The is the
Japanese system of promoting an employee in order of his or her proximity to
retirement
Retirement is the withdrawal from one's position or occupation or from one's active working life. A person may also semi-retire by reducing work hours or workload.
Many people choose to retire when they are elderly or incapable of doing their j ...
.
BBC News (22 March 2016: Japan seeks alternatives to its pay system
/ref> The advantage of the system is that it allows older employees to achieve a higher salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis.
F ...
level before retirement and that it usually brings more experience to the executive ranks. The disadvantage of the system is that it does not allow new talent to be merged with the experience and those with specialized skills cannot be promoted to the already crowded executive ranks. It also does not guarantee or even attempt to bring the "right person for the right job". The labor turnover rate in Japan is less than half the US level. The seniority-wage system can also be seen in Japanese government. Japanese parliament
The is the national legislature of Japan. It is composed of a lower house, called the House of Representatives (, ''Shūgiin''), and an upper house, the House of Councillors (, '' Sangiin''). Both houses are directly elected under a paralle ...
seats are usually filled with the older members from each party.
After the economic bubble burst in Japan in the late 1980s and the venture capital (dot-com) shock of the 1990s, the seniority-wage system has become less popular amongst business as they could not afford to keep older employees with high salaries on the payroll. Many mid-level executives that climbed the corporate ladder with the Nenko system fell victim to corporate restructuring.
See also
* Seniority
Seniority is the state of being older or placed in a higher position of status relative to another individual, group, or organization. For example, one employee may be senior to another either by role or rank (such as a CEO vice a manager), or by ...
* Simultaneous Recruiting of New Graduates
is the Japanese business custom in which Japanese companies hire new university graduates en masse. This custom was practiced in South Korea until a 2010 age discrimination law banned the practice in South Korea. In 2018 the Japan Business F ...
External links
LABOR TURNOVER IN THE USA AND JAPAN: A TALE OF TWO COUNTRIES
References
Human resource management
Japanese business terms
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