In recent years, the term "job-based employment" has emerged as a buzzword in the human resources sector in Japan. This trend represents a shift from the traditional membership-based employment, which has been the norm for regular employees in Japanese companies, to a model that aligns with the global and digital market trends. While academic in origin, these concepts have transcended their original definitions and are now used in discussions about trends and value judgments*1. There is a tendency to outright reject membership-based employment while glorifying job-based employment.
However, the author (Jelper Club) argues that membership-based employment is an excellent employment form for students, especially those who are uncertain about their career paths or are in a "career moratorium". This article discusses the definitions and differences between membership-based and job-based employment, exploring why membership-based employment has been mainstream in Japan and why it is the solution to the career concerns of students nowadays.
Membership-Based Employment in Japan
Membership-based employment is characterized by hiring individuals as part of the company's membership without specifying their duties, assuming lifelong employment (regular employees are employed until retirement). In exchange, employees are expected to fully commit to the company for about 40 years, starting as fresh graduates*2. This employment form includes skill-based or seniority-based wages, where salaries are determined either by the ability to perform a job or by age and years of service*3. This system, which became widespread in Japan during and after World War II, was established as the predominant employment style during the high economic growth period and was highly regarded as a driving force of Japan's economic prosperity at the time*4.
A significant feature of membership-based employment is job rotation, aiming for long-term employee development by exposing them to various job roles*5. This allows employees to experience different positions within the same company, enhancing their growth. In Japan, it's widely accepted that companies have a responsibility to develop their employees, even if their performance isn't high, under a membership employment contract. Therefore, dismissal is extremely difficult under the Labor Contract Law Article 16.
Employees under membership-based contracts generally have job security, allowing them to explore various career paths and find their strengths. Without a clear job description, they will be able to take on new challenges using company resources, leading to the rise of "intrapreneurship" within many Japanese companies.
Job-Based Employment
Job-based employment, predominant in Western countries, involves employees providing their skills and abilities to fulfill specific job responsibilities (job descriptions), and companies compensating them accordingly. This system encourages constant competition for talent, with companies offering higher wages to secure skilled employees. Workers continually re-skill and improve skills to enhance their market value. A key feature of job-based employment is its adaptability, which enhances career flexibility in the Japanese job market by allowing for frequent changes in workforce and skills.*6.
Current Mainstream Employment Forms in Japan
The "Tripartite Guidelines for Labor Market Reform" published by the Cabinet Office on May 16, 2023, outline three key points: (1) support for skills improvement through re-skilling, (2) introduction of job-based pay tailored to the individual circumstances of each company, and (3) facilitating labor mobility to growing sectors. These guidelines clearly indicate the Japanese government's policy shift towards job-based employment, indicating Japanese companies adapting to global employment trends.*7.
However, even for the recruitment of new graduates in 2024, only 27.4% of companies have introduced or plan to introduce job-based hiring*8, showing a comparison of job-based and membership-based systems in Japan remains skewed towards the latter. In recent years, an increasing number of companies have been questioning the seniority-based wage system, a fundamental aspect of membership employment. These companies are abolishing seniority-based wages and adopting pay systems based on job performance and roles, regardless of years of service*9. Consequently, companies that combine the best aspects of both membership and job-based employment are increasing. This trend, as stated in the 2019 remarks by Keidanren Chairman Nakanishi, is likely to continue for some time*10.
The Foundation and Future of Japan's Employment
Peter F. Drucker, a world-renowned management scholar, mentioned in his book "Managing in the Next Society" the following about Japan:
In the United States, after national security, the most important thing is the economy. In Japan, the most important thing is society.
For Japanese politicians, bureaucrats, and economic circles, the economy is important, but society is even more important.
This perspective, according to the author (Jelper Club), is at the core of Japan's unique employment system. In Japan, not only the government but also companies need to contribute to the formation of social stability. Companies have a responsibility to take care of their employees from the time they are hired until retirement, a concept akin to "from the cradle to the grave." This approach is believed to have shaped Japan's unique employment system. Indeed, this employment system, including a policy prioritizing social stability, has contributed to maintaining social stability and a high quality of life in Japan, a country with a population still exceeding 100 million. Below are comparative graphs of Global Peace Index 2023 (Institute for Economics & Peace) and quality of life indices (NUMBEO) among the G7 countries.
Figure 1: Global Peace Index (2023) in G7 countries*11
Figure 2: Quality of Life Index (2024) in G7 countries*12
As can be seen from these two figures, Japan ranks at the top among the G7 countries in both degree of peace and quality of life. This means that working in Japan not only provides experience and compensation but also allows one to enjoy these social benefits. This greatness of society, created by both the government and private sectors, is believed to be the foundation of Japan's unique membership-based employment system.
In the future, trends such as technological advancement, a decrease in the domestic pool of new graduates due to an aging population, and an increasing departure rate of new employees due to a rise in the need for job changes are expected to heighten. These trends could be seen as antitheses to the membership-based employment system supported by the mass recruitment of new graduates and the lifetime employment system. However, it is unlikely that membership-based employment will be completely abolished due to the limitless time and cost required to change various internal systems. Rather, as mentioned earlier, a new form of employment based on membership-based employment might emerge by incorporating the merits of job-based employment. For example, a system where employment form changes between membership-based for non-managerial positions and job-based for managerial positions, or where technical jobs are job-based and non-technical jobs are membership-based, could be considered. Many Japanese companies are already experimenting and striving to create new employment forms based on membership-based employment.
