Job Security in Relation to Japan and India - Assignment Example

Job Security in Relation to Japan and India Table of Contents Table of Contents 1 Japanese system of Industrial Relations 2 Changes in Asian Industrial Relations 3 Job Security and Labour regulation in Japan and India 5 Comparison between Cultural Dimension of India and Japan 10 Conclusion 12 References 14 Bibliography 16 Introduction The paper is mainly focused towards the comparative study of the Industrial Relations of two countries India and Japan which mainly affects the Job Security of the employees in these countries. The reform in the system of Industrial Relations plays a vital role economic performance of these countries. The Japanese model have great influence on the restructuring of the Industrial Relations for various countries including India as it provides great learning for the workers, management, unions and the Government of the country as they need to be more constructive in the organization and need to be more realistic in their approach towards the Industrial Relations like Japan. The loyalty and commitment from the employees are widely dependent from the job security offered by the organizations of the country. To cope with the situations and a more stable relationship between the employees and the employer Japanese companies are constantly changing their pattern of employment which is needed to be implemented by the Government of India and the organization at India for a more stable and strong relationship building for building a employee base with high commitment and loyalty instead of being rigid to the rules of the Government. Flexibility at work plays a vital role in building trust amongst the employees and satisfies with job security for the employees (Zechariah, “Comparative Industrial Relations in Japan and India”). Japanese system of Industrial Relations With the initialization of industrialization at Japan the Japanese Industrial Relations System is a perfect blending of continuity and change in the characteristics of the employees. The first industrial enterprise of Japan was founded by the Japan government in the year 1890. This was first handled by powerful industrial families of the country but later with the transition from the agrarian society to the industrial nation demands relationship between the employees and the employers with the changing business model. With the influence of the western culture into the workplace the organization are influenced to change their work structure. Various reforms came into play with the introduction of lifetime employment as a form of linkage between the employer and the employees to build strong relationship. With the development of industrial relationship the workers are needed to posses’ special skills to retain their jobs in the competitive environment. The emergence of the lifetime employment and remuneration pattern was designed keeping in mind the future trend in the industry. The regular employees are who enjoys lifetime employment schemes and are paid according to their length of their services in the system. The Japanese system is mainly focused towards the level of the organization and the wages of the employees are dependent on the ability of the bargaining capability of the organization with the employees. Though this system gives great flexibility to the enterprises but the system is not out of critics as permanent employment ruled out the opportunities for part time and non-regular employment system. With more and more service industry and shifts from the manufacturing firms at Japan, fewer employees are under the policy of regular employment policy of the unions. Thus a large employee base of the country is unrepresented by any unions of the country which is the major challenge to the industrial relations in Japan who are outside the union net (Keegan, “A profile of the Japanese system of Industrial Relations”). Changes in Asian Industrial Relations The phase of 1980 to 1990 turned out to be a critical period for the major changes in the transformation of industrial relations system all over the world. Though there are several arguments regarding this issue whether there is real transformation took place in the countries or its just non-fundamental changes in the nations which took place. These changes mainly took place due to collective effects of the global market changes, increase in competition in the environment, the direction in which the change took place, bargaining decentralization and flexibility in wages system due to change for the employer and deployment of labours. These changes also took place in the Asian countries like India and Japan. The Asian market being more exposed to the western culture get influenced with the changes in the global market in a much significant way to cope with the changes in the global economy and the competitive market. There are mainly six different stylized model on which the industrial relations depends upon. These can be described as flexible workplace model of Japan, the tripartite model of Singapore, dominated state employer model of Malaysia, decentralized model of Philippine, multi-union politicized model of India and the transitory model of China and various other parts of Asia. With these reforms to take place one core concept is Stability which is vastly influenced with this reformed