Work and Pay in the United States and Japan

Increased international competition has put pressure on U.S. firms to restrict the proportion of workers with income or job security and to increase the contingent work force. Similar pressures are at work in Japanese firms, and we expect this trend to become more visible as a secular adjustment when the Japanese recession ends. Overall, the labor market institutions in Japan have changed much more slowly than in the United States, and a much deeper economic crisis seems to be required before firms make adjustments in their practices to reduce costs. Even then, their adjustments tend to be marginal compared to the changes undertaken by U.S. companies facing intense global competition.

The 1990s recession has brought renewed emphasis to the benefits of employment security in the United States and to the costs of employment security in Japan. After analyzing the employee involvement, training, and wage systems, we will return in the concluding chapter to the question of what type of employment system, including security, would be effective in the United States, given its emphasis on mobility and individual autonomy and its macroeconomic institutions. We also discuss to what extent American (in)security practices are transferable to Japan.

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