More on Japanese jobs

· November 24, 2018

Following up on the post the other day, I have been reading some articles by economist Genda Yūji. His article from last year on the lack of wage increases despite tight labor markets is insightful. The whole thing is worth a look, but in terms of the training discussion going on in the US, I thought this historical view was interesting:

 During Japan’s period of high growth rates in the 1950s and 1960s, strong investment in new equipment on factory floors and elsewhere powered the rapid spread of technological innovations. At the time, relatively few people received higher education, and workers without specialized knowledge coped with new technology through trial and error. This process was supported by the enhancement of their abilities with on-the-job training. The practice of lifetime employment took hold as a way of promoting this training on a long-term basis, and the payment of seniority-based wages took hold as a way of recognizing the advanced abilities achieved through this sustained process. Capital investment did not lead directly to higher labor productivity; the advances were made possible by diligent efforts to train workers on the job.

The article goes on to point out that this isnt happening any more. 

The power of the technology revolution that swept through Japan in the 50s is incredible though - it makes sense that rapidly advancing skills would have to be something learned in situ, much the same as today by with digitalisation and automation. The fact that the support structures for the earlier solution are still in place but the solution itself is not is a strong signal towards a drift in the underlying incentives. 

That said, while I’ve been skeptical of large corporate training programs, I can see how they could really work if part of a larger compact between employee and company to go the distance together.