Telework in Japan: A Status Report
1. The broader backdrop to Japanese telework efforts
As with any other change in the status quo, telework does not exist in a vacuum from the larger political, social and economic currents which affect national life. If anything, because changing how we work is linked so closely to our value systems, it is imperative that we consider its development, and indeed its future potential, in the light of the broader backdrop. That is why this paper will begin by briefly outlining major trends afoot in the Japan of 1997, and then move on to discuss where telework stands today in that country.
On the political front, Japan has by and large displayed admirable political stability in the post-war period. This stability, however, has often concealed frenetic backroom negotiation and repositioning. Interestingly, the 1990s have seen a lot of this maneuvering finally move out into the public eye with the emergence of new political parties and groupings, the Goliath of Japanese politics, the Liberal Democratic Party (LDP), even experiencing a short fall from grace around 1994.
While the LDP's return to power two years ago has seen a return to politics-as-usual and the LDP's standard factional powerbroking, the political scene is not as smooth as the urbane prime minister, Ryuichi Hashimoto, would have us believe. Behind-the-scenes deal-making and allegiance-swapping are rife and popular disenchantment with Nagatacho politics has led to extremely low voter turnouts as the electorate quite rightly perceives that national politics offer them no new alternative. Instead, constituents have wielded their votes with a vengeance in a series of local referendums refusing to accept proposed garbage landfills and nuclear gener-ators. Widespread dissent over the presence of U.S. bases in Okinawa has also been a source of embarrassment for the government.
The resultant estrangement of politics from the electorate, coupled with a series of govern-ment cover-ups and scandals sadly prevents Japan from facing up to such pressing issues as the graying of society, improving external rela-tions, easing urban congestion, reforming educa-tion, and so forth. The government is currently involved in high-level talks on government and administrative reform, but the population at large shows no surprise as the teeth of each touted reform are pulled one-by-one by strongarm poli-ticians protecting their constituents' turf.
･The Japanese Economy
At the end of 1993, the Japanese economy finally started to recover from a two-and-a-half-year recession. That recovery, however, proved to be very weak, both the Kobe Earthquake and the strong yen acting as dampers. To date, Japanese output has hardly grown at all in the 1990s. Real GDP fell a huge 2.9% in the second quarter of this year, lowering year-on-year growth to -0.3%. This negative growth has seen a sharp jump in the number of companies going bankrupt. While most failings tend to be small operations, larger enterprises including Yaohan, a major retailer which has pursued an aggressive expansionist policy throughout Asia, have not proved invulnerable. The shake-out in the finan-cial sector is also a cause for serious concern. In addition to a number of small banks and lenders failing, several bank mergers are in the pipeline. Banks' non-performing loans remain a heavy encumbrance, however, and apparently lie behind the recent scuttling of a proposed merger between the two major banking institutions on Japan's northernmost island, Hokkaido. Else-where, scandals over misuse of funds and bribery currently plaguing Japan's major securities houses only add to the lackluster reputation of Japan's once well-regarded financial sector.
In an attempt to jump-start the economy, the government of the day has implemented six emergency packages since 1992. The last of these packages, implemented just two years ago, was the largest at ｴ14.2 trillion (=$118 billion at $1.00 = ｴ120), of which about one third was earmarked for building and disaster relief. Unfortunately, economic growth remains in the doldrums and politicians, having yet to learn that public works projects are no way to spark the economy in this global information age, are currently considering a new injection of funds.
The yen continued to appreciate throughout the first half of the 1990s, and rose from 1999 to 1981 to the dollar at the start of 1995, choking the fragile recovery. Since 1996, however, the yen has gradually weakened hovering today around the ｴ120 mark. Growing fears of the "hollowing-out" of domestic industry persist as more manu-facturers have moved offshore initially to beat the strong yen and today to beat high domestic labor costs. Interest rates remain at an historical low, the yield on Japanese government bonds falling to yet another record low (2.00%) in October. The bank prime rate still stands at 1.63% (Oct-ober 1997) and according to some estimates, Japan may well have the lowest real interest rate in the OECD (0.4%). To sum up, business is depressed, housing starts and industrial product-ion are down and neither the exchange rate nor interest rates point to any light at the end of the tunnel.
