Few would doubt that work-style reforms are at the core of the policy challenges confronting Japan. Many of the labor practices prevalent in this country are quite extraordinary in light of global standards.
First of all, it is difficult for employers to fire employees, based on court rulings and established practices, if not the outright letter of the law. This is in stark contrast with the situation in a number of industrialized countries, where employers more freely dismiss their workers with compensation of some sort, typically monetary.
At the root of the practice in this country is the established notion that the livelihoods of workers must be protected. A closer look at the issue will reveal, however, that behind this notion is an archaic idea that business enterprises cannot possibly go bankrupt and, therefore, will be able to pay the wages of workers once they are hired — an assumption that is false under a free-market economy. Small and medium-size companies cannot afford it. If they are on the brink of bankruptcy, they have no choice but to reduce their workforce. The freedom to fire employees should be recognized in Japan.