.7 in 1970; it dropped to 33.1 in 1987 and was expected to be 27.7 in 2000. Light industry employed 47% of the work force in 1970 and 58% in 1987. The sector was expected to employ 62% by 2000. Throughout the 1970s and 1980s, well over 95% of all men between the ages of twenty-five and fifty-four were in the work force, but the proportion dropped sharply after the usual retirement age of fifty-five (by 1990 the retirement age for most men had risen to sixty). Women participated most actively in the job market in their early twenties and between the ages of 35 and 54 (see Working women in Japan). The unemployment rate (2.2% in 1992) was considerably lower than in the other industrialized nations, but it has about doubled since the collapse of the Japanese asset price bubble. Youth unemployment is now a considerable problem in many regions.

Wages vary by industry and type of employment. Those earning the highest wages are permanent workers in firms having more than thirty employees and those workers in finance, real estate, public service, petroleum, publishing, and emerging high-technology industries earned the highest wages. The lowest paid are those in textiles, apparel, furniture, and leather products industries. The average farmer fares even worse, but might benefit from the appreciation of his land holdings as well as the powerful political ties to the Liberal Democratic Party.

During the period of strong economic growth from 1960 to 1973, wage levels rose rapidly. Nominal wages increased an average of 13% per year while real wages rose 7% each year. Wage levels then stagnated as economic growth slowed. Between 1973 and 1987 annual nominal and real wage increases dropped to 8% and 2%, respectively. Wages began rising in 1987 as the value of the yen sharply appreciated. In 1989 salaried workers receiving the highest average pay hikes over the previous year were newspaper employees (6.7%), followed by retail and wholesale workers (6%) and hotel employees (5.7%). Workers in the steel (2.5%) and shipbuilding (4.2%) industries fared worse. The salaries of administrative and technical workers were about 20% higher than those of production workers. In the late 1980s, with wages in manufacturing firms having 500 or more workers indexed at 100, enterprises with 100 to 499 employees were indexed at 79, those with thirty to ninety-nine employees at 64, and those with five to twenty-nine employees at 56.6. The gap between wages paid to secondary school and college graduates was slight but widened as the employees grew older; wages peaked at the age of fifty-five, when the former received only 60 to 80% of the wages of the latter.

In the standard model, workers receive two fairly large bonuses as well as their regular salary, one mid-year and the other at year's end. In 1988 workers in large companies received bonuses equivalent to their pay for 1.9 months while workers in the smallest firms gained bonuses equal to 1.2 months' pay. In addition to bonuses, Japanese workers received a number of fringe benefits, such as living allowances, incentive payments, remuneration for special job conditions, allowances for good attendance, and cost-of-living allowances.