The depressed economic climate naturally has a strong impact on the labor market, Japan's employment environment remaining in the doldrums with weak corporate demand for new recruits. The official unemployment rate of 3.4% is very high by Japanese standards, but unofficial estimates place the number of unemployed even higher at around nearly one worker in ten. The ratio of job offers to job applicants is very tight and continues to tighten. In fact, the number of national private company job offers have halved since their 1991 peak.
Wages and hiring practices are also undergoing great change. No longer is lifetime employment guaranteed with more and more middle-aged salarymen subject to layoffs. Comp-anies are also experimenting with year-round hiring and mid-career hiring in addition to recruit-ing a fresh batch of college graduates each April. Seniority pay, while not being completely phased out, is increasingly being coupled with pay-for-performance packages and like many companies in other OECD countries,
outsourcing and contingent workers account for a growing share of new jobs. As traditional job security erodes, the wider availability and greater understanding of information and communica-tions technology
(ICT) are leading to a healthy self-employed/ SOHO (small office/home office) market for higher skilled Japanese workers, who, like many of their overseas counterparts, are opting for more independence in their working lives.
2. Japanese Telework Today
As is well documented, telework in Japan dates from a string of satellite office and resort office experiments in the late1980s, although a technology trial on remote working by NEC in 1984 is often cited as the first foray in this area. Born of the economic bubble, the first round of satellite and resort offices were characterized by expensive facilities and technological gadgets, but very little attention was paid to the work processes and human resource issues raised by telework. At this point in time, only the corporate sector showed an interest in telework facilities, there being almost no involvement at the public policy level. With the downturn in the economy at the beginning of the 1990s, corporate interest also took a nosedive, resulting in the closure of many satellite offices, which at the time centered mainly on suburban Tokyo and numbered around a dozen sites.
Some Basic Statistics (% change at annual rate)
1 year_____-0.3 , 3-mth av_____-11.2
1 year_____+2.1 , 3-mth av_____+2.2
latest _____ 3.4 , 1 yr ago _____ 3.3
3-mth av = % change of latest 3-month average on preceding 3-month average.
(Source) The Economist, October 25, 1997
Since 1995, however, there has been a resurgence in interest in the telework concept in Japan on both the part of the government and the private sector. This interest has coincided with huge growth in the domestic computer market, 1995 being the year when Windows 95 hit the Japanese market, 1996 when Internet hosts and accounts skyrocketed and 1997 being touted as the year of multi-media and SOHOs. Portable PC sales are proving to be extremely robust in 1997 with 42% year-on-year growth in the June Quarter. It should be noted, however, that not all portables are purchased for mobile work, a significant proportion being purchashed rather for their smaller desk footprint, an important consideration in a country where office space is at a premium.
A further incentive for greater government involvement has been fear of being left behind in the ICT race as the U.S.A.'s Clinton/Gore presidential team introduced its far-reaching National Information Infrastructure program, better known as the Information Superhighway.
On the corporate front, this new interest in telework seems to be driven by both a growing awareness of the importance of ICT in a highly competitive global economy and by the pressing management need to reengineer corporate workstyles and business processes. Let us first consider public sector trends.
Compared to their overseas counterparts, Japanese government at all levels has been extremely slow to catch on to the policy implications of telework. This delay is starting to be rectified, however, as the following table suggests. Not surprisingly, the Ministry of Posts & Telecommunications (MPT) has been an early and consistent supporter of both corporate and regional telework initiatives. Moreover, it is scheduled to start its own in-house pilot this fall, a first at the central government level. The honors for the first public sector teleworkprogram, however, appear to have been won by Gifu Prefecture, which started a small work-at-home pilot in September of this year.1992 Law on Promoting Regional City Hubs, Local Infrastructure & Industrial Facilities Relocation Joint effort by 6 ministries, promoting office decentralization.
