Nenko System
Encyclopedia
The is the Japan
ese system of promoting an employee in order of his or her proximity to retirement
. The advantage of the system is that it allows older employees to achieve a higher salary
level before retirement and that it usually brings more experience to the executive ranks. The disadvantage of the system is that it does not allow new talent to be merged with the experience and those with specialized skills cannot be promoted to the already crowded executive ranks. It also does not guarantee or even attempt to bring the "right person for the right job". The labor turnover rate in Japan is less than half the US level. The seniority-wage system can also be seen in Japanese government. Japanese parliament seats are usually filled with the older members from each party.
After the economic bubble
burst in Japan in the late 80s and the venture capital (dot-com) shock of the 90s, the seniority-wage system has become less popular amongst business as they could not afford to keep older employees with high salaries on the payroll. Many mid-level executives that climbed the corporate ladder with the Nenko system fell victim to corporate restructuring. Without knowing how to compete for a high wage position unlike the younger talents, in the 21st century, the seniority-wage system is seen as a decadent system that has spoiled the older generations.
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
ese system of promoting an employee in order of his or her proximity to retirement
Retirement
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to...
. The advantage of the system is that it allows older employees to achieve a higher salary
Salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
level before retirement and that it usually brings more experience to the executive ranks. The disadvantage of the system is that it does not allow new talent to be merged with the experience and those with specialized skills cannot be promoted to the already crowded executive ranks. It also does not guarantee or even attempt to bring the "right person for the right job". The labor turnover rate in Japan is less than half the US level. The seniority-wage system can also be seen in Japanese government. Japanese parliament seats are usually filled with the older members from each party.
After the economic bubble
Economic bubble
An economic bubble is "trade in high volumes at prices that are considerably at variance with intrinsic values"...
burst in Japan in the late 80s and the venture capital (dot-com) shock of the 90s, the seniority-wage system has become less popular amongst business as they could not afford to keep older employees with high salaries on the payroll. Many mid-level executives that climbed the corporate ladder with the Nenko system fell victim to corporate restructuring. Without knowing how to compete for a high wage position unlike the younger talents, in the 21st century, the seniority-wage system is seen as a decadent system that has spoiled the older generations.