Japan

Features

Europe's ‘lost decade’ – the Japanisation of the West

Nick Boulter , 03 Jan 2012

More than three years on from the first signs of financial meltdown, governments are still struggling to cope with the immediate economic implications. But the full extent of the repercussions will continue to be felt in the workplace for many years to come.

One of the biggest concerns is that the West is following the experience of Japan in the 1990s and will see a 'lost decade' of stagnating demand, stock market decline and financial instability. Japan's lost decade was triggered in 1990 when overinflated credit, financial and property markets imploded, leading to a prolonged period of economic decline. The Nikkei Index fell by 63% over the following 10 years and Japan's economy has lurched between stagnation and recession ever since.

One of the many troubling parallels between Japan and the West is that both have an ageing population. This creates problems for the state, which will find it increasingly difficult to meet its pension and benefits obligations, and for employers, who have to manage the dual problem of an older generation of increasingly expensive workers who cannot afford to retire and a younger, disgruntled generation who find their career progress blocked as a result.

Learning lessons from Japan

So if the West does go the way of Japan, what can employers and talent managers expect?

Key trends are already emerging:

A shift towards more flexible employment. During Japan's lost decade there was a marked swing away from lifelong employment and towards flexible, part-time and lower-paid jobs.

A similar trend is already apparent in many Western countries, where permanent, full-time jobs with good pensions are no longer the norm. The tendency instead is towards contract based, part-time or flexible working hours, and to outsourcing of whole functions or areas of work.

Reduced benefits. Faced with an ageing population and declining tax income, Western states...