A noticeable absence from the ranks of central government initiatives is the Ministry of Transport, where the best shot at reducing train and road congestion has been its off-peak commuting campaign.
Telework related central government initiatives
1996 Ministry of Posts & Telecommunications/Ministry of Labor Telework Promotion Council
Ministry of Posts & Telecommunications
1994 Telework center subsidy program (provides funding for facility and local area networks: Yamagata TWC 1994, Higashi Mikawa TC 1996)
Electronic Telecommunications Program Bill (allows for special municipal bond issues, whose funds can be used for terminals and telecommunications equipment. Used by Yamagata TWC in 1995 for additional funding.)
1994- Telecommunications & The Environment Research Committee
1995 Telework Center Research Committee
1997 First national Telework Day, May 27
In-house pilot, October
Ministry of Labor
1994-6 Sponsored 2-year satellite office pilot for the disabled from March, 1994.
(Now operated by The Japan Association for Promoting the Employment of the Disabled.)
1995 Research Committee on Work-at-home Using IT Equipment (joint study with UK DOE)
Ministry of International Trade & Industry
Office Arcadia Plan
1994 Research Committee on Measures for Promoting Young Residents in Regional Areas
Ministry of Agriculture, Fisheries & Forestry
Subsidy program for structural improvement of agriculture (aim to upgrade information access in ruralcommunities)
Subsidy program for promoting new residents in agricultural communities (aim to upgrade information access in rural communities)
(compiled by the author from various sources)
･Private Sector Trends
Just as approaches to telework and actual telework practice have evolved in Europe and North America, Japan too has moved on from the excesses of the bubble period. Reflecting the increasingly challenging economic climate, Japanese companies are beginning to rethink their approach to how they hire, compensate, evaluate and compete in today's turbulent labor and business market.
In contrast to the initial wave of joint satellite office and resort office pilots aimed at commute reduction, office cost reduction, and new business development, today sees a growing emphasis on in-house efforts and changing employment patterns. For example, NEC, which has been involved in Japanese telework from its earliest days, is slowly expanding its own proprietary network of telework facilities in suburban Tokyo, the company now operating four such facilities with the opening of its latest
center in Chiba this year. Some of its salesforce are being converted into mobile workers and its innovative drop-in center in downtown Osaka has proved extremely popular with its peripatetic workforce.
Fuji Xerox is another large company in the vanguard of flexible telework initiatives, a mixture of head office decentralization, telework centers and mobility being seen as valuable tools in the ongoing search for greater efficiency under its New Work Way campaign. Asahi Beer has also hit the news with its extensive use of e-mail and mobile workers.
It is not only the big players who are embracing telework, however. As is the trend in other industrialized countries, ICT is being adapted and adopted by small or independent entrepreneurs as the self-employed use the network to leverage themselves into viable business positions. The Japanese SOHO market is said to be booming with the popular press and business magazines peppered with articles on "cyber warriors" and "networkers". The rise in home-based businesses is in direct contrast to
the slow uptake of corporate work-at-home programs. Regional telework centers such as Iwaki TWC , Yamagata TWC and Telecottage Shitara also demonstrate the regional potential of telework, but Japan is yet to witness a rural telework boom on a par with the robust U.K. telecottage movement.
While the devastation wrought by the Kobe earthquake in 1995 brought home the vulnerability of many businesses, there has been little direct evidence of telework being incorporat-ed into crisis management plans. The Japanese telework population is still small, a 1996 survey conducted by the Satellite Office Association of Japan placing the number of regular white-collared teleworking employees at 960,000 or approximately 4% of the white-collar workforce. However, the rapid introduction of computers and networks could change this picture radically over the next few years.
