Many both in and outside of Japan share an image of the Japanese work environment that is based on a lifetime-employment model used by large companies as well as a reputation of long work-hours and unusually strong devotion to one's company. This environment is said to reflect economic conditions beginning in the 1920s, when major corporations competing in the international marketplace began to accrue the same prestige that had traditionally been ascribed to the daimyo-retainer relationship of feudal Japan or government service in the Meiji Restoration. At the very top, the most prestigious companies would recruit and retain the best workers by offering better benefits and truly life-time job security. By the 1960s, employment at a large prestigious company had become the goal of children of the new middle class, the pursuit of which required mobilization of family resources and great individual perseverance in order to achieve success in the fiercely competitive education system.
Employees are expected to work hard and demonstrate loyalty to the firm, in exchange for some degree of job security and benefits, such as housing subsidies, good insurance, the use of recreational facilities, and bonuses and pensions. Wages begin low, but seniority is rewarded, with promotions based on a combination of seniority and ability. Leadership is not based on assertiveness or quick decision making but on the ability to create consensus, taking into account the needs of subordinates. Surveys indicate continued preference for bosses who are demanding but show concern for workers' private lives over less-demanding bosses interested only in performance on the job. This system rewards behavior demonstrating identification with the team effort, indicated by singing the company song, not taking all of one's vacation days, and sharing credit for accomplishments with the work group. Pride in one's work is expressed through competition with other parallel sections in the company and between one's company and other companies in similar lines of business. Thus, individuals are motivated to maintain wa (harmony) and participate in group activities, not only on the job but also in after-hours socializing (nomikai). The image of group loyalty, however, may be more a matter of ideology than practice, especially for people who do not make it to the top.
Japan's workforce grew by less than 1% per year in the 1970s and 1980s. In 1991 it stood at 62.4% of the total population over fifteen years of age, a level little changed since 1970. Labor force participation differed within age and gender groupings and was similar to that in other industrialized nations in its relative distribution among primary, secondary, and tertiary industries. The percentage of people employed in the primary sector (agriculture, forestry, and fishing) dropped from 17.4 in 1970 to 7.2 in 1990 and was projected to fall to 4.9 by 2000. The percentage of the Japanese labor force employed in heavy industry was 33.7 in 1970; it dropped to 33.1 in 1987 and was expected to be 27.7 in 2000. Light industry employed 47% of the work force in 1970 and 58% in 1987. The sector was expected to employ 62% by 2000. Throughout the 1970s and 1980s, well over 95% of all men between the ages of twenty-five and fifty-four were in the work force, but the proportion dropped sharply after the usual retirement age of fifty-five (by 1990 the retirement age for most men had risen to sixty). Women participated most actively in the job market in their early twenties and between the ages of thirtyfive and fifty-four (see Working women in Japan). The unemployment rate (2.2% in 1992) was considerably lower than in the other industrialized nations, but it has about doubled since the collapse of the Japanese asset price bubble. Youth unemployment is now a considerable problem in some regions.
Wages vary by industry and type of employment. Those earning the highest wages are permanent workers in firms having more than thirty employees and those workers in finance, real estate, public service, petroleum, publishing, and emerging high-technology industries earned the highest wages. The lowest paid are those in textiles, apparel, furniture, and leather products industries. The average farmer fares even worse, but might benefit from the appreciation of his land holdings as well as the powerful political ties to the Liberal Democratic Party.
During the period of strong economic growth from 1960 to 1973, wage levels rose rapidly. Nominal wages increased an average of 13% per year while real wages rose 7% each year. Wage levels then stagnated as economic growth slowed. Between 1973 and 1987 annual nominal and real wage increases dropped to 8% and 2%, respectively. Wages began rising in 1987 as the value of the yen sharply appreciated. In 1989 salaried workers receiving the highest average pay hikes over the previous year were newspaper employees (6.7%), followed by retail and wholesale workers (6%) and hotel employees (5.7%). Workers in the steel (2.5%) and shipbuilding (4.2%) industries fared worse. The salaries of administrative and technical workers were about 20% higher than those of production workers. In the late 1980s, with wages in manufacturing firms having 500 or more workers indexed at 100, enterprises with 100 to 499 employees were indexed at 79, those with thirty to ninety-nine employees at 64, and those with five to twenty-nine employees at 56.6. The gap between wages paid to secondary school and college graduates was slight but widened as the employees grew older; wages peaked at the age of fifty-five, when the former received only 60 to 80% of the wages of the latter.
In the standard model, workers receive two fairly large bonuses as well as their regular salary, one mid-year and the other at year's end. In 1988 workers in large companies received bonuses equivalent to their pay for 1.9 months while workers in the smallest firms gained bonuses equal to 1.2 months' pay. In addition to bonuses, Japanese workers received a number of fringe benefits, such as living allowances, incentive payments, remuneration for special job conditions, allowances for good attendance, and cost-of-living allowances.