Lastly, the late P.F. Drucker stated in his 1999 book "Managing in the Next Society":
I hope Japan will maintain the social stability, community, and harmony achieved through its lifetime employment system, while also realizing the freedom of movement necessary for knowledge work and knowledge workers. This is not only for the sake of Japanese society and its harmony. Japan's solution will likely become a model for other countries because, in any country, bonds are essential for society to truly function.
To reiterate, membership-based employment has been the engine that built the culture supporting the long history of Japanese companies and has been the source of Japan's stability and high quality of life. The ongoing transformation of this employment system in Japan, which should be said "Aufheben of employment system", which remains at the forefront compared to other countries, is likely a cutting-edge attempt. Considering the previously mentioned index scores related to social stability and high quality of life, along with the fact that as of January 11, 2024, the total market capitalization (in US dollars) of stocks listed on the Tokyo Stock Exchange surpassed that of China's Shanghai Stock Exchange, reclaiming its position as the leader in Asia*13, this Aufheben is undoubtedly moving towards success. Additionally, this new form of employment born from this Aufheben could be a solution to the "career moratorium" that many young people are struggling with today. This is because it provides an environment where they can explore many job options and delve into these options under stable employment conditions.
Members of Jelper Club considering employment in Japan are encouraged to confidently and positively engage in their job search, despite the negative campaigns that are often directed at Japan's employment system. You are urged to confidently take their first step into society in Japan.
At Jelper Club, we're here to support you every step of the way for your career development in Japan. Our platform connects ambitious students from top universities worldwide with exclusive internship and full-time job opportunities in Japan with a variety of Japanese proficiency requirements. We also provide access to practical information, member-only events, and a professional community of like-minded individuals.
If you're ready to embark on your own Japanese adventure, visit Jelper Club today and discover how we can help you unlock your potential in Japan.
(Editor: Jelper Club Editorial Team)
References・Notes
１. "ジョブ型雇用の真実"（POLICY RESEARCH INSTITUTE）：https://www.mof.go.jp/pri/research/seminar/fy2021/lm20220215.pdf
２,６. "日本独特のメンバーシップ型雇用が変化への対応と成長を阻んでいる"（Harvard Business Review）：https://dhbr.diamond.jp/articles/-/8103
３. "「日本仕様のジョブ型雇用」とは何なのか(1)－戦前まで遡る歴史とその取り組みを振り返る－"（NLI Research Institute）：https://www.nli-research.co.jp/report/detail/id=75993?pno=2&site=nli
４. "濱口桂一郎：ジョブ型とメンバーシップ型の世界史的源流"（Mita-Hyoron）：https://www.mita-hyoron.keio.ac.jp/features/2023/02-2.html
５. "「ジョブ型」導入後に、チームワークを最大化させる４ステップ"（Robert Walters）：https://www.robertwalters.co.jp/hiring/hiring-advice/teamwork-maximize.html
７. "三位一体の労働市場改革の指針"（Cabinet Office）：https://www.cas.go.jp/jp/seisaku/atarashii_sihonsyugi/pdf/roudousijou.pdf
８. "4 社に 1 社が、新卒採用に「ジョブ型」を導入。導入企業の半数以上が「適性のある人材の母 集団形成」に手ごたえをつかむ/採用担当者アンケート"（Gakujo）：https://service.gakujo.ne.jp/wp-content/uploads/2023/10/220325-comenq.pdf
９. "脱・年功序列=中高年冷遇？"（NIKKEI）：https://www.nikkei.com/article/DGXZQOCD0713F0X00C22A9000000/
１０. "定例記者会見における中西会長発言要旨"（Keidanren）：https://www.keidanren.or.jp/speech/kaiken/2019/1223.html;
The statement made by Chairman Nakanishi of Keidanren in 2019 can be translated as follows:
"The traditional Japanese employment system, which combines new graduate mass hiring, seniority-based wages, and lifetime employment, is unlikely to nurture talent that can cope with such transitions. Changes in employment forms within companies and improvements in employee engagement need to progress together. In this context, we cannot rely solely on the traditional Japanese employment system; we will need to incorporate job-based employment as well, which will also enhance employment fluidity. In fact, companies are focusing on economic, environmental, and social values, and there is a strong tendency for employees to feel more fulfilled and motivated when they recognize that their work contributes to society. Considering these changes, it is necessary to deepen discussions between labor and management."
１１. “Global Peace Index 2023” (Institute for Economics & Peace): https://www.visionofhumanity.org/wp-content/uploads/2023/06/GPI-2023-Web.pdf; To make it similar to the Quality of Life Index, where a higher index value is better, perform a calculation by taking the reciprocal of the original Global Peace Index 2023 and multiplying it by 100.
１２. "Quality of Life Index by Country 2024" (NUMBEO): https://www.numbeo.com/quality-of-life/rankings_by_country.jsp
１３. "東証の株式時価総額、アジア首位返り咲き 上海証取超え"（NIKKEI）：https://www.nikkei.com/article/DGXZQOUB119Y90R10C24A1000000/#:~:text=%E3%82%A2%E3%82%B8%E3%82%A2%E6%8B%A0%E7%82%B9%E3%81%AE%E5%8F%96%E5%BC%95%E6%89%80,%E6%97%A5%E6%9C%AC%E6%A0%AA%E3%82%92%E3%81%AA%E3%81%8A%E4%B8%8A%E5%9B%9E%E3%82%8B%E3%80%82
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