The government has yet to overhaul labour laws that make it virtually impossible to dismiss excess labour. And the aversion in the Japanese media and among corporate chiefs to lay-offs runs deep. As a result of such attitudes, downsizing is almost exclusively the result of early-retirement plans or the farming out of employees to subsidiaries. For the first time ever, one in 10 university graduates in Japan found themselves without jobs upon leaving school in April. Meanwhile, companies cling to inefficient organizational structures and ways of doing business, delaying potential increases in productivity and the evolution of business models.
Political expediency is again the culprit.
Yet their suppliers are alive because the government is guaranteeing their loans. By propping up these firms, the creative destruction of Japan Inc. is slowed. But the delay is only making matters worse. However, even if Japan was to bite the bullet, it's not clear that the business community is up to the challenge of recreating itself. When Japanese and foreign executives were asked during the most recent IMD World Competitiveness Survey to rank the availability of competent senior managers, they gave the country a 4.76 out of 10.