Journal Issue

Industrial manpower development in Japan: Worker training, Japanese style

International Monetary Fund. External Relations Dept.
Published Date:
September 1985
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Shigeko M. Asher and Ken Inoue

By the early 1970s Japan had attained a level of per capita GNP comparable to that of the major industrial countries. Although there was a temporary setback during the post-oil shock adjustment in the mid-1970s, Japanese industry, especially manufacturing, increased its labor productivity (output per manhour) at a higher rate than other leading industrial nations—its labor productivity in manufacturing rising from an index value of 100 in 1970 to about 160 in 1978, compared with below 140 for the Federal Republic of Germany and about 126 for the United States (see chart). A probable cause of this rapid increase was the relatively high level of private capital investment that made rapid technological innovation and upgrading possible. Another factor, which may be difficult to quantify but is well recognized as important, was the availability of competent industrial manpower and the way it was managed.

This article describes the nature and effectiveness of the Japanese approach to developing manpower for its industry. Many countries in the East Asian and Pacific region are industrializing rapidly with a resultant change in the structure of their output and employment. Their supply of industrial manpower, however, is lagging behind demand. These countries, and others that have shown an interest in emulating the Japanese experience, may profit from an understanding of the way Japanese industry trains its manpower.

The Japanese approach should, however, be understood within the context of its culture and society since they play an important part in the Japanese training and employment systems. The Japanese experience may not be transferable easily to a country without a similar, supporting cultural and social structure. Lessons for developing countries that emerge from the Japanese experience are the stress placed on well-funded and disciplined formal education to supply useful “raw materials” to industry—a common characteristic of advanced countries; the active role of industry in its personnel development; and integration of personnel training and management by industry.

Broad central direction

Education is the foundation of the modern workforce. This is especially so in Japan. Schools, colleges, universities, and companies in Japan do not operate according to rigid central plans for manpower supply and demand. Instead they respond to broad guidelines and perspectives set out by the central government and operate according to information flowing in from all segments of the society.

The central government sets forth a broad perspective for national development. For example, the Economic Planning Agency, in its Outlook and Guidelines for the Economy and Society in the 1980s (August 1983), defined the purpose of its plan as follows: “An economic plan is not designed to provide detailed regulations governing all economic and social fields. Nor is it aimed to be implemented rigidly and forcibly. Rather the economic plan is fundamentally aimed at (i) clarifying a prospect of the desirable and realizable state of the economy and society; (ii) defining the basic economic policies to be pursued by the Government in the medium-and long-term periods and spelling out priority policy goals and ways to attain them; and (iii) providing guidelines for the household and business activities.” Referring to formal education, public vocational training, and employer-sponsored training, the Government plan provides the basis for measures to be taken by local governments and the private sector in conjunction with the Government to educate people according to the needs of the economy.

Shared responsibility

In accordance with the Japanese Government’s plan, government and industry complement each other in the training and development of industrial manpower. Education programs under the Ministry of Education supply industry with secondary school and university graduates possessing basic general knowledge and skills. Graduates from five-year technical colleges and science and engineering faculties of universities enter employment with specialized training. Programs under the Ministry of Labor and the Small and Medium Enterprises Agency provide a variety of technical and managerial training, including basic and higher-level courses for new school leavers, and employed and unemployed adults. These programs aim to meet the needs of smaller enterprises whose resources are too limited to organize training programs on their own. With these “raw materials,” Japanese industry conducts training specific to its requirements, either on-the-job or through specialized institutions.

Labor productivity in manufacturing: Japan, Germany, United States

Source: JETRO, Productivity and Quality Control, Tokyo, 1981. p.6.

The Ministry of Education administers an education program consisting of a 6–3–3–4 system, corresponding to the number of years spent in primary, secondary, upper secondary, and higher levels of education respectively. The financing and management of schools, colleges, and universities is shared by national and local governments, and the private sector. In particular, over 75 percent of university and about 30 percent of upper secondary school students are enrolled in private institutions. Local authorities and private agencies account for over 70 percent of education expenditures in the country.

Almost 100 percent of the 6–15 age group receive nine years of compulsory education at the primary and secondary school level; about 95 percent of the 15–18 age group are enrolled in the three-year upper secondary schools, making secondary education virtually universal. Higher education institutions enroll nearly 40 percent of the relevant age group. Compulsory education emphasizes general and moral education with nearly 70 percent of the time spent on general subjects and about 30 percent on physical and moral education. Vocational courses are conducted at upper secondary technical high schools but the proportion of students enrolled in those courses declined from 40 percent in 1955 to 30 percent in 1983. This fall largely reflects industry’s preference for general education school leavers and students’ response to that preference. Only one third of the students who selected technical high schools later found that their occupation was somewhat or highly related to the subjects they had taken, according to a survey by the Ministry of Education.

