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JAPAN
The Paradox of Harmony
By Keiko Hirata, Mark Warschauer Yale UNIVERSITY PRESS
Copyright © 2014 Keiko Hirata and Mark Warschauer
All rights reserved.
ISBN: 978-0-300-18607-9
CHAPTER 1
The Whistleblower
Masaharu Hamada is a long-term employee of Olympus, a company famous for its cameras and medical equipment. After years at the company, and with an outstanding sales record in Japan and the United States, Hamada was stunned when he was suddenly demoted from his position as team leader of his sales division. Despite his talent for selling, he was assigned meaningless and solitary work, such as reading elementary training manuals and taking rudimentary tests designed for new employees. The intention was, in the condescending language of his supervisors, 'to educate Hamada.' He was denied a raise and promotion and was banned from contacting his former colleagues and clients. At one point, he was almost driven to a nervous breakdown, and he contemplated suicide.
Why would Olympus waste one of its top employees? To answer that, we need to go back to 2007, when Hamada discovered that his supervisor was trying to recruit an employee from a client firm who had classified information. Headhunting from a client firm is illegal in Japan, but his supervisor had already approached another employee from the same client. As a salesman, Hamada had been on the receiving end of complaints from his client. He brought the case before Olympus's compliance unit; despite the firm's privacy-protection rules, Hamada's name was leaked to the very boss he was complaining about.
A panicked Hamada wrote a letter to Olympus's president, Tsuyoshi Kikukawa, who would later be implicated in an accounting scandal. Kikukawa forwarded Hamada's letter to the personnel office, which suggested that Hamada's troubles may have been affecting his health. Personnel provided a doctor and insisted that he see only that doctor. The office had a plan: the doctor would diagnose Hamada as mentally ill, make him take extended sick leave, and then force him to quit. A justifiably anxious Hamada saw through the plot and refused to visit the doctor, which further angered the personnel director.
In desperation, he turned to the firm's labor union. The union director seemed supportive and sympathetic, but Japan's labor unions are company-based and are often tied to a firm's management. Such was the case with Olympus: even the union director pressured Hamada to see the company doctor. There was nobody left to turn to.
Reluctantly, in 2008 Hamada sued Olympus for its unfair reprisals. In 2010, despite pressure from the judge, he refused to settle with Olympus. He then lost his case in the lower court. But in 2011, the Tokyo High Court reversed the decision and ordered Olympus to pay Hamada 2.2 million yen ($22,000) in damages. In 2012, the Supreme Court rejected the appeal by Olympus and Hamada's former supervisor. Victory was assured. It was the first time that the Supreme Court had heard a whistleblower case.
Whistleblowers are a rarity in Japan, but Hamada was supported by some of the few that there are, including Hiroaki Kushioka, who had retired from a trucking firm in northern Japan after three decades of corporate harassment for talking to a journalist about a secret cartel among trucking firms that illegally inflated prices. For 30 years he was given menial work, such as gardening or shoveling snow, and his supervisors continually pressured him to quit. In 2002 he sued his firm in a district court for job discrimination and human rights abuses, and in 2005 he won. It was Kushioka's former lawyers – Japan's top attorneys on whistleblowing and labor law – who helped Hamada win in the Supreme Court.
Hamada's plight is not over yet. In a testament to Japanese corporate loyalty, he still loves Olympus and is not ready to quit his job. His former supervisor now serves as an executive director at the company. Even after the Tokyo Bar Association warned Olympus about its abuse of Hamada's human rights in 2012, he continued to be assigned demeaning work, so that he was obliged to turn to the Tokyo Bar Association a second time. The following year, another Olympus employee filed a lawsuit after he, too, was given a menial job (in this case, working under Hamada). He claimed that it was a form of psychological pressure and harassment to get him to quit.
Japanese companies tend to work like clans, and whistleblowers quickly become outcasts. As the firms globalize, they must seriously address corporate governance and transparency issues. And to do that, they need to understand that whistleblowing is an invaluable aspect of good governance. It should be encouraged as a way of eradicating unethical practices and elevating companies to higher standards. The silver lining in Hamada's case is that the public is now more aware of whistleblowing problems, and the publicity has ensured that it is on Hamada's side. Hopefully, the Supreme Court's ruling will set a precedent for Japanese firms in dealing with whistleblowers. Hamada's next challenge is to push the Diet (Parliament) to enact laws penalizing firms that abuse whistleblowers. 'We need a society where honest hardworking people don't lose out,' says Hamada. His struggles continue.
Japan's miracle economy
Hamada and Olympus can only be understood within the broader context of Japan's economic development and business culture, as it has developed over the past seven decades. After the Second World War, nearly half of Japan's industry and national infrastructure lay in ruins. The United States, frightened that the Soviet Union would find ample ideological territory in the communal society of postwar Japan, contributed food, production supplies, and transportation materials to Japan's reconstruction efforts, in order to bolster its resistance to Soviet influence.
