In the late 1980s, Japan experienced over-inflated credit, financial and property markets, which led to a prolonged period of market decline. Sound familiar?
In the first part of his look at the similarities between Japan in the 80s and the eurozone crisis, we used the Japanese example to look forward to the sorts of trends we’re likely to see in the employment market over the next few years.
Today, we ask what the impact of the crisis will be on work…
As the state and companies withdraw from benefits provisions, employees will be forced to be increasingly self-reliant for pensions and other benefits. Self-funded and insurable benefits will grow. Ministers announced last week that the state retirement age will rise to 67 in 2026, a decade earlier than planned - this is likely to continue to rise.
More part-time work
The proportion of the workforce in permanent roles will decrease, and more flexible and low-paid employment will increase. In Japan, the proportion of employees in the fabled Japanese ‘life-long’ employment schemes has fallen from 85% to around 65% over the past 20 years, and it is still falling.
There will be a downward pressure on pay and workloads will increase, as companies strive to remain competitive. Many middle-management jobs are likely to disappear, as they are relatively expensive and are made less relevant by new technologies and working patterns.
Lower job satisfaction
Although recent figures have shown that a third of graduate roles were left un-filled last year, that’s likely to change. There will be fewer graduate jobs than people who want them, resulting in a growing proportion of graduates working in non-graduate roles.
Despite the debate surrounding executive pay, the gap between the highest and lowest-paid workers is likely to rise as senior executive pay is increasingly linked to global markets. Competition between countries to retain companies will also influence their attitude to taxation for high earners.
Lower living standards
According to research by the Institute for Fiscal Studies, between 2009 and 2013, real median household incomes will drop by 7.4%. Combined with a downward trend in house prices and no real rise in the stock markets, living standards will drop as people tighten their belts.
Obviously, these scenarios are hypothetical – but the trends are real. In the future, we may look back to recent decades as a lost golden age for employment in the West.
- Nick Boulter is a member of Hay Group’s global executive team.