Lifetime Employment Fading Fast in Japan : Employment: Toyota will hire designers on contract--a new sign of erosion in Japan’s system of lifetime jobs.
In a new assault on Japan’s slowly eroding system of lifetime employment, Toyota Motor Corp. says it will begin hiring experienced automotive designers on a contract basis.
Previously, such work has been done by permanent employees hired after college graduation who worked their way up in the company. But the new employees--who may be of any age and nationality--will be hired on the basis of experience and offered merit-based rather than seniority-based pay increases.
Erosion of long-term job security has become a topic of intense public concern in Japan. Faced with the most prolonged recession in decades, companies are looking for new ways to reduce costs.
Firing workers is generally seen as socially unacceptable and is usually considered a measure of last resort. But programs such as the one Toyota is launching--a variation on the worldwide trend toward less-than-permanent work forces--would shift a growing portion of new employment to positions carrying no guarantees against termination.
Indeed, for a prestigious corporation like Toyota to take the step makes it easier for others to follow suit.
At Toyota, the newcomers will be offered one-year contracts that can be extended up to five years. They are expected to “propose novel designs and revitalize the whole company with unconventional ideas,” the company said in announcing the program Friday.
While the experimental program will initially involve only a small number of new hires, the company is portraying the new policy as a step toward broader changes.
“To respond flexibly to the further globalization of business in the coming years, it is essential that corporations adopt a diverse employment system,” Toyota’s statement said.
Newly hired automotive designers will have a first-year salary of about $90,000--an amount usually attained by the firm’s white-collar workers only after about 15 years on the job.
The designers will receive “appropriate upward adjustments . . . depending on results,” the company said. If performance is impressive enough, their pay could double in the second year, Toyota spokesman Naoto Fuse said.
Such a pay system would differ drastically from that applied to lifetime employees, who receive incremental annual increases based more on seniority than merit.
Company officials say the new system may eventually be applied to about 10% of white-collar hires.
While most Japanese appear comfortable with the existing employment system, talented and ambitious individuals sometimes find it a source of immense frustration. People in their mid-30s, for example, cannot hold high positions or receive especially large salaries, regardless of how well they do their jobs.
In a survey conducted last year by the Japan Productivity Center, 89% of responding firms said they favored lifetime employment in principle. But only 56% said they actually guaranteed jobs until retirement.
As to the merits of the system, 83% said it helped them secure and train employees and 79% said it offered psychological stability to their workers. But 63% said it locked in inflexible personnel costs.
