Transformations in- and outside the internal labour market: institutional change and continuity in Japanese employment practices

The weak performance of the Japanese economy since the 1990s has renewed the debate on the efficiency of its employment practices. Although actual changes have long trailed expectations, two major developments have taken place in recent years: a rise in non-regular employment and the introduction of performance-related pay (seikashugi). Both affect the internal labour market that has been crucial to human resource management in Japan. The first development diminishes its relevance and the second directly impacts its functioning. This paper discusses these changes and the factors that determine their character. Moreover, it argues that the changes are not just aligned with but also made possible by an important continuity in the support for the core practice of lifetime employment. What results is a story of institutional change and continuity which argues that the specific character of Japanese employment practices remains in spite of an apparent convergence.