The Journal The Authority on Global Business in Japan

Each year, the Japanese Ministry of Health, Labour and Welfare issues an update on the nation’s workforce. The 2016 report reveals that the number of non-regular employees was continuing to rise—a trend that now spans more than two decades. These workers, who may be part-time, contract, or temporary agency workers, now number 20 million, accounting for 37.5 percent of the total working population. Women represent 67 percent of the total figure, and 45.1 percent of these women earn less than ¥1 million annually.

Japanese women rank third in higher edu­cation among Organisation for Economic Co-operation and Development member countries. It is discouraging to see that these college-educated women have few choices. There are discussions taking place in the government about equal pay for equal work and work-style reform, but some private research firms say these measures—even if implemented—are insufficient to overcome the lack of labor that Japan increasingly faces. This is especially true of those untapped, highly skilled women.

In this interview that expands upon the American Chamber of Commerce in Japan (ACCJ) Women in Business (WIB) white paper titled Untapped Potential, we talk to A. Barry Hirschfeld, Jr. about the changes that need to be made.

Having lived and managed your company in Japan for more than 20 years, what positive progress have you seen in the labor market? What challenges do you see now?
The current labor system finds its roots in post-war Japanese history. At that time, labor mobility was not an issue. Companies were geared up for high growth and workers remained at the same company. Today, as women seek to re-enter the workforce after or while raising children, and as venture companies need to hire quickly and have the flexibility to adjust their workforce later, the system has become outdated. Japan needs an updated labor system to respond to the needs of the 21st century.

How do our WIB recommendations relate to this?
In our ACCJ viewpoint and white paper, we proposed the creation of a new type of labor contract that companies can use to hire women back into the workforce, or venture companies can use to rapidly hire and expand without fear of being unable to adjust their staffing in response to business cycles.

Under our proposal, companies and employees could mutually agree to enter into a contract whereby employment could be terminated with predetermined severance. This is very similar to the system in Germany. The typical argument against such an arrangement is that workers can be fired without cause.

However, what has happened under the current system is that—to avoid the often unrealistic commitment of lifetime employment—companies hire non-regular workers, which largely means women who receive low salaries.

The key point here is that we are just suggesting a new option. Companies and staff can mutually decide to continue utilizing the existing system if they wish.

What might the future be like if women had these new options and companies had more choices?
With a new labor contract, companies would have an additional tool to hire women back into the workforce, not as lower-paid, non-regular employees but as regular employees with potentially better salaries and benefits.

Currently, companies have only two options: regular employee with an unlimited commitment or non-regular employee with lower salaries and no incentive to provide training. Our recommendation would offer another option that allows both sides to benefit.

Makiko Tachimori (Fukui) is vice-chair, Women In Business Committee, and president, Harmony Residence, Inc.