Japanese Human Resource Management

The Japanese economy expanded rapidly after World War II. Most industrialised facilities had been destroyed, large financial companies had been dissolved by the occupying forces, and people were in need of food, money, and homes. Consequently, after 1945, the Japanese economy began its revival from a starting point of nothing, without financial, material, or human resources. The ‘stability of life’ was the basic need of workers.

Some of Japan’s business entities are the world’s oldest. Kongo-gumi, a construction group associated with the Shitenno-ji Buddhist temple in Osaka, was established in 578. Ikenobo-kado-kai was established in 587 to spread the art of flower arrangement. Since that time, the spiritual tradition of Kongo-gumi has been transmitted by 39 masters, and the tradition of Ikenobo-kado-kai has been transmitted by 45 masters (Yokozawa 2012), and skills have been transmitted via master–disciple relationships as well.

In the 1990s, Japanese industry experienced a significant recession. Various types of restructuring were then conducted after the collapse of the bubble economy. Downsizing was inevitable. This situation was a challenge for the practice of long-term employment and the psychological contract which was used by employers. A nationwide survey showed that measures which included voluntary retirement schemes (VRS) were widely used at this time. Wage reforms and the introduction of part-time workers were also common (see Table 3.1).

Up to 1990, worldwide industrial restructuring required every economic actor to adapt flexibly to changing situations. Whilst the giants seemed to suffer from slow action and reaction, it was the small companies which became more active. Moreover, they became more active in the sectors which showed the greatest growth. A report of the Organisation for Economic Cooperation and Development (OECD) pointed out, for example, that about one-quarter of employment in growing sectors in the Federal Republic of Germany and in Japan was in very small establishments (less than 10 employees), while in declining sectors the proportion was about one-eighth (OECD 1989). This could be partly due to the expansion of the service sector; however, small and medium-sized enterprises (SMEs) in manufacturing also appeared to be developing on a broader basis. In manufacturing, a pervasive revision of labour could be seen to be occurring in smaller units of employment (establishments and enterprises), at least in the industrialised countries (Sengenberger and Loveman 1987).

The key issues in the industrialisation of developing countries faced with a globalising economy increasingly concern new directions for development, such as partnerships, linkages, networks, and stakeholder participation. United Nations organisations, for example, are seeking further collaboration with private sector and non-governmental organisations. Renewed attention is being given to the importance of foreign direct investment (FDI), which could most effectively enhance the technology and human resources of recipient countries. United Nations (CCPOQ/DESA, 1999) pointed out that the new emphasis on FDI coincided with current advocacy on behalf of ‘capacity building’ as a development strategy throughout the international community.

Please check whether the identified section levels are correct.

An overview of the global position held by Asian countries looks very impressive on the world map. It is important to reconfirm at first Asia’s standing in the world as a community. Asia’s high economic growth in 2005 was most impressive in the last decade. Further, China’s and India’s growth in gross domestic product (GDP) taken together in the same year is more impressive. In 2005, the GDP of China (40.9 %) and India (14.3 %) together accounted for 55.2 % of the Asian GDP, up from 49 % in 2000. The combination of the two emerging economies, China and India, has been referred to as ‘CHINDIA’. China is projected to produce one-third of all the wealth in the world, provided the economic trends established between 1975 and 2002 continue for another decade.

In the mid-1990s, the unemployment rate in Japan was still extremely low compared with other industrialised countries such as the USA and those in the EU. The recession of the Japanese domestic economy raised the unemployment rate to 2.9 % (June, 1994), which was still lower than that of other industrialised countries but a similar level as during the oil crisis in Japan (2.8 % in 1986). One of the reasons for the low level of unemployment in Japan was explained by the term ‘lifetime employment system’, which was supported by employers and workers as an implicit agreement in an enterprise. The benefits of this practice were that it enabled social partners to secure employment continuation prior to other concerns of workers. This well-known approach, however, led to a misunderstanding of the real employment situation in Japan. A large number of employees in an enterprise did not necessarily have their initial employment connections protected for life; rather, most of them had the option of retiring early.

Developing countries constitute more than two-thirds of the members of the International Labour Organization (ILO). The main task of the ILO is to set international labour standards. With regard to developing countries, it is important for compliance with international labour standards to be integrated into free trade systems in order to form the basis for fair competition (Valticos 1982) However, ILO standards do not always correspond to the circumstances of developing countries. One of the reasons for this is attributed to the ILO’s history. It was founded in 1919 as part of the Versailles Treaty by the 43 participating countries, most of which were developed countries. By 1987, the ILO had adopted 162 Conventions and 172 Recommendations. Most developing countries joined the ILO after gaining independence. Thus, developing countries did not participate fully from the beginning in the standard-setting activities of the ILO. Occasionally, the representatives of developing countries insisted that they could not participate in the standard-setting process because of their financial problems, their particular circumstances regarding human resources and labour administration, and the logistics of dealing with ILO matters (ILO 1977).

The ILO Declaration on Fundamental Principles and Rights at Work and its follow-up (henceforth the Declaration) was adopted by the ILO Conference in 1998.

For the last few decades, the issue of corporate social responsibility (CSR) and labour standards has been one of the most popular business topics not only in the business world but also among academics and educational institutions such as universities and business schools. Academia has been critical about unilateral links between labour standards and free trade agreements and has analysed the multidisciplinary issues. From the aspect of business education, the Principles for Responsible Management Education (PRME) initiative is a prominent example of educational relationships for responsible business between the United Nations and business schools.

Living and working conditions are becoming increasingly relevant for business and management. Globalisation in the world economy, characterised by the liberalisation of world trade and investment, may create wealth and prosperity for some, but is accompanied by serious social and environmental problems. Capital investment is on a constant worldwide quest for lower labour and living costs; and in Asia, debate has arisen over whether this quest contributes to a decline in social factors.