[KS] Re: Lifetime employment

[Richard C. Miller]

Greeting back to you, Herr Sohn.

It is true that Drucker's book The Practice of Management was translated
into Japanese in the mid 1950s (1956 is one date I've seen), however the
good Mr. Drucker probably inflated his contribution somewhat. For example,
the whole notion of "quality circles" and "democratic management" are the
brainchild of American guru W.E. Deming in the late 1940s. His ideas were,
shall we say, insufficiently appreciated here in the U.S., but taken up as
early as 1948 in Japan, which established   the Deming Prize in 1951. Also,
as Chalmers Johnson observes in his book MITI and the Japanese Miracle, at
about the same time (late '40s and early '50s), MITI was pushing the
development of wage and promotion standards that focused on stability in
the workforce and the peaceful avoidance of strikes (see pp. 216-217). As
for the notion of "lifetime employment," it's a bit of a misnomer. I would
translate the Japanese (nenkou seidou) as "seniority system." Aside from
the fact that it covers only a minority of workers, and those only in the
white-collar segments of the largest companies, it only governs
compensation, not job security. Workers with seniority are retained in
favor of entry-level or temporary workers during minor downturns, but when
things get bad it's the most expensive (most senior) workers that are
fired. This has probably been forgotten even in Japan, because it has been
so long since the economy has been so poor.

As for the Korean case, I think it's difficult to say how similar it is to
Japan's. Roger Janelli has an interesting book, Making Capitalism: The
Social and Cultural Construction of a South Korean Conglomerate that is
based on fieldwork he did in a large Korean firm he called "Taeseong." He
argues in this book that, at least in the case of the company he worked in,
there was a system of compensation largely based on seniority, but that
there was essentially no job security. He provides a list of reasons
allowing the company to dismiss any employee that was printed in the
employee handbook that runs the gamut from death (!) to "personnel
reductions..required by job reorganization or the conditions of the
company" to "when such disciplinary action or firing is decided" (pp.
152-153)--basically, for any reason or no reason. I don't know about Korea,
but courts here in the U.S. have ruled that employee handbooks can be
considered binding contracts. 

With that in mind, I am led to ask how much of a promise "lifetime
employment" really is. My slightly educated guess is that during the fairly
long periods of prosperity in Japan and Korea, business grew rapidly enough
to handle the increased expense of increasingly senior workers, dealing
with any problems by firing temporaries, cancelling contracts with small
suppliers, and suchlike. Management presented this situation to the
insulated workers as proof of the "beautiful practices" of Asian
business--you were loyal to us, so we are loyal to you. Now that management
no longer feels it has the luxury of continuing to pay senior workers, that
loyalty apparently requires the supreme sacrifice. I personally see nothing
resembling Confucianism in this behavior. It looks like pure Capitalism to
me. When large U.S. companies ended a comparable period of labor peace in
the late 1970s by breaking unions, unilaterally slashing compensation,
increasing work hours, and firing tens of thousands of workers, no one
seemed mystified by their behavior. We had no mythology of a culture that
could somehow be capitalist without actually being capitalist. How is the
Japanese or Korean case different?

Perhaps I'm just being cynical here, but I think that the long-term history
of East Asia's economic development bears me out.
--Richard C. Miller
--UW School of Music
--rcmiller at students.wisc.edu


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