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Flexibility in Japanese internal labour markets: The introduction of performance-related pay

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Abstract

The introduction of performance-related pay by Japanese firms, a development known as seikashugi, stands out as the most important adjustment in their management of regular employees. This paper discusses this development and analyses its implications for the logic of Japanese employment practices. Previous analyses and developments in other countries suggest that it could imply a breakdown of the internal labour market, a key feature of Japanese employment practices. However, drawing on theories of institutional change and two studies among Japanese firms in 2002 and 2007, this paper argues that implications have been modest in spite of the appearance of convergence. Enabled by its flexibility and a continued support for the practice of lifetime employment, the Japanese internal labour market has assimilated performance-related pay and shaped its own transformation.

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Notes

  1. As a matter of fact, the interviews took place in the fiscal years 2002 and 2007. The actual interviewing periods were from October 2002 till March 2003 and from September to December 2007.

  2. A more detailed discussion of the case studies as they were included in the first study can be found in Keizer (2005).

  3. This paper refers to publications by the Japan Institute for Labour Policy and Training with the abbreviation JILPT. It also uses this abbreviation for publications under the Institute’s former name (Japan Institute of Labour) and publications under its Japanese name (either “Nihon Rōdō Seisaku Kenkyū—Kenshū Kikō” or the former “Nihon Rōdō Kenkyū Kikō”).

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  1. Bradford University School of Management, Emm Lane, Bradford, BD9 4JL, UK

    Arjan Bernhard Keizer

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Correspondence to Arjan Bernhard Keizer.

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An earlier version of this paper was presented at the 11th Conference of the European Association for Japanese Studies in Vienna on September 2, 2005. I also gratefully acknowledge the support and comments by Joop Stam, John Groenewegen, Hiroyuki Odagiri, Miguel Martinez Lucio and Gretchen Larsen. The empirical research for this paper was made possible by a Monbukagakusho Scholarship for postgraduate research studies and funding from the Japan Institute for Labour Policy and Training.

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Keizer, A.B. Flexibility in Japanese internal labour markets: The introduction of performance-related pay. Asia Pac J Manag 28, 573–594 (2011). https://doi.org/10.1007/s10490-009-9170-3

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