Tuesday, 21 December 2010

Japan - the setting of the rising sun

Last year's election of Yukio Hatoyama, leader of the Democratic Party of Japan (DPJ), and head of Japan's first non-Liberal Democrat Party (LDP) government to have a genuine chance of ruling Japan in almost 60 years, caused many to express the hope that Japan might finally start to make progress after more than 20 years of economic stagnation. Unfortunately, this has proven to be a forlorn hope.

Rather than tackling the burgeoning public debt, Hatoyama declared a £630 billion government program funded in large part through borrowing designed to "save life". Rather than reducing unemployment, unemployment remained flat at around 5%. Rather than doing anything to resolve the dispute over US troops on Okinawa, Hatoyama dithered. Rather than doing much to improve relations with China and Korea, things are as bad as they ever have been. And, of course, rather than ending the leadership merry-go-round of Japanese politics which leaves even educated Japanese people unable to name the last three people to head their country's government, he resigned after only eight months over what would, in any other country, have been a minor matter.

However, I think even had he been successful in addressing all of these points the stagnation of the Japanese economy would have continued. This because the fundamental cause of Japan's two lost decades would remain - Japan's corporate structure. Put simply, Japan has the most risk-averse, inefficient, hierarchical, and misogynistic corporate culture that I have ever worked in. I say this speaking as someone who has ground-level experience of some pretty tough-to-work-in British firms as well as, of course, Foxconn.

The irony in this is that it is exactly the spirit of self-sacrifice engendered by this corporate culture which is credited for Japan's post-war economic miracle, when Japan grew by twenty times between 1965 and 1980, a rate of growth even faster than that of China after 1978. Having worked in this environment, though, it is clear to me that this was and is a two-edged sword. Yes, employees do sacrifice holidays which they are legally entitled to take merely because their managers do so also, but the result of this is an almost zombie-like approach to work in which work is completed at a snail-pace. Yes, employees do put in an extra-ordinary number of hours, working late into the night, but this leads to offices which are virtually empty until about 10-10.30 am, and employees who are kept in a state of near-exhaustion. Yes, workers are willing to forego weekends and public holidays, but the result is people with virtually no family life or personal life outside of their office, who must then compensate for this by engaging in office affairs, alcoholism, and many of the foibles that get such attention outside Japan. As Heang Chhor, head of McKinsey in Japan said when interviewed by the Economist for its recent special report on Japan:

“This is a country where the mindset is all about input. In Japan what is expected of you is always to try harder, to put in more hours. They don’t value output.”

The other aspects of Japanese corporate culture are hardly better. In the field of female equality in the work-place Japan has fallen behind even relatively less advanced neighbours like Taiwan and China. This is not a mere statistical anomaly, in the office I worked in, out of a company of more than 200 employees, the only female employee to rise above the level of secretary was essentially a glorified PA who owed her position to family connections to the boss. Something like half of the professional women I spoke to in Japan reported receiving what would in Europe and the United States at least be called sexual harassment from senior male colleagues.

Although Japan is a country with much respect for the aged, in the workplace, based on my limited experience, this does not seem to translate into better conditions for older workers. In the office I worked, old people with useful qualifications would be kept on so that they could sign off on work which required their specific qualification to complete, but these people would regularly be subject to loud-mouthed abuse from the management. I remember one 74 year-old man who, having made a minor error, was called a "fool" in front of the entire office and told to "hurry up and die" by a senior manager. The same manager also made it clear that, were it not for the old man's qualifications, he would have been fired long ago.

That Japanese companies are hierarchical in comparison to most Euro-American firms will surprise no-one, but the extremes to which this hierarchy is taken even in comparison to Taiwanese and Chinese firms certainly shocked me. Even relatively minor decisions were often referred to the highest level of management, with "CYA" being the general rule. Whilst I was working in an admittedly conservative industry, it was the degree to which this was taken which surprised me.

The virtual cult of personality which exists in some Japanese firms came as something of a surprise, once again, remember that I am comparing this to Foxconn, where quotations from Terry Guo were displayed all over the factory. In the company I worked in, a company song, written by the boss's wife, would be played at all meetings. These were called 'meetings' but were more similar to Maoist struggle sessions, in which the minor faults of certain employees would be outed and apologised for, and speeches would be made comparing the boss to national heroes and urging us to give "110%" for the company. Combined with risk-averse company policy, this served to crush whatever initiative existed within the firm. The net result, of course, was a loss-making firm becoming more and more reliant on more successful foreign clients.

From this perspective, it is clear that until the Japanese government intervenes to prevent undue pressure on workers to work excessive hours, until effective measures are taken to ensure equality for female employees, until abusive management is exposed and talent properly harnessed, Japan's "lost decade" will go on and on.

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