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March 5, 2006

'Company Community' Vanishing as Japan in Grip of Social Change

Collapse of economic bubble, lengthy stagnation of 'lost decade' combine with tough competition under globalization to reshape corporate culture

Masahiko ISHIZUKA (Councilor for the Foreign Press Center Japan and also teaches at Waseda University)

In what has been referred to as the "lost decade," post-bubble Japanese society has undergone profound changes in many respects. The most remarkable of them all seems to have taken place in employment practices and working conditions, with far-reaching consequences for the nation's lifestyle and outlook.

The shifting sands have almost swallowed, among other things, the lifetime employment system along with the other protocols that constituted the "company community," which basically functioned as the ultimate social safety net. The demise of the system - attributable to the prolonged economic slump and globalization, which have placed Japanese firms under unprecedented hardship - has given rise to a sense of social instability and anxiety about the future.

Sociologically speaking, the company community system was regarded as a replacement for the close-knit villages and towns throughout the country that had existed for centuries, even surviving World War II. These local communities declined as a result of the postwar economic growth and industrialization that sparked the migration of young workers on a massive scale from rural Japan to large cities, especially Tokyo and Osaka and their surrounding regions. Whatever remains of local societies is now nearly extinct due to relentless depopulation of rural areas.

Those who were uprooted from their native localities, finding themselves lost in the urban diaspora, could take comfort in quasi-communities once they landed a job. The Japanese style of corporate management was once famous for its family-like relations, the compensation system that included wife and child allowances, the provision of amenities such as housing and recreational facilities and, in some cases, even company cemeteries. Company-wide sports days and departmental overnight trips to hot spring resorts and the like were common events that made employees feel as if they belonged to a tight community.

Indeed, Japanese firms - especially big ones - served as a provider of social security. Dismissals of employees in layoffs or restructuring drives were rare. Job security was usually not a matter of concern. In exchange, the company demanded virtually open-ended devotion from employees, who responded accordingly.

All this has changed drastically in the past decade as Japanese companies have undergone painful restructuring to survive the lengthy slump in the 1990s in the wake of the economic bubble's collapse, with additional impact coming from global competition. After being forced out, a large number workers in their 40s and 50s lost faith in the corporate system as a guarantor of a secure lifestyle, as did the public at large.

Uncertain status

Loss of confidence in the system is more structural than personal or individual. A large percentage of workers are now contingent employees - part-timers, temporary staffers and other types of non-regular employees whose positions and conditions are precarious.

Since 1998, regular employees decreased by about 4.5 million people, or 12%, while non-regular employees such as part-timers and temporary staff increased 42%, or a total of 4.9 million - raising their percentage of the total working population from 24% to 32%. This is perhaps the most pronounced change that has taken place within the Japanese employment system.

Regular employees are becoming a lucky minority in the labor market. However, because of their diminished numbers, the workload on each of them is much heavier than in the past and they are often forced to work longer hours. Despite record profits and the recovery of business currently under way, companies are unabashedly thrifty in sharing profits and labor's portion is in decline. Firms cite the necessity of preparing for global competition by investing more in capital equipment, as well as increasing the dividend payment to boost share prices - and hence market capitalization - in an effort to safeguard against possible takeovers.

When companies accepted the responsibility of caring for the well-being of workers and firms' own interests encompassed those of their employees, the government's corporate-oriented economic policies were considered tolerable. But this may no longer be the case as the public cannot expect companies to play the role of guardian in their lives.

One sign of change is a rush of bills for new labor-related legislation submitted to the Diet. Many labor and employment practices, which in the past were outside the scope of existing laws, are now requiring clarification under the law - the pending labor contract law, for example.

The question remains, however, as to what sort of communities the Japanese people will form in the absence of traditional options like local or company communities.

This is also a matter with significant political implications, considering that one of Prime Minister Shinzo Abe's key platforms is the love of one's native community. His policy may make sense at a time when many social ills - the admitted failure of the education system, for one - are attributable to the breakdown of communities, but there is no easy solution for reviving those communities.

An uneasy mood prevails in contemporary Japan, with worries that its society is disintegrating and the cohesiveness that once characterized it appears to be rapidly becoming a thing of the past. Some political leftists are concerned that the right wing is poised to take advantage of the situation, filling the vacuum by increasing the state's influence and resulting in a possible rise of nationalism.

(Originally appeared in the February 26, 2007 issue of The Nikkei Weekly, reproduced here with permission.)

Copyright © Japanese Institute of Global Communications