The Three Tiers in the Asia Pacific Region

1. The Top Tier – Led predominantly by Japan, it includes Australia, Hong Kong, New Zealand, Singapore and South Korea. The non Anglo-Saxon countries are generally known as the 'Asian tigers' and are made up of 'newly industrialised economies' (NIEs). The Second Tier – Second generation of 'tigers', made up of Malaysia, the PRC and Thailand. At present in a 'sandwich trap' of cheap labour competition from below and exclusion from higher value-added markets above. The Third Tier – Burma, India, Indonesia, the Philippines and Vietnam are a diverse range of economies characterised by the availability and abundance of cheap and unskilled labour. The Three Tiers in the Asia Pacific Region

2. Key differences between the traditional system and the emerging system of labour reforms within China System Characteristic Status Quo Experimental Strategy Hard-line Reformist Employment Iron rice-bowl Labour market Conditions Job security Labour contracts Mobility Job Assignment Job choice Rewards Egalitarian Meritocractic Wage system Grade based Performance based Promotion Seniority Skill-related Union role Consultative Co-ordinative Management Economic cadres Professional Managers Factory party-role Central Ancillary Work organisation Taylorist Flexible Efficiency Technical Allocative

3. Respect for age, family and hierarchy. Sense of duty and order. Orientation towards groups. The preservation of 'face'. The importance of relationships. Chinese culture based on Confucian ideologies

4. Phase 1: 1953–56 Central Planning Mao Zedong came to power in 1949. He advocated that China should move to a economy based upon socialist ownership. The Five-Year Plan was launched in 1953. This included moves towards centralised planning and control. Phase 2: 1957–61 Decentralisation & the Great Leap Forward The Soviet influenced system was not in sympathy with a Chinese culture in which collectivism was a central feature. The 'Great Leap Forward' saw control of many industries pass from central to provincial governments. However, a great emphasis was placed upon allegiance to the Communist Party and Factory Directors had to report to party committees. The system of bonus payments was reduced. Four Phases of Development under Mao Zedong (1)

5. Phase 3: 1962–65 The Period of Readjustment The 1959–61 period saw a drop in agricultural output followed by a famine. This was partly caused by an overemphasis on expanding the manufacturing sector during the Great Leap Forward. The period of readjustment saw moves back towards more centralised planning, but factory directors were given more control over day-to-day production issues. Phase 4: 1966–76The Cultural Revolution Politics and ideology were predominant. Emphasis upon allegiance to the Party. Factories moved away from hierarchical control to factory revolutionary committees. The role of the State was central throughout. Four Phases of Development under Mao Zedong (2)

6. The Three Pillars: Nenko – seniority system Lifetime employment Enterprise unionism Other elements: Employer participation (Ringi system) Embedded training Mentoring Sempai–Kohai (Senior–Junior) relationship Core–periphery workforce The Japanese Three Pillars and other elements of HRM

7. Measures to discourage mobility of skilled workers and encourage retention Changing the hiring from an indirect to a direct system. Establishing welfare benefits in the company: Paid job-related injury & illness benefits; congratulatory money for marriage & childbirth. Introducing the seniority wage system: Promotion depended on length of service. Thus a move to another company meant their wage level went down. Also dependent on age, education and until recently gender. Establishing an education and training system within the enterprise: With the development of an internal labour market training and development became important. Firm-specific skills were emphasised as well as all round skills so employees could be transferred between jobs. Unlike Western countries employees are not hired to do a certain job. This underscores the concept of ‘promotion through job rotation’. Historical development of Japanese HRM

8. After the Second World War workers wanted to safeguard their rights amid the collapse of the industrial structure and wholesale inflation. For the first time blue collar and white collar workers cooperated controlling production for the sake of their own living standards. They demanded: Removal of the old grades and status Job security Reform of management organisation The setting up of participation systems Recognition of the unions To conduct labour agreements Democratisation of management Expansion of workers' rights The best way to cooperate between the two groups of workers to gain and maintain these initiatives was at the enterprise level. Establishment of enterprise unionism

9. Employers saw the advantages of promoting enterprise unionism and they ensured that: Labour relations were conducted vertically, thus weakening the horizontal solidarity of the workers. The emphasis was on cooperation in the workplace in the desire for consensus and the removal of workers who propagated radical ideas and were aggressive toward management. The rights of management were encouraged by setting up a new employer–labour relations system in each company. This also had the effect of creating a Unitarist style of organisation. However, the path of industrial relations was not always smooth and up to the 1960s there were often disputes, sometimes of a violent nature. Cooperative industrial relations, identified with Japanese management style, only began in the 1960s. Thus the ‘traditional model’ is really quite a recent phenomenon. Why employers encouraged enterprise unions

10. PAST Internal labour markets Hierarchical pyramid-typeorganisation Lifetime employment Job segmentation In-house on-the-job training Internal human network Manual skill oriented Firm specific skill Systematic job rotation Manufacturing factory model Mass production oriented Long-range evaluation of human resource management Money value of work for employees Bureaucratic control PRESENT Enlargement of internal labour markets (related firms) Flat-type organisation Variety of contracts Flexible job categories Emphasis on out-of-house interaction External human network Conceptual skill oriented Firm specific culture Failure of internal career development plan Flexible unit model Value added oriented Short range evaluation of human resource performance Non-pecuniary value of work for employees Partnership relations Changes in HRM patterns in large Japanese firms

11. Changes facing Japanese organisations: Increasing number of: Middle aged and older workers Highly educated workers Female workers Continuous changes in technology Growth in service economy Global development of the division of labour. Traditional internal labour markets of large Japanese corporations are at a turning point: Long-term trend of wage differentials by personal characteristics & positions in organisations Some characteristics unique to Japanese companies may be disappearing The hierarchical structure of companies will hardly exist any more. Formerly bureaucratic organisations have become more flexible units: Project teams Related companies Subsidiary companies Sub-contracting companies Compensation system will move to cope with new HRM system. New trends in Japanese HRM patterns

12. An older labour force Fewer young people entering the labour market Strain on the pensions system Strain on wages system as remuneration rises with age Shortage of senior positions Japanese population and labour force problems

13. Raised pensionable age from 55 years. In 1985 raised to 60 years with 65 years in future. Modification of Seniority wage system. Many companies have set an age where wages start decreasing or at least increasing at a rate less than average. Revision of retirement benefits, e.g. reducing the proportion of salary making up the lump sum. Not enough senior positions for those now in their 40s and 50s. Many companies are beginning to emphasise factors other than age and service, e.g. ability. Resignation from a position at a certain age. Increased employment of women especially in the 25–29 age group. Main reason: expansion of services such as banking, retailing and insurance. A decline in the birth rate from 1.8 to 1.5 per Japanese woman since 1980. Women's rising level of education and drive for equal opportunities and take up employment. Backed by Equal Opportunities legislation 1985. Companies are required to provide equal opportunities in recruitment, employment, work assignments and promotion. The law forbids sexual discrimination in training and education, welfare benefits, retirement age, resignations and dismissals. Backed by provisions of child care leave, and childbirth leave and re-hiring. Japanese population and labour force some solutions