More than two decades ago — just as Japan was impressing the world by emerging from the first oil crisis with a leaner economy — Taichi Sakaiya, now head of the Economic Planning Agency, warned in a novel that the nation would face a midlife crisis before the turn of the century.
As he predicted in his 1976 best seller “Dankai no Sedai” (“The Baby Boom Generation”), the economy now seems to have reached a turning point. With its long-cherished lifetime employment system on the verge of collapse, the nation’s rapidly aging society now faces an unprecedented level of joblessness.
Confidence is eroding, particularly among baby boomers and other middle-aged people. Untroubled by the slightest possibility of layoffs, they both supported and enjoyed the nation’s postwar economic growth. But pundits say lifetime employment is becoming obsolete.
Critics say lifetime employment was only effective during the economy’s catchup phase and while it could grow simply by emulating the West, “In a broad sense, a certain era is coming to an end,” Sakaiya said in an interview following the publication of his latest book, “Jidaimatsu” (“End of an Era”).
“That era has been a historic phase of development toward a modern industrial society, which Japan has craved for 130 years, ever since the dawn of the Meiji Era,” Sakaiya said.
The Meiji Restoration was driven largely by nationalistic zeal to pursue industrialization and catch up with the West. Later, Japan’s postwar growth was helped greatly by amicable labor-management relations, he said.
However, management and labor have not always had good relations. Many workers had no choice but to work at factories in industries such as textiles around the 1930s. According to Sakaiya, factory workers accounted for a mere 246,000 out of a population of some 60 million in Japan in 1927.
While a majority of Japanese at the time engaged in small-scale, labor-intensive farming, a growing number of people were being absorbed by service industries related to railways, postal services, public utilities, teaching, distribution, civil service, military and housekeeping.
Although heavy industries such as steel and shipbuilding were temporarily boosted by a post-World War I munitions boom, a subsequent economic slump resulted in growing unemployment, with about 500,000 out of work.
Nonetheless, until the Factory Law was revised in 1937, there was virtually nothing to prevent management from laying off workers, according to Sakaiya. “Management had little trust in their workmen and factory girls, who frequently changed jobs,” he said, adding in “Jidaimatsu” that labor unions were not officially recognized, and some circles likened the unionization drive to the communist movement.
“During the period spanning the years before World War II to right after the war, a majority of workers had a sense of belonging to large families based in farming villages rather than large companies that concentrated on capital accumulation,” Sakaiya said.
But postwar agrarian reforms and high economic growth from 1955 onward changed all that. The nation was also stable politically due to the so-called 1955 system based on the Liberal Democratic Party’s single-party rule.
“The 1955 system and high economic growth completely severed local societies and large-family-oriented communities. Youth opted to leave their parents behind in their farming villages to migrate to big cities for work,” Sakaiya said. “Eventually, people sought new communities in their own working places and nurtured corporate loyalty under the lifetime employment system.”
Although Japan’s effort to create a modern industrial society through imperialism was crushed in its World War II defeat, the strait-jacket social and educational system inherited from the prewar regime helped the nation evolve by the 1980s into a society that best fit the mass production era, according to Sakaiya.
Unfortunately, the U.S. and Britain, both considered economic losers by the Japanese at that time, were already prepared for what Sakaiya calls an “intelligence-value society,” one where information and telecommunications networks play a major role.
By the end of the 1980s, farmers had dwindled to 7.4 percent of the total working population in Japan. The share of salaried workers, on the other hand, had grown to 70 percent of the workforce, and from their earnings came 70.6 percent of all direct tax revenues.
In November, the government announced a 24 trillion yen emergency economic package that in part aims to foster 1 million new jobs. The unemployment rate hit a record 4.4 percent that month, with the number of jobless totaling 2.91 million.
“Unless Japan faces up to drastic corporate restructuring and deregulation to bring on dynamic changes as seen in the U.S. and Britain in the 1980s, we may well fall into the (high-unemployment) plight of (present-day) France and Germany,” warned Hisashi Yamada, a senior economist at Japan Research Institute.
As Japanese companies struggle to keep their heads above water amid the prolonged recession, a growing number of middle-aged salaried workers are finding themselves under growing pressure to “voluntarily” leave their companies, according to Labor Ministry officials.
Having dedicated their lives to hard work with the belief that they were helping Japan catch up with the West, many now feel betrayed.
When baby boomers landed their first jobs, forming a firm base of the nation’s workforce pyramid, they thought they had found jobs for life. But today, they are being exposed to the grim reality that they may lose their jobs without an adequate social safety net to help them out.
“Under the tacit contract of lifetime employment and seniority-based pay systems, we have devoted ourselves to working for the company. On many occasions, we even sacrificed our private lives for the sake of improving productivity and efficiency,” said Akihiro Sakai, 58, who retired from a Tokyo-based precision instrument firm last January.
After having worked for the firm for 35 years, he said, he was forced to participate in what the company called a “voluntary” early retirement program. “We worked hard for low salaries while we were young, and it’s just not fair (for the company) to force us to leave when our wages are up,” Sakai said.
Takashi Sumioka, a social psychiatrist, said many middle-aged and elderly workers are “company men” who take pride in having been part of the locomotive of the nation’s postwar economic growth. “Having long taken for granted a secure life under the lifetime employment system, these people have difficulty coping with the current situation,” said Sumioka, who heads the Seijo Sumioka Clinic in Tokyo.
“When subjected to corporate restructuring, they panic, fall into states of depression and insomnia, or even feel an impulse to commit suicide,” he said, pointing to the growing number of people in their 40s and 50s who are taking their lives.
Some brush up their job skills at public vocational training courses. There are also those who attempt to set up their own businesses, utilizing their own business assets and getting help from private investors who provide funds and advice to potential new entrepreneurs. Sakai is such a wannabe.
Relying on his retirement allowance to cover household expenses and housing loan payments, Sakai is attending a monthly class at Golden Age Kigyo Juku, a name that translates literally as the cram school for entrepreneurs age 45 and up.