Japan's priorities shifted from fighting the US to fighting poverty. Early on, Prime Minister Shigeru Yoshida (1946–47, 1948–54) guided this trend through the 'Yoshida Doctrine,' which prioritized recovery and growth, limited funding for national defense, and relied on America for protection. By the mid-1950s, Japan had already returned to its pre-war levels of industrial production. After that, its GDP increased more than fifty-fold between 1955 and 1990. The Yoshida Doctrine steered Japan out of poverty and ruin, into a land of skyscrapers and bullet trains and toward the world's second-largest economy at the time.
This burgeoning economy required corporate workers who would devote themselves tirelessly to the expansion and recovery effort. Soldiers (and a generation of children raised to become soldiers) found a new niche as corporate warriors. They worked long hours and demonstrated the same kind of loyalty to their firms and their bosses as was once reserved for the emperor and the nation. Having experienced the desperation of poverty during and immediately after the war, they worked (and overworked) to improve their lives and rescue Japan from the shame of its defeat.
Workers were given lifetime employment, and promotion was based on a combination of seniority and personal talent. The salary-men trusted that their lives would improve year by year. Giving less than all of their energy in return would have displayed ingratitude.
By the 1980s, Japan seemed to be an unstoppable force in global economics. Having recovered from the 1970s' oil crises, it had accumulated huge international trade surpluses, most notably with the US. Tense American lawmakers insisted that it stop free-riding on America's open market and security protection. American economists argued that the Japanese should spend more time on leisure and less time at work, in order to stimulate domestic consumption and reduce the lopsided trade balance with the US. Scholars warned about Japan's close government–business alignments and urged the US to deal with it more aggressively. Japanese management became a hot subject for research, and Japanese language courses became popular among college students in the US and other countries.
America had to react. And in September 1985 it did. An agreement between the US, Japan, and three European powers – the Plaza Accord – effectively raised the value of the yen to reduce Japan's mounting trade surplus with the United States. The Japanese government relaxed interest rates to stimulate Tokyo's export-led growth. Easy money flowed into Japanese real estate and stock investments. Prices skyrocketed. By 1990, the aggregate value of land in Japan was said to be 50 percent higher than the total land value of the rest of the planet. The emperor's palace in central Tokyo alone was worth more than all of California. Japanese firms went on real-estate shopping sprees, grabbing foreign landmarks such as the Rockefeller Center and Columbia Pictures. Fear of Japan was palpable in the United States. An over-the-top scene from the post-apocalyptic 1990 film Prayer of the Rollerboys showed the Harvard University campus being airlifted to Tokyo by Japanese helicopters.
Young women (dubbed 'office ladies' or 'OLs') went shopping, too. Though they usually had entry-level jobs and no career ambitions, they were armed with a strong yen and a penchant for upmarket fashion. With savings and bonuses from their meager jobs, these women traveled to major cities in the US, Europe, and Asia to shop for expensive brand-name bags and clothes. Tourism in cities like Honolulu came to depend on such women.
The 1980s was a euphoric era in Japan, and for many people the question was when, not if, Japan would overtake the US as the world's economic giant. But as we all know, Harvard University never ended up in Tokyo. The ever-expanding Japanese economy had to pop.
Bursting the bubble
The inevitable burst came in 1990–91, with the collapse of the stock and real-estate markets. People soon realized that their affluence had been an illusion, built on easy credit and speculation. When it went up in smoke, most people returned to their traditional habits of frugality. Banks went out of business and property values went into freefall. The frenzied rush of domestic spending came to a halt as the free money dried up.
Japan entered its 'lost decade' (actually two decades) of economic recession. Japanese real estate lost 90 percent of its value; jobs became harder to find; and a new generation of Japanese shoppers increasingly eschewed Luis Vuitton for cheap goods in 100-yen ($1) stores.
Japan saw slow growth and deflation through the 1990s and 2000s. Between 1994 and 2006, its share of the global economy almost halved – from 18 percent to 10 percent. By 2012, China had more Fortune 500 companies than Japan. When it comes to per capita income, Japan has fallen behind many other advanced industrial countries: from second in 1993, it fell to eighteenth place in the 2008 international rankings. In terms of GDP per capita adjusted by purchasing-power parity, Japan was passed by the Asian Tigers: by Singapore in 1993; Hong Kong in 1997; and Taiwan in 2010.7 Rising national debt forced the government to cut back on safety nets for the increased number of those in need.
Before the bubble burst, fresh graduates in Japan had plenty of options. There was a market for regular full-time employees with high-school or college degrees, and firms would provide specialized job training for new recruits. Male graduates typically faced no problem in finding guaranteed lifetime employment. Meanwhile, female workers were expected to become 'office ladies,' or to take menial or clerical work for a few years until they got married.
