Japanese Maverick Challenging the Salaryman System?

I’d like to think that this blog is more than just a cut and paste job of articles from the Economist, but when something like this comes up then a blogger has to do what a blogger has to do. But hopefully my commentary, and some overdue shots of Korean women in bikinis that I’ll put up in a few days, will convince you that its worth your while to stick around here and not just go straight to the Economist’s website instead.

First, let me point out how strange it is to a Korea studies geek that the salaryman system in Japan is the focus of any attention at all. This might seem a bit blasphemous to anyone even vaguely familiar with Japan, as to many the words “Japan” and “salarymen” go together like, well, like “love and marriage.” But as I’ve mentioned in numerous previous posts that I’m sick of linking to, the Japanese sociologist Yoshio Sugimoto has pointed out that in reality Japanese salarymen were never a majority or even the largest sector of the Japanese workforce, so considering the statistics then this stereotype is simply bizarre. Like he says, how Japanese keiretsu are in a position to manipulate Japan’s image to the outside world, and why they choose to present their salaryman system as the Japanese norm would be a fascinating topic to study but one which he doesn’t get into there, and also one I’ll wisely leave up to people much more familiar with Japan than myself.

This doesn’t mean that changing work culture and practices in Japan isn’t interesting of course, or that developments in Japan don’t have relevance to Korea, but given that salarymen (really) were a majority of workers in Korea until 1997, and that most of these jobs have disappeared in the ten years since, then Korea would be a much more natural and interesting object of study. But the Economist too is clearly beholden to the stereotype, and its search engines reveal no articles about salarymen in Korea in the last ten years!

Changing how Japan works

Yasuyuki Nambu of Pasona is on a mission to make Japan’s labour market more flexible 

WHEN Yasuyuki Nambu was an engineering student preparing to graduate from university in 1976, he was struck by the injustices of Japan’s workplace. Men were far more likely to be hired than women and were paid much more for the same work. Women who left their jobs to start a family found returning to work almost impossible. Mr Nambu had the idea of creating a non-profit organisation to place women in flexible, part-time jobs. His father suggested turning this job-placement scheme into a commercial venture. The result was Pasona, a firm that now has annual revenues of around $2 billion and which sends around a quarter of a million people off to a job every day. Japan has thousands of temporary-staffing agencies today, but Mr Nambu’s was the first, and is still one of the biggest. Mr Nambu has helped to change the way Japan works.

Before Pasona, job placements were handled by a government agency and offered little more than empty, make-work employment. Moreover, part-time and temporary employees were treated as outcasts from Japan’s corporate-welfare model, founded on the principles of lifetime employment and seniority-based wages that depend on length of service, not performance. Under this model, privileged “regular” workers enjoyed benefits such as training and the use of company holiday-resorts, and were even reimbursed for the cost of travelling to and from work. In return, they were expected to remain loyal to their employers. All this was denied to “non-regular” or temporary workers, who were also paid much less.

Reconciling myself to the fact that I like actually like Korea and Koreans, I no longer write off Korea as “Japan 15 years ago” like I used to, but long-time readers of this blog will be struck like I was at how this description of Japan in 1976 sounds like a much more succint version of my summaries of Korean employment today.

In the 30 years since Mr Nambu set up shop, non-regular employees have gone from the periphery of the Japanese labour force to the mainstream. The trend got a big push during the economic downturn in the 1990s, when big companies retained staff but changed their status to non-regular workers and hired temps whenever openings emerged. And a generational backlash against the stereotypical “salaryman”, or white-collar worker, created a new group of young people, known as “freeters” (a combination of “free” and Arbeiter, the German word for worker), who drifted from job to job. As a result, the number of non-regular workers has increased from around 20% of the labour force in 1990 to one-third of all workers today.

It’s amusing that after just pointing out how Korea isn’t merely a carbon copy of the Japan of 15 years ago, I learn that they have exactly the same words for some things, and I don’t mean because of similar grammar and all that. In Korea, part-time work is 아르바이트, pronounced “Ara-bye-eet”, obviously also from the German Arbeit. Teaching English in Korea for so long, of course I’ve noticed that about 95% of recent foreign loanwords are of English origin, so the Korean words derived from other languages like this one really stand out. I’ve heard that this German choice comes from the large number of Koreans who worked in Germany in the 1960s, and wonder if a) this is actually true, and if so b) if the Japanese adoption of the word is for the same reason.

As for freeters themselves, after a good decade or so of studying Northeast Asia this is the first time I’ve heard of this positive usage of the word, and ”parasite single” would be much closer to the image I’ve had of them. Not that Wikipedia is the definitive guide by any means, but it does mention this positive usage of the word used in the article…so I’ll have to ask my friend living in Osaka what the real story is these days.

