The Growth of the Firm and Promotions in the Japanese Seniority System

Until now two reasons have been advanced to explain Japan’s good economic performance — high productivity, low unemployment and steady rates of economic growth. One focuses on Japanese industrial relations which have been characterized by seniority-based wages, permanent employment and enterprise unionism, and the other attaches great importance to the labour compensation system relatively unique to Japan, that is, the bonus payment system. However, it is still a matter of some dispute quite how these features contribute to good economic performance in Japan.