Redundancy in Japan

Press, 27 August 1983, Page 22

Redundancy in Japan

By PETER McGILL, in Tokyo Candid admissions of failure may seem rather strange coming from Japan’s leading industrialists. Recently, however, an ever-growing number of Japanese company presidents have thrown up their hands and quit. In the first five months of this year, 172 presidents of big companies stepped down, mainly because they were unable to cope with rapid technological changes that are threatening Japan’s cosy employment system. “I’ve read books on the introduction of biotechnology over and over, but haven’t understood any of them really well,” said the Teijin president, Mr Tomu Tokosue, in announcing his resignation; Once exclusively a textile-maker, Teijin is now increasingly diversified into pharmaceuticals, medical equipment, video-tapes, biotechnology, and genetic engineering.

Mr Tokosue is at least in good company. Mr Takateru Koakimoto, the president of Nippon Kogaku, which makes Nikkon cameras, was forced to admit that his faith in good quality, sturdy 35mm cameras was no match for smaller, easier to operate electronic cameras that have been sweeping the market. Beaten by the electronic chip, he announced: “I’m too old to cope with the rapidly changing market,” and stepped down. Top executives are just the most prominent victims

of changes being wrought by new technology and the switch;to new product areas as older heavy industries lose their international competitiveness. Japan’s famed lifetime employment system is cracking under the strain.! In the era of high economic growth, the system guaranteed workers regular pay increases and promotion based on seriority, as well as numerous fringe benefits, in return for lifetime commitment and hard work for the same company. [The result was generations of “generalists” who knew a little about most aspects of the company as they climbed the ladder but were experts in none. For many companies that tradition has now become a curse. Japan’s enviable 2.7 per cent unemployment rate cloaksj an estimated 4.5 M “redupdant” workers kept on in the companies to keep labour harmony. By avoiding large lay-offs, Japan has been spared the social costs of high unemployment that bedevil Western countries, but at the cost of slumping productivity. Last year, Japan’s mining and manufacturing sector, the old economic powerhouse, managed only a 1 per cent increase in productivity, chiefly because of production cutbacks in steel and chemicals. Leaner United States and European industries, that have been able to shed their workers,

are rapidly closing the productivity gap with Japan.