structure. Job security of an employee is significantly dependent on this stability of the country. With stability in the action from the industrial relationship workers are more dedicated to their work and employers are more efficient in handling conflict within the organization through wage increase in an organized and centralized manner and controlled union parties for political purposes. This stability is defined in different ways for different countries. In some countries like Indian Government believes that stability is only defined as the institutionalization of the Industrial Relations at the time of conflicts only while in Japan the concept of stability is focused towards the stability of the workers at workplace who drive and develop the Industrial Relations for the country. The salient changes in the Asian Industrial Relations system is primarily occurred due to maintenance of the labour peace through job satisfaction and job security and increase the stability of the firm to compete in the global market with the changes in the environment. In India the changes in the economic development have brought rapid changes in the industrial relations for the country. With this introduction employees are offensive and unions lost their power. There are several changes which took place in labour law at state level though central laws have not changed yet. The concept of protection for the workers have changed to workers must be protected and a stronger tie between the union and political parties is developed for the deep structure of the Indian industrial relations system. While in Japan the changes in the economy with the global market implemented new laws that permitted the option of short term employment and various other options for the life time employment schemes for the employees. This flexible system of employment gives great advantage for the employers to attract labour through the strategy but on the other and this also reinforced practice which in the long run insulted the wider labour market of the country. This continued change in the practice of the organization and the industrial relations forced each and every sector of the market to reform along with the global scenario but these breakups with time is the major reason for the growing weaknesses of the employment system of Japan (Kuruvilla, p. 42-45, “Change vs. Transformation”). Job Security and Labour regulation in Japan and India Since the year 1950, labour market of Japan has several distinctive features to look after. One of the most significant amongst them is the lifetime employment scheme of the country and the hiring practice of the large organizations at Japan. With this practice companies hire employees’ directly after school and retain the employees till a certain age of 55 or 60 with a lifetime guarantee of job. Though this practice have great effect on the mind of the employees for job security but this has no written contracts in spite of the fact that this total mass comprises of about one third of the total workers pull. Instead of hiring from outside the organization for the higher posts, the company promotes through internal recruitment policy for mid level managers and top management. Another issue is the wage payment of the employees according to the seniority instead of skills of the employees for retaining employees within the organization for a long time. For the workers who are not fortunate enough to get into the life time employment schemes of the large organization the government has protected few sectors like agriculture, construction and few more for employees to work at a lower wages and flexible wages system and shot term employment. But several issues on the flexibility has also arises since employees are not secured enough with the flexibility and the wages system from the companies. Thus the flexible job was limited to certain numbers only to maintain job security issue (Yashiro, “Why labour market flexibility in Japan is so difficult”). And the final issue is the weak union systems of the companies for the labour market. The unions of Japan are mainly towards the company rather than the employees of the organization. With this reform in the structure of the employment the Japanese employees are much more secured and have job security in their employment with the company but on the other hand there are various consequences for the Government of Japan which creped in with the induction of the life time policy. Since job security is there employees are more dedicated towards their work and also the productivity of the firm increases along with the decrease in the unemployment in the country but with the changes in the economy it has a significant impact on the Government to cope with the consequences of the employment system. When the economy of the country grew rapidly Japan found life time job security for the employees as the feasible option to retain employees and build strong base with dedicated employee base. But with the changes in the economy when companies need to cut down workforce it was not possible for the firms due to the commitments towards the workers. Along with that since the top managements are the employees promoted from the organizations itself, it was not possible to hire experienced employees to that post. Only the employee base is added at the bottom line of the company which