With the major exception of recently introduced technical colleges and engineering departments, higher education institutions also emphasize general education. There is not much demand for specialized post-graduate programs in Japan; only about 4 percent of university students are enrolled in masters and doctorate programs, half the proportion of similar students in the United States, for example. Technical colleges, based on a pre-World War II model, were reintroduced in 1962 as special institutions to promote science and technology. These colleges are linked to lower secondary schools and conduct five-year courses with nearly 60 percent of the time devoted to specialized education, compared with about 40 percent at upper secondary technical high schools and universities. Technical colleges produce high quality shop-level supervisors with a higher degree of maturity since they enter employment around the age of 20 instead of 18. University engineering education is conducted in line with the Government’s industrial policies and requirements. About 85 percent of the engineering graduates obtain jobs as specialists in their fields, while less than 5 percent of graduates in the humanities and social sciences, who comprise over 50 percent of total enrollments in higher education, find employment in their areas of specialization.

According to the National Vocational Training Law, vocational training is classified into public vocational training administered by the Ministry of Labor and authorized vocational training conducted by a single enterprise or an association of enterprises. There are four types of public vocational training conducted at five types of institutions (see box).

The total number of annual trainees—including those who are employed and those who are looking for jobs—in training institutions run by the Ministry of Labor is about 300,000. This is quite insignificant when compared to, for example, the labor force in manufacturing alone, which was about 12 million in 1980. Moreover, the training capacity has been declining: places for basic training fell from 60,000 in 1973 to 49,000 in 1980.

The Vocational Training Law allows prefectural governors to authorize employers, their associations, juridical persons, or trade unions to establish vocational training schools, junior vocational colleges, or skill development centers when such individuals or institutions meet the prescribed standards. Of enterprises that conduct authorized vocational training, only a small number are relatively large, single, enterprises that provide the training by themselves. Most are smaller and conduct training jointly within associations. National and prefectural governments provide various types of assistance and incentives for both employers and employees undertaking authorized vocational training. The assistance and incentives include traineeship loans, training allowances for the unemployed, financial assistance to smaller enterprises with less than 300 employees (in retail and services less than 50, and in wholesale less than 100), professional advisory and institutional services, and incentive grants for paid educational leave.

In addition to the Ministry of Labor, the Ministry of International Trade and Industry assists smaller enterprises through the collaboration of its Small and Medium Enterprises Agency and local governments. These activities fall under three categories: (1) management guidance provided at prefectural level; (2) training conducted at two institutes of the Japan Small Business Corporation (JSBC) located in Tokyo and Osaka; and (3) dissemination of management information through 36 Small and Medium Business Information Centers in the country.

These training activities are unique in origin, target group, curriculum development, and financing. JSBC institutes were created at the request of small- and medium-sized firms (that absorb about 80 percent of the Japanese labor force), which felt an urgent need for workers’ training to keep up with new technology and management processes. There is no apprenticeship training in Japan except for a few traditional, independent, artisan jobs. Smaller firms that basically depend upon training on the shop floor have therefore sought government assistance. This is why JSBC institutes train only management and employees of small businesses and local government officials in charge of providing guidance to small- and medium-size enterprises. The selection of courses and their contents involves close consultation with firms through frequent questionnaires and feedback from previous participants in the courses. Since smaller firms have very diverse needs, JSBC institutes provide several tiers of programs and different management courses. Day-to-day operational expenditures are shared by the central government (75 percent) and firms (25 percent).

In spite of government and government-assisted programs for industry, the scope of authorized vocational training and small business training is very limited, and similar to that of public vocational training. For instance, the enterprises that have established authorized training institutions individually or as an association only account for less than 2 percent of enterprises in Japan, and small business institute training is conducted at present only at two locations for about 4,500 trainees in management and about 2,000 in technical courses annually. The implication is that most of the vocational training in Japan is conducted not by government or with government assistance, but by private industry.

Training by private industry

A company is regarded as a Dojo (a training place where one practices martial arts) of life. Every activity in a company is therefore considered part of the training for employees at all levels. It includes not only on-the-job training and study seminars, but also formal and informal meetings at different levels, moral lectures from the president, and private counseling.

