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Monday, July 7, 2008

Work traditions worth keeping

When I had a chance to meet with a group of students, I asked them for what purpose each would do the job that he or she got in the near future. A majority replied "something that makes work worth doing and life worth living," although some did say "for money."

Contrary to claims made by certain market-first economists who misinterpret Adam Smith, not all individuals or corporations act solely in their own self-interests or for personal desires. Amartya Sen, a Harvard professor awarded the Nobel Prize in economics in 1998, states in his book "Rational Fool" that man is not a rational fool who pursues self-interests and personal desires above all else; rather, "sympathy and commitment" to others constitute the basic criteria of human behavior.

Indeed, everybody feels some degree of sympathy to help those in trouble. At the same time, any normal person has one commitment or another for which he or she lives only once. Fulfilling that commitment becomes the goal of living.

Believing it is a shame to die rich, Andrew Carnegie, who was often called the king of the steel industry, contributed huge sums of his own money to promote culture and art by establishing the Carnegie Foundation and building Carnegie Hall.

Similarly, Bill Gates, the founder of Microsoft Corp., poured billions of dollars into his own foundation to provide medical care to the poor. According to Gates, he has accumulated wealth in the process of enjoying business, and is set on spending all of the foundation's basic assets before he dies.

Kazuo Inamori, the founder of Kyocera Corp., created the Inamori Foundation, which awards the Kyoto Prize each year to individuals making outstanding contributions in the three fields of basic sciences, advanced technology, and arts and philosophy. Recipients, usually one but sometimes two or more in each field, are selected through rigid screening.

Inamori has also made other social contributions by helping promote research activities and holding international symposiums.

Carnegie, Gates and Inamori are all great businessmen worthy of respect as they are filled with the spirit of "sympathy" and "commitment."

Some young people work for environment-related nongovernmental organizations for about half as much remuneration as they would receive in regular jobs. There are also people who volunteer to help impoverished people and others in difficult situations. Their behavior is undoubtedly guided by "sympathy" and "commitment" rather than by the pursuit of self-interests and personal desires.

Few countries in the world have as small a disparity between the rich and poor as Japan. Some economists who know very little about the science of statistics have come up with the outrageous theory that the degree of disparity in income distribution can be measured by using a sole yardstick known as Gini's coefficient.

Whether, and to what extent, disparity exists must be determined by various factors, so it is too simplistic to give an answer solely on the basis of one statistical expression of income distribution. It is clear that the larger the number of people who work as activists and volunteers in NGOs, the higher Gini's coefficient will be.

As Nobel laureate Sen said, it is a sign of social maturity when a growing number of people become less interested in earning a bigger income and are motivated to work because of sympathy and commitment.

Making a big issue out of such a phenomenon would lead to puerile arguments involving statistical data by economists with little or no knowledge of the basic pattern of human behavior related to the motivation to work.

The Japanese people have long made egalitarianism one of their most fundamental principles. For example, the wage disparity among those hired by a corporation the same year is extremely small in Japan compared with other market economies, or even with China.

Lifetime employment and a seniority wage system still prevail in Japan even though they have come under criticism. Neither egalitarianism nor the labor practices related to it have been forced on the Japanese by an outside force. In my view, they have been adopted by the Japanese people themselves as a basis for living comfortably.

Since 1991, however, the protracted recession has forced corporations to cut labor costs. This, coupled with deregulation of the labor market, has resulted in an increasing number of contract workers and temps provided to companies by employment agencies. A considerable wage disparity does exist between these irregular and full-time employees.

Although this has given rise to the argument that Japan has become a society of disparity, this is not the result of wrong market-oriented reform pushed by former Prime Minister Junichiro Koizumi. Rather, this phenomenon should be viewed as the outcome of Japan's adjusting its labor practices to the new environment of protracted economic stagnation and uncertainty.

In other words, the new disparity in wages is a result of Japanese corporations hiring less full-time employees and relying on irregular workers to make up for labor shortages for the ultimate purpose of maintaining the lifetime employment and seniority system for existing full-time employees.

Recently, corporations have once again begun hiring a larger number of full-time workers, partly because many "baby boomers" have reached their retirement age, but also because the economy has shown signs of gradual long-term recovery. This seems to indicate that Japanese businesses have not abandoned their unique employment traditions.

Takamitsu Sawa is a professor at Ritsumeikan University's Graduate School of Policy Science and a specially appointed professor at Kyoto University's Institute of Economic Research.

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