The Japanese Employment System in the 21st Century: Under Reconstruction

Abstract

The main objective of this paper is to provide a comprehensive overview of the recent developments in the Japanese employment system. The paper deals with two distinct factors: economic and demographic. In addressing the impact of economic factors on the employment system, the paper analyzes the reactions of employers with regard to employment patterns, the changes in the legal framework, as well as the new tendencies in dismissal law. Particular attention is given to the analysis of the law reforms undertaken by the Japanese government aimed at enabling a transition from the system of job security towards a more liquid labor market. These reforms are analyzed in the light of the socio-economic changes, new developments towards a more diversified and flexible labor market, as well as the social constraints that may present an obstacle to more comprehensive changes in the existing system. In the part dealing with the impact of demographic factors on the employment system, the paper analyzes reforms aimed at remedying problems arising from the shrinking workforce. In particular, the paper introduces reforms aimed at promoting a greater participation in the labor workforce by the older employees, foreigners and women. The paper then makes assessment of efficiency and limitations of those reforms. One common point to legal reforms dealing with economic and demographic factors is that in both cases the implementation of legal reforms has demonstrated that sometimes the law can be used as efficient tool in enforcing the government policies and can guide changes in the desired direction, while in some cases the law has shown its limitations.