There are basically two training methods, on-the-job and institutional. On-the-job training is provided by almost all companies since it is considered practical and useful. It can be conducted individually, based on one’s needs and personality; it can be provided any time and anywhere; it also builds close human relationships between staff and their supervisors. Institutional training is based on a systematic curriculum for a certain period in a class. It is provided either by a company, an association of companies, formal educational institutions, or specialized management institutions. The training provided by the last three groups is normally used as a supplement to the first. Institutional training within a company has two programs, “specialized” and “stratified.” The specialized program is open to all employees according to their needs, and includes computer skills, foreign languages, and safety training. The stratified program is provided to employees in the same positions.

The content and methods of specialized technical and skill training are not unique to Japanese industry. Many of them have been borrowed from other countries. What is special is the high degree of emphasis placed on attitudes and morale of workers, and the long-term perspective of training. For example, as part of the stratified training program, a company organizes one or two weeks of intensive training for all new employees. This orientation program introduces them to the company and provides a basic knowledge of the business, but the more important objective is to motivate new employees to work for the goal of the company through harmony and teamwork. Spiritual attitudes such as pride, self-esteem, sense of duty, and responsibility for work and the company are emphasized. To promote these attitudes, some companies require new employees to stay in company dormitories for at least their first year. A retired ex-employee of the company is often the superintendent of the dormitory and he takes care of both the private and public life of new employees. Employees continue to take the stratified training program, lasting less than one week, every one or two years until they become middle-level personnel (about 10–15 years after recruitment).

Vocational training institutions and training courses




Vocational Training School (378)
Junior Vocational Training College (6)
Skill Development Center (2)
Institute of Vocational Training (1)
Vocational Training School for the Handicapped (12)
Note: Numbers of institutions are given in brackets.
Note: Numbers of institutions are given in brackets.
The characteristics of four types of vocational training are summarized below:
Type of trainingObjectivesTarget groupDuration
Basic trainingProvide basic skills and knowledge needed to become skilled workersNew graduates from lower and secondary schools6 months to 3 years
Upgrading trainingHelp workers catch up with technological progress in industriesWorkers who have basic skills and knowledge10 hours to 6 months
Redevelopment trainingTrain workers who intend to find alternative jobs for which they are not trainedAdults employed or temporarily unemployed2 months to one year
Instructor trainingProvide necessary skills and knowledge to produce professional vocational training instructors4 years
Source: K. Inoue, The Education and Training of Industrial Manpower in Japan, World Bank Staff Working Paper No 729. World Bank. 1985.
Source: K. Inoue, The Education and Training of Industrial Manpower in Japan, World Bank Staff Working Paper No 729. World Bank. 1985.

Japanese companies also train new employees through frequent transfers from one section to another and from one branch office to another. This transfer policy provides the opportunity not only for new employees to be trained in different business activities under different supervisors, but also for the company management to observe the potential of young workers and decide where they are most suited to be assigned for the longer term. In large corporations new graduate employees continue to be transferred for 10–15 years.

Life-long employment

The existence of life-long employment and the resultant necessity to create a labor market within a company promote active training by Japanese companies. Although lifelong employment is more prevalent in larger enterprises than in smaller ones, it is widely recognized that it is a unique characteristic of Japanese management and encourages companies to make a long-term investment in worker training. However, there is no legal basis for this system, binding either the employer or the employee. Lifelong employment has become customary. Employees stay in the same company for a variety of reasons. There is social pressure against change. Those who move to a different company are considered to be unstable and not highly competent (therefore they keep moving). Even if a worker wants to leave the company, it is difficult to find a new job since companies, especially large ones, recruit new graduates only once a year at a fixed time. Most employees prefer to stay because Japanese companies adopt a seniority wage system; and through company training over the years, employees develop a philosophy, attitude, specialized technical knowledge and skills unique to the company, and eventually loyalty to the company. Employers also have a vested interest in keeping their workers, because it allows them to make a long-term investment in personnel development; recruitment of workers from outside the company often causes friction between new and old employees and disturbs the harmony among employees; and traditional ethics exist among employers not to dismiss their workers easily. Thus, the cultural factors of employees’ loyalty and employers’ paternalism reinforce lifelong employment in Japanese companies.

