IBM emerges as test case to Japan Prime Minister’s labor reforms

By IVCPOST Staff Reporter

Jul 13, 2013 05:50 AM EDT

Last year, IBM veteran Martin Jetter came to Tokyo as the company's new president in its Japanese unit. He had a radical idea of having workers held responsible for the performance of the company. Within months after his arrival to the country, the Japan IBM unit fired a group of employees. The reason behind the fire out was due to underperformance in the kind of restructuring common in many Western countries. Company restructuring is not common in Japan where the most sought after jobs carried lifetime employment promises.

International Business Machines (IBM) was sued for illegal termination. Prime Minister Shinzo Abe faced a big test in one of the most divisive and politically inclined issues confronting his governance. This was whether to make it easier for firms operating business in the country to fire out workers.

The prime minister hoped to transit Japan away from a system of employment that prioritizes stability to focus on growth. This was after years of stagnation in the economy of Japan. Last Sunday, Abe said during a TV show interview that he wanted more job hiring based on specialization or location. He added that he would like jobs to offer benefits closer to full time work but can be easier cut if deemed that is no longer necessary.

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