With all that’s in the news about automation, artificial intelligence and the instability of the current workplace, some people may fantasize about a time when most people had jobs for life.
It dawned on me when I was putting together the Cash Chronicles Instagram post this morning about the $320 million trading loss at Mitsubishi Corporation, that much of the world is still playing catch up to the US in terms of work life.
The Keiretsu
The hyper competitive rise and fall of corporations is a very American thing. For better or worse, the country tends to let the market determine who will be the next winners and losers in terms of companies and this happens relatively fast. The average tenure of a company in the S&P 500 in 1964 was 33 years and is expected to fall to 12 years by 2027.
This means that with the rise and fall of corporations, employees will have to switch jobs more often. This is already the case with many young people today. This instability is also a likely contributor to much of the political angst that people in de-industrializing areas of the US are experiencing and their willingness to see new more radical politicians enter office.
While we have been so caught up in our own fast moving economy, the rest of the world has been playing catch up. In fact, the makeup of the corporate landscape and national companies is very different in other countries, even advanced ones.
This brings us back to Mitsubishi and the case of Japan. When many people hear the name Mitsubishi, they think of the car company Mitsubishi Motors or even the company that made TV sets back in the 80’s. But this is a misnomer because the name Mitsubishi is that of a Keiretsu or conglomerate in Japan.
This is not the conglomerate as we know it. We tend to think of names like General Electric (GE) when we think of a conglomerate. In other words we think of one company with a number of different style of businesses underneath it. GE has everything from power to aviation to healthcare under its umbrella. The Keiretsu is a little different. It is a group of independent companies that own portions of each other and usually have a bank associated with them to support them. To make matters more confusing, they tend to share a name. In the case of Mitsubishi there is Mitsubishi Motors, Bank of Tokyo Mitsubishi, Mitsubishi Corporation and Mitsubishi Heavy Industry. In all, there are about 49 companies associated with the Mitsubishi name that exists to this day.
The legacy of this is that, as mentioned, in the past there was some cross holding of their ownership, but that ended in the late 90’s when Japan went through its own crisis. Now the companies are all independent again but remain with the Mitsubishi name. When I read a few articles about the trading loss, I noticed that one or two mentioned Bank of Tokyo Mitsubishi as opposed to Mitsubishi Corporation, which are two completely different companies.
There has been a history of the industry being dominated by a few big companies in Japan. The predecessor to the keiretsu was the zaibatsu, which consisted of four families that controlled essentially all the industry and economy of Japan prior to WWII.
On to the Job for Life
At the heart of the spirit of keiretsu was always stability. Having consistent companies, names, levels of service and quality are a mainstay of Japanese culture and society.
This translated to the job market as well. Just like the chiming of church bells, every April, companies would recruit the latest round of 23 year olds for the country’s biggest companies. Upon entering, workers would move up based on age and then take mandatory retirement at age 60.
It’s almost impossible to get fired in Japan. Punishment would come in the form first of the ire from a boss, then potentially in reduced responsibilities. If there is further action needed, I have heard stories of the worst office workers being put in a room and given no tasks all day, eventually even their computer is taken away. Rather than take the shame of having no responsibility and no work, the employee is encouraged to quit out of shame.
The social cohesion is extremely tight in Japanese society which is one reason why there are many things that can exist there that can’t anywhere else. The power of social pressure is immense and allows social norms to dictate much of people’s lives. This is one of the downsides of the system, individual freedom in name only.
The benefit of this obviously is employment stability. Labor laws make it very difficult for corporations to fire someone even for underperformance. Japanese culture is one that has an extreme aversion to uncertainty. Knowing where you are going to work everyday and avoiding the uncertainty that comes with looking for a job are valued more highly there.
Apart from the social pressure, other downsides are lower pay than in the US for almost all workers, long required hours and vague job descriptions with varying levels of responsibility. As for the social pressure, it manifests itself probably most vividly in that Japan typically ranks very low compared to other rich countries when it comes to happiness.
As Westerners, we may be tempted to say jobs there sound good. Some may even say I would love a job where there was no responsibility and I kept getting a paycheck. We have to keep in mind that the social pressure in Japan keeps from abuse of their unique system like this. The shame of not having a job for men is so strong that people will dress up as if they are going to work and sit in the library or park all day rather than face the shame of letting their family know they are unemployed.
But the views are spectacular
The Here and Now
We tend to look back on the past and only remember our good memories, forgetting many of the bad ones. As the case of Japan shows, we don’t need to look at the past to find an example of jobs for life, only to other countries.
From these we can see the downsides of the job for life: little to no choice, social rigidity, lower pay etc. We look at the situation in the US now and all we see are the downsides of our own job situation: the angst of switching jobs, the uncertainty of healthcare and the inconsistency of benefits across companies. This however, hides the dynamism behind the economy. There is a certain excitement in all the changes going on in the job market. The fact that there will be a huge number of jobs 10 years from now that don’t exist in the present should be cause for excitement not worry.
We may not have as much control over healthcare but we do have control over things like retirement and tax sheltered vehicles like an HSA account. Here we have the freedom to choose how much we would like to put away for retirement versus what we spend today. As bad as it may sound to some, there also is a safety net.
I volunteered at a local food pantry this summer that gives out free meals everyday at 5pm. There are no questions asked, only your date of birth is recorded for statistical purposes. On site, there are counselors that can assist you with getting into public housing and shelters if you are homeless. In addition, if you are strapped for cash, and you have a smart phone, there are sites like Fiverr, Taskrabbit, Ubereats and selling on EBay, that can put money in your pocket right now. Don’t believe me? Well Gary Vaynerchuk is still out there on Saturday mornings making $5 off of pieces of junk despite the fact that he runs a multi million dollar company. He even turned it into a YouTube series which you can see here.
Source: Garyvaynerchuk.com
The jobs of the past were dirtier, predictable and limited. They had many advantages but living in the past is not the way to get the best out of our present. The example of Japan should show you, that the real fear is uncertainty, of getting out of our comfort zone and become as dynamic as our economy is. Some people want stability and want comfort, that’s fine, we need those types of people too. When we think of the future though, no one is looking back and asking where all the blacksmith jobs have gone and clamoring to bring them back. Embracing change and uncertainty is what has pushed the country forward and kept us at the economic forefront for 70 years, let’s keep that energy.
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