Employment practices in Japan’s automobile industry: the implication for divergence of employment systems under globalization

This paper analyses recent developments in HR practice toward core white collar employees at Japan’s major automobile companies. It confirms there have been incremental but substantial changes in key HR policies such as compensation and the ranking system, but also finds that traditional long-term employment continues to be practiced at most firms. It further observes that Japan’s auto companies have introduced global HR polices earlier than have Japanese firms in comparable sectors. This, however, has not resulted in the alignment of policies toward those of overseas operations, which one often finds in other Japanese industries such as finance and pharmaceuticals. This would indicate that different trajectories of change are emerging in employment practices—that is, diversification in employment systems is expanding—according to sector (or, the products and services firms offer). This paper also analyses several background factors propelling such divergence, and suggests possible future constellations of employment systems among large elite firms in Japan. In these ways this study contributes to the debate on the effects of globalization on divergence and convergence of employment systems.