The Industrial Relations System in Large Japanese Enterprises - A Comment

Abstract 1. Confidence in continued employment and wages according to seniority cannot facilitate technical innovation and the optimal use of human resources in the Japanese large enterprise without the aid of personnel appraisal and the sub-contracting system. 2. Personnel appraisal rewards those workers who collaborate in technical innovation and punishes those who do not by means of differentials in seasonal bonuses, wage increases, promotion and demotion. 3. The sub-contracting system helps a large enterprise maintain enough flexibility by reducing sub-contracting, eliminating its over-employment, transferring those workers who do not collaborate in technical innovation to its sub-contracting enterprises, and organizing the workers of a large firm and those of its sub-contracting firms separatel