The Characteristics of Japanese Company

The Characteristics of Japanese Comapny

James Abegglen, an American economist, wrote the book titled “The Japanese Factory” in 1958. In his book he revealed the three factors why Japan made a high economic growth.

Lifetime Employment System

It means that once the workers join the company, they stay there until their retirement age. The original idea has started a long time ago. Japan used to have an apprenticeship system mostly in merchant houses during Edo period in the 17th century. An apprentice called Detchi started to live in the business owner’s house at the age of 10 or so. He couldn’t deal with the business but did household choirs such as cleaning the shop and going shopping. He didn’t have to pay for the room or meals, but he didn’t get any salary. At the age of 17 or 18, he started to learn the business and receive salary. At the age of around 30, he became the manager. After working as a manager for many years, he still could stay in the company for his lifetime or he was allowed to be independent supported by the owner.

The company was like a big family. The most of the boys who join the company at the age of 10 or so stayed in the same company for their lifetime. In the 20th century, Detchi system had gradually disappeared, but the custom to stay in the company for lifetime has remained. After the WWII, Japan made a high economic growth for a long time, it was very rare that the big company went bankrupt or fired the employees. So, many workers felt that the company was their second family and they had loyalty to the company, so they remained in the same company and worked very hard. Even today, Detchi system no longer exists, the companies hire the newly graduated students at the same time in April and give them lessons how to be a good businessman, which seems like a modern Detchi system.

Also the seniority system explaining as follows was an important factor to support the lifetime employment system.

But the heyday didn’t last forever. The high economic growth has stopped in 1990’s. Even big companies went bankrupt. There was also an amendment of the labor law and the dispatched workers have started to increase in number.

Seniority System

This system was possible because of the lifetime employment system explained above. If you stay in the same company for a long time, they get better salary and also get promoted. It was possible to apply the system because the companies continued to expand during the long economic growth period. They continued to increase the profit, so they could give better wages for the workers every year. They could also give higher positions because of the number of employees was increasing year by year.

By this system, employees had motivation to remain in the same company for a long time to get better salary and position. And in order to appreciate the company, they worked hard.

This system is changing. Now, if you don’t make a good result, you don’t get better salary and better position. The companies have shifted to the merit system to emphasize more on the result. But still many companies, mainly log-lasting ones, continue the seniority system in some way. Most of the senior employees want to receive the benefit of the system.

Company Union

In western countries, the labor union has started as a craft union which is formed by the employees of the same occupation from many different companies. On the other hand, in Japan, the labor union was formed mostly within the company and the members are only from the same company. The big difference is that the craft union can be more aggressive. In the case of the company union, the members know very well the actual situation of the company, so they don’t insist their benefit too much and compromise through the discussion. They used to execute the strike until 1980’s. The public transportations sometimes stopped, but it didn’t last long time, just one day or a few days. But it has not happened after 1990’s.

Right after the WWII, over 60% of the employees joined the union, but it decreased to 17% in 2018. There are mainly two reasons for this drastic change. The one reason is that the percentage of the dispatch workers has increased. The second reason is that even the full-time workers, especially young workers, don’t want to spare time for the union activities and spend their private time.


Even though, the companies have been changing, the basic idea of these three systems remains in the companies and in the workers. These worked very well during the economic growing period when the number of the employees was important to expand the business, but now, in the 21st century when the time of IT, the old customs may be the trammel of the company growth.

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