in turn also increased the base cost of the company with flat employment and the senior members also enjoyed higher wages at the same time. Due to high price of the small company sector the Government is not able to control the unemployment and this system facilitated the process of unemployment for the country. Unemployment is rising amongst the society and few segments are enjoying job security due to the availability of the life time employment schemes. To cope with this issue the government tried to get rid of this practice but on the contrary this also broke the trust of the employees on the large corporate with false promise of life time job security (Lincoln, p.44-45, “Job Security in J A P A N”). Companies now hire employees on short term basis and part time basis which is increasing at a very fast pace. But this type of practice on the other hand is weakening the job security for the employees who are familiar with practices of life time job security (Freeman, “Japan’s weakening job security”). Thus removing completely from the system is a difficult task rather the life time employment and the wages system and labour practices should be modified to suit the global economy and control the unemployment of Japan. On the other hand the Indian employment market is mainly concentrated towards the agriculture. The massive agrarian economy of the country comprises of about 3/5 of the total workforce for the country with a total of ¼ of the gross domestic product for India (Nagaraj, p.1, “Labour Market Issues in India”). There is a strong effect of the economy of India on the labour laws which are reformed by the Government. To manage the industrial relations system and labour market due to the economic changes in the environment several state intervention model has been implemented by the Government of India (Sundar, p. 585, “Emerging Trends in Employment Relations in India”). Various programs of economic liberalization forced the Government of India to revive and reform the industrial relations laws for India. There are mainly three legislation of the country which mainly contributed towards the reform of the Indian industrial relations namely Trade Union Act, (TUA) 1962, Industrial Disputes Act, (IDA) 1947 and the Industrial Employment Act, (IEA) 1946 (SenGupta, Sett, p. 144, “Industrial relations law, employment security and collective bargaining in India: myths, realities and hopes”). Like the Japan employment system India have also job secured organized sector with large and medium organization and an unorganized sector with small firms and self employed workers (Morley, Gunnigle, Collings, p. 202, “Global Industrial Relations”). One of the most striking features of the industrial relations law of the country is its absence for the provision of the recognised trade union who will act as collective bargaining agents. Under the Trade Union Act it cannot be recognised which eliminated the provision of bargaining relationship between the employers and the employees. Under the Industrial Dispute Act the government is the sole authority to handle situations and enjoys full discretionary power. Regulation for the labour disputes also has an adverse effect on the employment of the country. The poorly designed resolution for disputes and the job security laws of the country generated a large contraction in the registered sectors into manufacturing. With higher job security from the organizations and with the costlier dispute resolution also results to reduction in the wages of the workers. With more job security in India the growing trend of the market is also increasing the cost for the employers in the long run (Ahsan, Pages, p.20, “5.2 Effects on Employment, Wages and Other Outcomes”). Thus with global management relation companies are following the industrial relations in India and are adjusting their new system for being more socially secured with more income security for the employees but on the other hand loosing the concept of job security to high maintenance cost (Kazmi, p. 458, “Industrial Relations”). With the new reform the major points which are included for the employment security issues are need for prior permission by the employer from the Government before lay-off employees and should be paid compensation if it takes place (Bhattacharya, p. 2, “Labour market regulation and industrial performance in India”). This gives an unreasonable restriction to the employers while increasing the job security of the employees. The Trade union also holds the employer responsible for any violation of laws whenever there is job loss in large scale. For a mutual understanding the Trade union seeks permission from the employers to setup council to negotiate on the matter before sudden lays-offs for a period of time. But this has not been imposed by the Indian Government yet, as the legislative council don’t find the need of such permission before the act, in spite of the fact that this Trade Union can be a useful tool for the negotiation purpose if the employees are compensated with attractive wages. Comparison between Cultural Dimension of India and Japan The cultural dimension of the country also plays a vital role in influencing the character of the people and the structure of the organizations in the particular country. Job security can also be affected by the culture maintained by the countries