February 13, 2019 [No. 62 – 2018]
Prof. Yoshio OKUNISHI
Faculty of Business Administration, Hosei University
In the preceding issue, I explained the standard process of college student job-hunting in Japan. It is conducted in a fairly coordinated manner based on a guideline issued by Keidanren (Japan Business Federation). Since many competing applicants and firms make their decisions almost in the same period, they don’t need to hasten or delay their job-seeking or hiring activities too much. Therefore the hiring and job-seeking costs are smaller than they would be if the timing of those activities was diverse or widespread.
Some claim that college student job-hunting and hiring activities should be liberalized and that those activities should be conducted throughout the year. As a matter of fact, however, it is not illegal to do so even now. Then the question is: Why do the majority of large firms still follow the guideline? My answer is that they are aware of the cost saving effects of the current system. Furthermore, the current system matches the Japanese social norm that college students should start their careers right after graduation. Both students and their parents will not accept a system in which students start job-hunting after graduation. Indeed the youth unemployment rate in Japan is lower than many other countries.
In contrast, universities are not very happy with the current system because students’ time spent on college studies becomes minimal during their job-hunting activities. But the voice of universities is not strong enough. Many firms tend to value the personal traits of students such as communication skills, positiveness and cooperativeness rather than their academic scores.
There are criticisms of the current system from a broader perspective as well, i.e., there is a view that student recruitment is a subsystem of the total HRM system. A typical Japanese HRM system could be depicted as follows, to each of which I will make my own comments.
First, firms prefer to hire newly graduating students without previous job experience (except for temporary part-time jobs). They treat every year’s incoming fresh employees, called “douki,” as a rather homogeneous group in managing their careers. This is reflected in some firms’ peculiar practices not to hire applicants who have already graduated from college. The custom that every fresh employee starts his or her career in April at the same time has not only practical but also symbolic significance. I am personally skeptical how effective these customs are.
Second, it is often the case that the jobs and workplaces of newly graduating students are not notified beforehand. The basic idea behind this is that firms do not provide this information so that they have more flexibility in rotating or transferring their employees. This is now being challenged, though, as young employees become more diverse and independent. Thus many firms have introduced several different career courses even among college graduates. So, newly joining college graduates may not be a “homogeneous” group anymore. I predict differential treatment of them will increase, although firms will not discard the discretion to assign or change jobs of their employees.
Third, careers, promotion and compensation among “douki” employees will diverge gradually; after 10 or 15 years, the difference will become apparent. The competition among employees is rather tough even during early periods of their careers, because the performance in the early periods will determine the career of the later periods. Long working hours may be a consequence of such a system. This is particularly disadvantageous to female employees who tend to bear more family responsibilities.
Fourth, work is supposed to be secured until mandatory retirement. But downsizing is not uncommon for the last three or more decades. The slope of age-wage profiles has become much flatter as well. Thus the merits of “long-term employment” and “seniority-based wages” have diminished. I guess this has profound effects on the effectiveness of the current college student job-hunting system. For example, ambitious and talented young students may prefer careers over which they have more control and are rewarded now not later. Another dissatisfied group may be those who put more value on family lives than work lives. Unless firms can offer attractive careers to those students, they will miss valuable human resources.
In his provocative statement at the press conference of Keidanren on September 3, 2018, Chairman Nakanishi said: “I feel that conventional Japanese methods such as lifetime employment and simultaneous hiring of new graduates are gradually ceasing to function effectively. Each company should have its own particular approach to recruitment, depending on its circumstances.” I cautiously agree with his view. But the answer is not obvious at all, because the Japanese system has many virtues and the same is true for some other systems. Furthermore, since various parts of each system are intertwined, it is difficult to change just a part of the system. So, it remains to be seen to which direction and how fast the Japanese HRM system will be changing.
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