The important fact about Japanese wages today is that pay scales for regular workers have not fallen despite declining prices. This "downward rigidity" in seniority-based wages may be partly responsible for the growing presence of part-time workers and for the nation's persistently high level of unemployment. This analysis, found in the latest government report on the labor economy, underscores continuous heavy pressure on companies to reduce labor costs.
The seniority-based lifetime employment system makes it difficult to slash the wages of regular workers, so employers try to cut payroll costs by letting go older workers who draw relatively high salaries. Staff shortages are covered by hiring part-time workers who can be paid much less than full-time employees. With fewer full-time jobs available, the jobless rate remains high.
Part-time employment has soared in the past several years as companies, large and small, have stepped up efforts to replace full-time employees with part-time and temporary workers. This is particularly true of midsize and large companies. In fact, various surveys show that this shift to part-time hiring -- part of an escalating drive to reduce personnel costs -- is reaching epidemic proportions across a broad spectrum of industries.