and the practices of the organization according to the culture of the country and the people related with the organization in a particular country. This cultural diversification can be understood by Hofstede’s five cultural dimension charts. This chart depicts the uniqueness in each country’s behaviour and explains how it affects the country. These five dimensions for measuring cultural differences are power distance index, Individualism, Uncertainty Avoidance Index, Masculinity and the Long-Term Orientation (ITIM International, “What are Hofstede's five Cultural Dimensions?”). With the comparison between the five dimensions of the cultural aspects of the country between India and Japan the scores obtained by the countries gives a great insight of the cultural trends of the organization and the structure followed by both the countries. Figure 1: 5D model of Geert Hofstede (Source: ITIM International-a. “Geert Hofstede™ Cultural Dimensions”) The power distance index of the country shows that how the less powerful section of the organization expects the inequality of power in the company or organization. Compared to the two countries between India and Japan people of India are more acceptable to the inequality of power and thus more forces and pressure from the top management affects the people India as compared to Japan. Whereas Individualism in a society shows how people are integrated and mix in groups at their workspace. Both the countries shows almost same level of individualism which depicts both India and Japan are strongly integrated into groups which shows the chances of forming more unions and groups in the country. Masculinity at Japan shows significantly high score compared to India in the graph. The role based on gender varies significantly at Japan as compared to India. Japan is mainly dominated with male members in the organization which is evenly distributed amongst the genders in Indian organizations. With respect to the tolerance to uncertainty people of Japan are more tolerable to uncertainty and critical situations. People of Japan can cope with situations like job loss and any threats from job satisfaction in a more tactful manner than the peoples of India in the industrial sector. The people are less carried away with emotions at Japan and are more phlegmatic to situations and handle situation for safety and security. The long term and short term orientation of the people at India shows much less score compared to that of Japan which depicts people of Japan have more respect to their tradition and the social obligations. Employees at Japan are much more committed to their work life and maintain their tradition of the past than the changing habit of the Indians. Conclusion In most of the countries over the globe the major reason for setting up job security provision is to protect the workers from the fluctuations of the economic condition of the country. Countries like Japan and India have reformed their industrial relations policy for suiting the current economic condition like Japan implemented the life time employment system and for India the restriction in the firing process without permission from the Government have a great impact on the mind of the employee for the secured job offering from the large organization. But on the other hand there are several consequences of this restriction and practices from these countries. The industrial relations reformed practices are not suitable for long term stability of the employment policy as this will only decrease the chances of job creation and also job destruction flows within an organization, it will also reduce the speed of recovery from shocks for the employees at critical situation resulting to an increase in long term unemployment. References Ahsan, A. Pages, C. (2007). 5.2 Effects on Employment, Wages and Other Outcomes. September 14th, 2011. < http://siteresources.worldbank.org/SOCIALPROTECTION/Resources/SP-Discussion-papers/Labor-Market-DP/0713.pdf >. Bhattacharya, A. (2006). Labour market regulation and industrial performance in India. September 14th, 2011. < http://www.cdedse.org/pdf/work141.pdf >. Freeman, B. (2008). Japan's weakening job security. September 14th, 2011. < http://www.globalenvision.org/2008/11/06/japans-weakening-job-security >. ITIM International -a. (2009). Geert Hofstede™ Cultural Dimensions. September 13th, 2011. < http://www.geert-hofstede.com/hofstede_dimensions.php?culture1=42&culture2=50#comparehttp://www.geert-hofstede.com/ >. ITIM International. (2009). What are Hofstede's five Cultural Dimensions?. September 13th, 2011. < http://www.geert-hofstede.com/index.shtml >. Kazmi, A. Strategic Management and Business Policy. Tata McGraw-Hill Education. (2008). Keegan, A. (No date). A profile of the Japanese system of Industrial Relations. September 13th, 2011. < http://www.maths.tcd.ie/local/JUNK/econrev/fbj/html/anne.html >. Kuruvilla, S. (2000). Change vs. Transformation. September 14th, 2011. < http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN014351.pdf >. Lincoln, E. (1999). Job Security in J A P A N. September 14th, 2011. < http://www.brookings.edu/~/media/Files/rc/articles/1999/fall_japan_lincoln/lincoln.pdf >. Morley, M., Gunnigle, P., Collings, D. (2006). Global Industrial Relations. September 14th, 2011. Nagaraj, R. (No date). 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