‘Equal Pay for Equal Work’ Changing the Japanese Employment Paradigm

Abstract

Against a backdrop of domestic demographic and economic challenges, Japanese employers have started to increasingly grapple with the risks associated with hiring full-time workers without fixed-term contracts. Japan’s previous ‘three jewels of the Japanese employment system’ – lifetime employment (shushin koyo), seniority-based wages (nenko joretsu) and specific enterprise unions (kigyo-nai kumiai) – are becoming perilous in a nation shouldering the burdens of a declining birthrate and a rapidly ageing population (Kingston 2001; Lincoln & Nakata 1997). Whilst this model played an important role in Japan’s period of rapid economic growth, often regarded as a major social driver of Japan’s postwar growth (see Abegglen 1958), prolonged economic stagnation as Japan enters its second so-called ‘lost decade’ has caused many economists to question to what extent this model is sustainable in the shadow of Japan’s future.