Of course, the figure of one-third of Japanese workers being irregular contradicts Sugimoto’s statistics, but then the Economist provides no sources. While magazines don’t usually provide them and so this can be forgiven, given the Economist’s tendency to let its liberalist ideology triumph over the facts, especially when discussing Northeast Asia (virtually no other source in the world still accounts for East Asia’s economic success in terms of open markets), then I’m definitely not going to take the Economist’s word for it in this case.

The result is a two-tier labour market, with huge differences in pay and benefits between regular and non-regular workers, even if they are doing the same jobs. But rather than being a manifestation of the problems bedevilling Japan’s economy, Mr Nambu believes, freeters are a solution to its ills. They provide flexibility that is beneficial to both employees and employers, he says. As for concerns about growing inequality, the best way to address them is to extend some of the benefits offered to regular workers to freeters, too. Pasona has gone about this in several ways. It has worked to increase the pay of temporary staff, initially by reducing its own margins. It has promoted individual retirement-savings accounts, akin to American 401(k) plans, even before they were enshrined in Japanese law. And it has pushed employers to reimburse non-regular workers’ transport costs.

For Mr Nambu, Pasona’s mission transcends the workplace. “We want to provide solutions to society’s problems,” he explains. He even refers to his top managers as a “shadow cabinet” on the basis they, rather than the government, are in a position to remedy many of Japan’s pressing issues—from the declining birth rate to revitalising rural areas—by establishing a more flexible labour market. The private sector, not government, ought to lead this transformation, he says. Such outspokenness has prompted criticism from the establishment. Mr Nambu’s flashy ways do not go down well in traditional, buttoned-up Japan. He is as famous for cycling to work in bright red shorts as he is for his forthright views, which he trumpets on his personal website—also unusual in a Japanese boss. Although businesses privately support him, because temporary employees suit their interests, government officials worry that he is undermining traditional Japanese labour practices that, they believe, serve the country well by maintaining loyalty and equality. They would prefer to return to a world in which regular employment is the norm.

Jeez, if that really is true of Japanese government officials, venerating a system that never actually was the norm in Japan, then no wonder Korean employers stick to an ideal of long hours and company before family loyalties a mere 10 years after the salaryman jobs and their compensating huge employee benefits dried up. But his point about change not coming from government is valid, as the Korea government has done little to change entrenched workplace practices beyond making laws which they don’t enforce, as I’ve explained before. While I doubt Korean irregular workers consider themselves “free to pursue their own interests” like he suggests their Japanese equivalents are, it sounds like a euphemism on a par with “letting an employee go,” but women in particular are challenging this inaction by refusing to have children…the fiends…and indeed it is the coming demographic crunch which will spur rapid change here from below, not vacuous soundbites from government officials.

Freeter, choose your own destiny

Mr Nambu regards this as sentimentality that is out of place in the modern, global economy. The post-war period was a time when people had no alternatives: “Be a regular worker—and exploited for the rest of your life,” he explains. Rather than undermining Japan’s social ties between employee and company, he says, he is empowering workers by giving them more choice and flexibility. At a youthful 55 years, Mr Nambu has expounded this viewpoint in a dozen books about business practices and workforce trends. And it has guided his own life. A freeter himself before the term was coined, he juggled odd jobs at a department store and a school while laying the foundations for his firm.

Pasona has expanded into other areas of workforce services. Some 40 subsidiaries handle outsourcing projects, recruitment of full-time staff, outplacement support to help redundant staff find new jobs, technical support, finding temporary jobs for the retired, and managing benefits schemes for other firms. Pasona has also expanded into other Asian countries and America. (It has around 4,000 staff, 75% of whom are regular employees.)

When The Economistlast caught up with Mr Nambu in 1996, his office was adorned with photos of himself alongside such dignitaries as Bill Clinton, Prince Charles and Ronald Reagan—but no Japanese politicians, a sign of his status as an outsider in his own country. In the decade since, Pasona’s revenues and temporary workforce have both more than doubled, yet Mr Nambu remains as controversial as ever. “The concerns I had 30 years ago, I solved by creating the human-resources department of Japan, Inc,” he says. But the battle continues.

My opinion of the Economist has gone down somewhat since I began this post: to me, this article seems little more than a perpetuation of Japanese stereotypes. If it is so inaccurate about Japan, can I take its word for subjects like the Middle East which I know little about except for what the Economist has told me? Perhaps I should subscribe to the left-wing British expat newspaper the Guardian Weekly again to balance it, as my friend in Osaka keeps bugging me to do. But at least it has persuaded me to learn more about Yasuyuki Nambu, and find out if he has any Korean equivalents. A good start is perhaps the doctor turned venture capitalist 안철수/Ahn Cheol-Su that I learned about in my Korean class, very famous in Korea, but I can’t find anything in English on him at the moment.

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