For example, a majority of Japanese companies and government offices with 500+ employees are now using e-mail, and the average ratio of computers to employees is 4.5 staff per computer, up from 6.5 in 1996. The number of companies with a 1:1 ratio was 5.7% of all companies up from 2.1% last year (9.6% for firms with 1000+employees).
Network Wizards also reports a 30% increase in the number of .jp domains on the Internet in the period January-July 1997. Regarding the locatioon of Internet access, according to Access Media International, 61.3% of Japanese access from work/school only, 21.3% at home only, and 17.4% at work/school and home.
So, the level of ICT penetration is still low, but the rate of increase is significant as these figures show. In the longer run, this should increase the pool of potential telework jobs and teleworkers.
3/96----- 10.2 mil
12/96----- 18.7 mil
5/97----- 28 mil
*including cellular and PHS (available from 7/95)
1995 ----- 5.7 mil (+70% on 1994)
1996 ----- 7.19 mil (+26%)
1997+ ----- 9.7 mil (+35%)
(Electronic Industries Association of Japan)
3. The Outlook for Tomorrow
The Japanese employment market is undergoing significant change as both ICT trends and demographic trends converge to shake up the status quo. Japan's population is ageing faster than any other industrialized country. As of April 1997, the 15-and-under population stood at 19.52 million (males10 million), the lowest on record and the tenth consecutive drop. The 65-plus population accounts for 15.4%. These demographic trends mean that Japan's corporate sector must learn how to incorporate more women and elders into their hitherto monolithic male force.
Moreover, any such diversification of the labor pool inevitably means the diversification of work arrangements as both European and North American experience attestifies. As technological literacy and applications become more commonplace at both worker and managerial level, even Japanese companies will learn how to flex not just their muscles but their work processes. Slowly but surely they are coming to see that telework and its flexible principles are no longer a question of like or dislike, but a means for surviving the demo-graphic and technological shakeup that is currently hitting them.
The major challenge is, therefore, for Japanese management to learn how to manage diversity.
The future of Japanese telework rests on this and despite all the socioeconomic trends which reinforce the appropriateness of telework as one part of the employment/business solution, corporate telework will
remain a marginal work practice until Japanese companies become more comfortable with diversity.
Accordingly, the frontrunners are indeed likely to be the self-employed individual, the SOHO entrepreneur and small- and medium-sized enterprises (SMEs).
Baba, K., 'Telework Day Survey Report' (in Japanese), International Flexwork Forum, vol. 7 no.26, Tokyo,pp. 13-16
Sakiura, R., 'A Municipal First: Gifu's Home-based Telework Pilot' (in Japanese), International FlexworkForum, vol. 7 no.26, Tokyo, pp. 2-4
Sato, K. & Spinks, W.A., 1996, 'Commuter & Work Pattern Changes After the Great Hanshin Earthquake: Policy Implications for Greater Tokyo', New International Perspectives on Telework: From Telecommuting to the Virtual Organisation Workshop, Brunel University, UK, July 31-August 2, pp.364-379.
Spinks, W.A.1991, "Satellite and Resort Offices in Japan", Transportation, vol.18 no.4, Kluwer Academic Publishers, Netherlands, pp.343-363
Spinks, W.A.1995, "Telework in Japan: NEC's Approach", Telework International,vol.3 no.3, Fall, Canada
Spinks, W.A.1997, "Telework in Japan: a status report", Pacific Rim Management 1997, American Management Association, pp.99-100
Spinks, W.A.1997, 'Two regional case studies of regional telework in Japan', Second International Workshop on Telework - Amsterdam 97, Amsterdam, September 2-5, pp. 143-151.
Contact: Wendy A. Spinks
Assistant Professor, Tokyo University of Science
(Paper presented at Telecommute '97 in Orlando, Florida from November 2-5,1997.)