Since the 1990s, however, many young men have joined the fastest-growing segment of the Japanese labor market – the so-called 'irregular' (part-time or temporary) workers at the bottom of the labor hierarchy. Irregular jobs used to be dominated by shufu (housewives), who would re-enter the labor market part time once their children started school. Today, many young men compete with these housewives for low-paid, part-time, dead-end jobs largely in the service sector. Japan's labor market is thus largely bifurcated: permanent salaried employees on the one hand; irregular workers on the other. Both groups face serious challenges.
The salaryman's slog
It's 10 p.m. and a haggard middle-aged man is dozing on Tokyo's subway. His gray suit has wrinkled over the course of his workday. His mouth hangs open and his legs are outstretched, despite the etiquette reminders hanging throughout the train. His napping head slides slowly downward until it rests on the left shoulder of a young woman. She moves an inch to the right, but his head slides again and again settles on her shoulder. This is a common scene on Tokyo's subway.
He is just one of hundreds of salarymen, Japan's white-collar businessmen – corporate warriors fighting for the companies on which their lifestyle depends. The salaryman makes up the majority of the male workforce in Japan.
The man on the subway is Toru Kato, 49 years old, a white-collar manager at an office maintenance and cleaning company in Shinjuku, the buzzing business district of Tokyo. He wakes at 6 a.m. to get to the office by 8:30. He'll often stay in the office, finishing extra work or joining an obligatory drinking party with business partners, before catching the last train home. Tonight was his lucky night: he may be home by 10:45 p.m.
Toru works about 60 hours from Monday through Friday; but like his colleagues, he only declares some of his overtime work. The unpaid work (called 'service overtime') is considered necessary and obligatory at times of high demand. Like most salarymen, he rarely takes the two weeks of vacation he is offered, as he feels guilty about burdening his colleagues with extra work while he is away.
Toru and his family live in Saitama City, a suburb of Tokyo. He commutes into work for an hour, a typical commute for the Tokyo area. He is committed to his family, but admits that he is not often available as a father. Even on weekends, he often plays obligatory games of golf with his business clients, or else studies for an exam required for promotion. Currently, he is preparing for the TOEIC (Test of English for International Communication), a popular international test for business people, to improve his previous score.
Toru's firm promises the security of lifetime employment. In addition, it provides twice-a-year bonuses, monthly subsidies for transportation and housing, and generous retirement benefits. Toru can expect to climb the corporate ladder, with steady pay rises based on a seniority system that rewards loyal workers.
Toru's wife, Satomi, is a stay-at-home mom who takes care of their children, aged 15 and 17. She is responsible for the household budget, and she gives Toru a monthly allowance of $400 (out of his monthly take-home pay of $4,000) that he can spend on after-work drinking and golf. To save money, Satomi prepares a lunch box, or bento, for Toru every morning, alongside her children's. When the household is sent off, Satomi leaves for her part-time receptionist job at a neighborhood dentist.
Toru's family enjoys middle-class life, with his children going to Kumon to study math, and then on to piano and swimming lessons. He is plagued by overwork, long commutes, and a lack of sleep, but he is proud of his achievements at work and of his role as the breadwinner in his family.
To most Japanese men, the ideal life means having a full-time white-collar job. Though at first glance, the idea of loyalty-based promotion and lifetime employment may seem a wonderful way to live, the salaryman's life is far from easy. He typically works 60–80 hours per week, and rarely sees his children.
The salaryman is a conundrum of hard work and wasted effort. With a workforce so willing to dedicate themselves to extreme endurance efforts on behalf of their firms, one might imagine that Japanese companies would be just as unstoppable now as they were during the boom years. But these same salarymen struggle to survive the enormous workloads and the emotional toll of their work obligations. And lifetime employment within the system (for those lucky enough to have it) has created an environment where merit is shunned in favor of perseverance. The social cost is an underutilized, exhausted workforce and a wasted generation of human capital – all of which deprive the country of the innovation and imagination it needs to thrive.
Within Japanese corporate culture, it is difficult for employees to take vacation or leave the office early, even on a 'No Overtime Day' (see below). Some say it has become harder to take time off: workloads have increased since companies have cut back on staff to save on costs. One of the world's largest market research firms, IPSOS Global, ranked Japan as the most workaholic of 24 major countries in its 2010 report. Only 33 percent of Japanese workers use up all their vacation, in contrast to 89 percent in France. The United States ranked the fifth most workaholic nation, with 57 percent vacation utilization.
(Continues...)
Excerpted from JAPAN by Keiko Hirata, Mark Warschauer. Copyright © 2014 Keiko Hirata and Mark Warschauer. Excerpted by permission of Yale UNIVERSITY PRESS.
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