Because of life-long employment, management finds it difficult to recruit highly qualified and experienced personnel from the labor market outside the company. As a result they create a labor market inside the company through training. This internal labor market is often a closed system. Employees enter the market at the beginning of their careers and exit at retirement. However, labor within the system is not static, it is highly competitive and mobile. Employees compete for promotion. New employees in similar age groups and with similar academic qualifications have equal opportunities for promotion. They are often transferred among departments, and the company examines their merits and aptitudes. The most capable among professional and technical (white collar) workers become the president or executives of the company. Production (blue collar) workers also have an opportunity for promotion up to foremen. This internal promotion system, together with loyalty to a company, stimulates creativity and innovation in Japanese companies.

The existence of life-long employment and the creation of a labor market within a company also result in an approach to recruitment different from a typical Western model. In Western companies job responsibility and required qualifications are clearly defined. Anyone who meets the qualifications can apply for the job. Companies are interested in obtaining specific professional and technical knowledge and skills rather than a worker’s general potential to become a productive and loyal member of the family called the company. When the position is no longer needed, the worker is often laid off. In contrast, Japanese companies recruit employees with a strong potential and train them to become dedicated company staff who meet the company’s requirements. Job content and qualifications are therefore not clearly defined or emphasized in Japanese companies.

Worker participation

In addition to the interrelated practices of life-long employment, active worker training, and flexible labor movement within a company, Japanese industry mobilizes the best of its workforce by making employees participate in company decision-making processes. Worker participation provides management with a variety of suggestions to improve company operations and also raises the morale, especially self-esteem and pride, of workers, which helps increase productivity.

There are three main vehicles for worker participation: labor participation in management, a suggestion system, and a quality control system. Workers participate in management through activities such as collective bargaining, labor-management joint consultation, and profit sharing. The Japanese labor-management relationship is unique because more than 90 percent of unions are restricted to individual enterprises, which helps promote common interests among labor and management. After the first oil crisis, for example, unions accepted wage increases that were below the inflation rate. This compromise was possible mainly because of the unions’ longer-term view and priority to employment security rather than wage increases. The suggestion system collects workers’ opinions on their jobs and on the company in order to improve productivity and efficiency. It is estimated that about 75 percent of the establishments adopt the system and over 80 percent of workers in those establishments participate in it. According to a survey of 301 companies, the economic rate of return to the suggestion system was estimated to be as high as 29 percent.

Statistics-based quality control, originally brought in from the United States after World War II, has developed into a unique Japanese management system with several characteristics including company-wide quality control, small group activities called quality control circles, and training for quality control. A quality control circle is denned as a small group that operates spontaneously and continuously, as a part of company-wide quality control activities. It fosters self-development and mutual development, control and improvement of work within the workshop, and utilization of quality control techniques, with all members participating. Company-wide quality control affects all company activities relating not only to products but also to overall operations. Therefore, all departments of a company, including production, planning, sales, and personnel management, participate in the process. The number of quality control circles registered with the Japanese Union of Scientists and Engineers was only 23 in 1962 but increased rapidly to over 115,000 in 1980, with the participation of more than one million workers. If the participants of unregistered circles are counted, about one in five workers in all industries is estimated to be a member of a quality control circle. It is believed that workers participate in the circle not because of the direct economic benefit (most circles meet before or after working hours without payment), but because they can improve human relationships within plants and promote self-fulfillment. In short, the essence of the successful expansion of quality control circle activities is that imported techniques of quality control have been adjusted to the group-oriented cultural background of the Japanese management system.


As cautioned at the outset, the practices for personnel development and management in Japan are based on the Japanese social and cultural environment. It is therefore out of the question to suggest the wholesale transfer of the Japanese systems to a country with a different environment.

The roots of the Japanese manpower development and management systems lie in the traditional values and concepts of Japanese society. For example, the practices of lifelong employment, seniority-based promotion, and consensus decision making are consistent with the underlying values of that society. These values are, however, changing among the younger workers who seem to place more importance on individualism and materialism and less on dedication and self-sacrifice. The system is beginning to adjust to those changes: some firms are recruiting mid-career workers from the labor market; salaries are gradually reflecting more emphasis on skills and job content and less on age.

While the practice of Japanese life-long employment is not simply transferable to other countries, the general lesson of the Japanese experience is that companies should attempt to move closer to this practice rather than move further away from it if they hope to create a sense of greater stability and harmony among workers. Among other useful lessons are the methods used to increase productivity and quality, in particular in production processes. Quality control techniques, for example, which Japan learned about from the West and improved upon, could be transferred to other countries.

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