Employment Systems in Japan's Financial Industry: Globalization, Growing Divergence and Institutional Change
| Date | 01 September 2016 |
| Published date | 01 September 2016 |
| Author | Mari Yamauchi |
| DOI | http://doi.org/10.1111/bjir.12164 |
British Journal of Industrial Relations doi: 10.1111/bjir.12164
54:3 September 2016 0007–1080 pp. 522–551
Employment Systems in Japan’s
Financial Industry: Globalization,
Growing Divergence and Institutional
Change
Mari Yamauchi
Abstract
This article examines growing divergence and change in the employment
systems of Japan’s financial industry from the early 1990s until shortly
after the so-called Lehman Shock. This was a period which saw accelerated
deregulation and globalization strongly impact the country’s financial markets,
leading to intensified competition over human resources. Foreign multinational
corporations introduced into Japan’s local product and labour markets new
global ‘rules of the game’; in response, some native firms were forced to alter
core aspects of a traditional employment model. The result was the emergence
of diverging patterns of employment.The present study will demonstrate that the
interaction of two key factors — national ownership and variation among core
products and services oered— is shaping employment diversification, mediated
by firms’ individual policies and practices.This research contributes to the debate
on the eects of globalization on the divergence and change of employment
systems.
1. Introduction
In recent years researchers have observed, within many advanced nations,
diverging patterns of employment along with a weakening in distinctive,
country-specific employment systems (Katz and Darbishire 2000; Lorenz
and Valeyre 2005; O’Toole and Lawler 2006). Katz and Darbishire, for
example, found that four employment systems were becoming more salient
in automobile and telecommunication industries across seven advanced
economies, while O’Toole and Lawler have identified three separate
management models within large and midsize private sector companies
in the USA. These studies have pointed to globalization, the growth of
Mari Yamauchiis with Doshisha University.
C
2015 John Wiley& Sons Ltd/London School of Economics. Published by John Wiley & Sons Ltd,
9600 Garsington Road,Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
Employment Systems in Japan’s Financial Industry 523
service sectors and declines in union membership (coupled with increases
in managerial prerogative) as key factors driving change and divergence.
Similarly, research on Japan has found divergent patterns in employment
systems (Miyajima et al. 2003; Miyamoto 2006; Morishima 1995); however,
such studies have tended to focus on correlations between HRM practice,
and corporate governance reform, in light of institutional complementarity.
Research on Japanese employment systems, which examines how shifts in
the global business environment have impacted the domestic labour market,
remains underdeveloped.
To address this imbalance, this article explores recent diversification
in the employment systems of Japan’s financial industry by focusing on
the role of newly intensified competition over (human) resources resulting
from expansion by foreign multinational corporations (MNCs). A guiding
question here is: How has deregulation, and subsequent globalization and
specialization of the industry,influenced the structure of local labour markets
and HR policies of Japan’s leading financial institutions? This study further
explores why some native firms have undergone more rapid and profound
change than others. In order to provide possible answers to these questions,
the article also analyses the heterogeneous pressuresexperienced by each sub-
sector product (banking, securities and life insurance) and, as a result, firms’
diering responses in the area of HR policy.
To briefly review the historical context for this diversification and change,
the traditional Japaneseemployment system, underpinned by lifetime or long-
term employment (hereafter,LTE) and the ‘seniority-plus-merit principle’, or
nenko, (Dore 1973; Sako 1997), has been under pressuresince the early 1990s,
when Japan’s asset bubble burst and the economy entered a long period of
stagnation. Large corporations, while intent on avoiding radical reform of
these structures, nevertheless have responded to the shifting environment by
introducing performance-related pay (hereafter PRP), narrowing the scope
of core employees by increasing non-regular workers and reducing senior
employees through transfer and early retirement programmes (Jackson 2007;
Sako 1997).
In fact, the Labour Force Survey conducted by the Ministry of Internal
Aairs and Communications reported that,as of 2013, the percentage of non-
regular workers in Japan’s workforce had reached 37%. Similarly, the Japan
Institute of Labour Policy and Training (hereafter JILPT) reported the same
year that during the preceding half decade 30.3% of large companies (1,000 or
more employees) had conducted individual forced resignations and ordinary
dismissals. Such developments point to a major shift occurring over the past
two decades: The scope of core employees, as well as the solid job security
they’ve long enjoyed, continue to contract and weaken.
Further, recent research on employee attitude has found divergent
employment patterns forming between various age groups of full-time male
employees: Among recent university graduates working at large companies
the percentage of lifetime employees is markedly declining (whereas for
middle-aged to older workers there are no clear indications of change)
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2015 John Wiley& Sons Ltd/London School of Economics.
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