Paper short abstract:

Through an analysis of the educational backgrounds and career patterns of Japanese corporate elites over the last three decades, this paper argues that the conventional cohesive recruitment and career system have been strengthened despite rapid globalization and deregulatory labour market reform.

Paper long abstract:

By focusing on the educational backgrounds and career patterns of Japanese corporate elites (CEOs) over the last three decades, this research suggests that the conventional recruitment and career system have been strengthened even in the face of rapid globalization and structural reform of the labour market. Studies on labour market reform have successfully revealed the deregulation process and resulting flexiblization of the labour market. This literature has mainly focused on the rapidly increasing prevalence of non-regular employment, a labour market polarized by gender and age, and examined the social consequences, including social inequality and stratification (kakusa shakai). Despite this expanding research on labour market reform, there has not been an examination of the effects on the upper levels of the labour market over the last three decades of neoliberal reforms. Has the globalization of the economy led to a fundamental change in the conventional cohesive recruitment and career pattern of economic elites? Has deregulatory labour market led to the strengthening of the global market recruitment system of the corporate elites? How does the career pattern differ among business sectors? This research indicates that first, in Japan where heterogeneity in the educational background of corporate elites has slightly increased, national educational institutions continue to be a molding system for the CEO. Next, despite Japan's rapidly globalizing economy and structural reform, the seniority system and lifetime commitment for corporate elites has actually been reinforced. Surprisingly, this tendency is even stronger for the industrial sector, which has been considered to be a pioneer for globalization in the Japanese economy. This research provides insight into understanding the transformations and continuities of corporate governance in Japan in relation to decades of significant reform.

Paper short abstract:

The paper (a) describes the relevance of in-house careers in Japan, (b) analyses their negative impact on productivity at the micro, meso and macro level, (c) points to possibles channels through which external markets for skilled managers might be developed.

Paper long abstract:

In-house careers are common in all larger organizations around the world. But in no other modern economy do they continue to be as predominant as in Japan. They form the core of what has been known as the "Japanese employment system" or the "J-firm." Their system-wide diffusion was not only supported by Japan's post-war economic success, it also largely contributed to it. Since the end of the high-growth period, and even more so after the burst of the bubble economy, the downsides of institutionalized in-house careers (IIC) with regard to productivity growth have become more apparent. The paper will elaborate on these negative effects. At the firm level, IIC induces risk aversion, unproductive "loyalty competition", and lack of diversity. At the industry level, it restricts the efficient reallocation of resources between firms, and prevents that the best managers move to the most promising firms. At the level of international division of labour, IIC puts Japanese companies at a disadvantage in the "war for global talent" and in general limits their capacity of effectively integrating their business operations globally. The paper ends by pointing out how change might be brought about despite the strong path dependency typical of core institutions.

Paper short abstract:

The paper focuses on the social consequences of structural reforms implemented by the Abe administration which resulted in widening of the gap between rich and poor. The relatively new phenomenon of rising inequality is discussed in both theoretical and empirical approaches.

Paper long abstract:

During the last 20 years word "reform" came to be a common element in the vocabulary of Japanese politicians. In fact, the reform usually meant nothing more but the "regulatory corrections" related more to the political than economic agenda, and the applied economic policy was considered just as a "rescue act". However, the situation has changed since Abe Shinzo introduced his economic policy based on the concept of the three arrows aimed at the revitalization of the stagnant economy. While the mix of the monetary and fiscal measurements have produced some positive effects, the structural reforms, particularly the labour market one, have brought about the relatively new phenomena in Japanese society - economic disparity, rising inequality and increasing poverty.

Although some academic studies disagree with the hypothesis that Japan has suddenly been transformed in a strictly divided society, it is obvious from various statistical data that the poverty rate has increased dramatically in the last few years. The number of the "working poor" who earn less than two million yen a year increased to 11.39 million and accounts for one out of every four workers since Abenomics was implemented. Meanwhile, the number of extremely wealthy people whose income exceeds 500 million yen a year went up 1,415 and the total income of these super rich was about 2.33 trillion yen. Indeed, in 2015 Japan (with China) had the fastest-growing HNWI populations in the world, which results from boosting stock values caused by implementing "aggressive" quantitative monetary easing measures.

In my presentation I am going to discuss the problem of how the structural reforms of Abe administration resulted in a widening of the gap between rich and poor. I will focus particularly on the absence of the so-called "fourth arrow" of Abenomics, i.e. the relevant social policy including the long-term consequences.