Commentary / Japan

Are we addressing the core labor issues?

by Yoko Ishikura

March 8 was International Women’s Day. There seems to have been a sea change for gender equality in recent months, through activism against sexual harassment by #MeToo campaign, which originated in the United States. Many including myself wish to make the campaign sustainable to achieve long-awaited gender equally, even though the World Economic Forum, which publishes the Gender Gap Forum every year, stated that it may take 200 years to close the world’s gender gap.

What is the status of Japan regarding gender gap? According to the Gender Parity Report, its rank for gender parity was down from 103th to 114th in 2017, due to the low ranking of political empowerment and economic participation/opportunity, which forms a significant part of this index. The ranking by the European Institute for Gender Equality does not make the picture better, either. When you look at these figures from outside, you might wonder how effective or efficient the efforts and initiatives taken by the Abe administration for the empowerment of women and work-style reform in the past several years have been.

As for jobs and employment in general, in recent days the media extensively covered the official opening of the recruiting season for 2019 and the issue of miscalculation of working hours under the “discretionary work system.” The former offers a clue as to why so many similarly dressed young people rush to recruiting seminars. The latter may make you wonder why working hours are such a big deal debated at the Diet.

Some even say that the miscalculation fiasco might deal a severe blow to the work-style reform/productivity improvement policy initiatives that Prime Minister Shinzo Abe strongly advocates as key efforts for long-term competitiveness of Japan. This is quite a confusing picture to people who are not familiar with the history and status of the employment system.

The work-style reform legislation consists of several bills to address issues that confront Japan such as labor shortage, long working hours and low productivity. The measure to cap overtime work hours is included in the package, together with the policy shift to not compensate workers on the basis of hours spent on the job. Expanding the coverage of the discretionary work system is one of such attempts — although it has now been removed from the legislation.

In addition to these bills, policy proposals have been discussed such as allowing company workers to engage in side jobs and more flexible ways of work. Recurrent education/training is another example of encouraging people to continue developing new skills and acquiring new knowledge in the face of unprecedented technological change.

These initiatives and policy proposals address bits and pieces of issues on human capital, particularly concerning work and employment. I have no objection to promoting and implementing these policies and initiatives. And yet, two questions come back to me again and again: Are we addressing the core issue for the future? Why are we so focused on work hours?

There are several reasons behind these question. One is the activities of the Global Futures Council on Education, Gender and Work, in which I have been involved as a member. At the council, we have discussed issues such as flexible work, career of multiple jobs at multiple companies, the need for lifelong learning to continue re-skilling, and future jobs in the face of robotics and artificial intelligence, among others. Over the past year, discussion has expanded into broader employment-related social issues and their possible solutions, such as the introduction of “universal basic income” to sustain the income of people whose jobs have been automated by AI and robotics. These are issues that are still rarely taken up and discussed in Japan, which is so detached from the rest of the world and where people seem to live in an echo chamber.

Many organizations in Japan appear to remain in a 20th-century mentality with a traditional approach to work. To many of them, a job is a “full time” employment for a single company for one’s whole career. They seem to assume that traditional-style hiring in spring and fixed promotion programs with some in-house training in the early part of the workers’ career, rather than making lifelong learning opportunity available, will continue into the future.

As for the issue of diversity, many people seem to focus on methodology with which they can measure, such as increasing the ratio of women directors and managers. Few address the issue of how to make the work environment more accessible and friendly for women with young children and the elderly, so that they can join the labor market. Many educated and skilled women, as well as elderly people who have retired but have extensive experience, can be mobilized if a more flexible work environment is designed for them.

The human capital we need now and in the future will have different profiles and qualifications. They will be quite different from people currently in management positions in terms of skills and experience. Japanese corporations used to be known for good human resources development practices based on “one-shot recruiting” during the graduation season and training of workers according to corporate philosophy and practices in the early part of their career — because they were expected to stay with the companies throughout their career. Often, on-the-job training by their bosses was perceived to be effective and efficient.

Those days are over. The people we need today are qualified and willing to work, but seek flexibility in work style and environment such as remote work, flexible work hours and an evaluation system based on performance rather than time spent at the office. The skills required of new members of the labor market — and opportunities that they require today — are very different from ones provided for by training programs that current managers have gone through.

The world is moving at an unprecedented speed and big shifts of various kinds — from the geopolitical landscape to the power structure between consumers and producers as well as within the organizations — are taking place.

Japan is falling far behind in work and employment, not to mention in education.

I am afraid that many initiatives and policy proposals concerning the human capital development mentioned above is just scratching the surface of the issue at hand and patch together plans by different institutions and organizations. We should squarely face the urgent need for a new and flexible work environment, and for new skills such as ones for digital problem-solving, for which training programs based on past skill requirements and experiences will not suffice.

What we need is a departure from comfortable and easily measurable time-focused compensation to compensation based on performance, which is tougher and harder to calculate. We need people exposed to the global trend and aware of the reality of the digital workplace to point out clearly to Japan’s leaders that the choice is between “transform or die.”

Yoko Ishikura is a professor emeritus of Hitotsubashi University and serves as an independent consultant in the area of global strategy, competitiveness and global talent. She is a member of the World Economic Forum’s Global Future Council.