Job-based employment (ジョブ型雇用 - jyobu gata koyō), is the standard hiring practice in most places in the world where employees are hired based on the skills and experience required for specific roles outlined in a job description. This model is characterized by clearly defined job responsibilities, required skills, work hours, and locations. Employees in this system typically do not experience frequent job transfers or promotions unrelated to their role.

Membership-based employment (メンバーシップ型雇用 - menbāshippu gata koyō), is a traditional Japanese employment system where companies hire new graduates in bulk without specifying job roles or locations. Employees are assigned tasks as needed and are expected to contribute to various aspects of the company over time. In Japan, this has traditionally been the mainstream, fitting into the systems of lifetime employment, seniority-based wages, and labor unions.

Key Differences of Each Model

1. Basic Concept

• Job-Based Employment: Matches people to specific roles based on skills and experience.

• Membership-Based Employment: Hires individuals broadly, assigning tasks and roles as needed.

2. Job Scope

• Job-Based Employment: Fixed job responsibilities and boundaries.

• Membership-Based Employment: Flexible job roles, with frequent job rotations.

3. Compensation

• Job-Based Employment: Based on job role and required skills.

• Membership-Based Employment: Based on seniority and position.

4. Recruitment

• Job-Based Employment: Hires to fill specific vacancies based on skills.

• Membership-Based Employment: Conducts bulk hiring of new graduates.

5. Training and Development

• Job-Based Employment: Employees are expected to have the necessary skills from the outset.

• Membership-Based Employment: Company-led training and development programs.

6. Job Transfers and Mobility

• Job-Based Employment: Rarely involves job transfers unless requested by the employee.

• Membership-Based Employment: Regular job rotations and transfers.

7. Promotion and Demotion

• Job-Based Employment: Based on job performance and meeting specific criteria.

• Membership-Based Employment: Based on seniority and rarely involves demotion.

8. Career Advancement

• Job-Based Employment: Employees seek career growth through skill enhancement and job changes.

• Membership-Based Employment: Career growth through company-driven training and internal promotions.

9. Termination

• Job-Based Employment: Possible if job requirements are not met.

• Membership-Based Employment: Rarely terminated without valid reasons, with efforts made to reassign roles.

1. Post-War Economic Growth

After World War II, Japan experienced rapid economic growth. During this period, companies needed a stable and loyal workforce to support long-term business strategies and growth. Membership-based employment, characterized by long-term employment and seniority-based wages, provided this stability.

2. Lifetime Employment and Seniority-Based System

The concept of lifetime employment (終身雇用 - shūshin koyō) became a cornerstone of the Japanese employment system. This approach ensured that employees had job security and could expect gradual wage increases and promotions based on their years of service rather than performance alone. This system fostered loyalty and dedication to the company.

3. Company-Specific Skills and Training

Japanese companies invested heavily in training and developing their employees, creating company-specific skills that were not easily transferable to other organizations. By nurturing employees from within, companies ensured that workers were well-versed in the company’s culture, values, and business practices, enhancing overall productivity and cohesion.

4. Cultural Emphasis on Group Harmony (Wa)

Japanese culture strongly emphasizes group harmony (和 - wa). Membership-based employment promotes this by emphasizing group and company success over individual success. A classic example of this is Shigeru Miyamoto, the creative genius behind Super Mario Brothers. He entered Nintendo in 1977 and is still an advisor at the company today.

5. Strong Labor Unions

Labor unions in Japan have historically been powerful and advocated for employee job security and benefits. The membership-based system aligned with the unions' goals of providing stable employment and protecting workers' rights, making it a favorable approach for both employers and employees.

6. Risk Aversion

Japanese companies tend to be risk-averse, preferring to maintain stability and predictability in their operations. Membership-based employment provides a predictable workforce, reducing the risks associated with high employee turnover and the uncertainty of external hiring.

7. Economic Bubble Era

During the economic bubble era (1986-1991), Japanese companies experienced significant growth and profitability, which allowed them to offer long-term employment and generous benefits. This reinforced the membership-based employment model as it was financially sustainable and beneficial for both parties.

8. Societal Expectations

It was common for employees to remain with one company throughout their careers. Job hopping was not (and still isn’t) looked at favorably by employers. This expectation reinforced the membership-based model, as employees and their families valued job security and stability.

Job-Based Employment: Advantages for Companies

1. Clear Job Roles: Specific job descriptions streamline hiring and performance evaluations.

2. Easier Evaluations: Clear criteria for assessing employee performance.

3. Specialized Talent: Attracts highly skilled professionals suited to specific roles.

4. Appropriate Compensation: Aligns salaries with skills and job requirements, motivating employees.

Job-Based Employment:  Advantages for Employees

1. Focus on Expertise: Allows employees to excel in their specialized fields.

2. Merit-Based Compensation: Rewards skills and performance, providing opportunities for higher income.

Membership-Based Employment: Advantages for Companies

1. Generalist Development: Nurtures versatile employees capable of handling various roles.

2. Team Cohesion: Fosters strong company loyalty and teamwork.

3. Cost-Effective Recruitment: Bulk hiring reduces recruitment costs.

4. Flexible Job Assignments: Easily adapts to changing business needs.

Membership-Based Employment:  Advantages for Employees

1. Training Opportunities: Provides extensive training and development programs.

2. Job Security: Long-term employment reduces the risk of sudden termination.

Job-Based Employment: Disadvantages

1. Limited Mobility: Lack of job transfers can hinder broad skill development.

2. High Employee Turnover: Specialized roles can lead to higher turnover as employees seek career advancement.

Membership-Based Employment: Disadvantages

1. Role Ambiguity: Unclear job roles can lead to mismatched job expectations.

2. Slow Career Progression: Seniority-based promotions may not adequately reward high-performing employees.

In recent years, however, shifts in the global economy, technological advancements, and changes in employee attitudes toward work have prompted some Japanese companies to reconsider this traditional model. The need for specialized skills, the rise of non-traditional working styles like remote work, and the increasing workforce mobility are driving a gradual shift towards more job-based employment structures.

Shifts of the Job Market

The traditional lifetime employment system is becoming obsolete as it is becoming less common for employees to work for a single company from graduation to retirement. Because companies find it difficult to retain talented employees for long periods, hiring individuals who already possess the required skills has become essential to ensure productivity. While membership-based hiring practices still exist, there is a greater focus on job-based hiring practices in the ever-evolving job market. 

Changes in Attitudes Towards Work

Changes in people's attitudes towards work also contribute to the attention job-based employment is receiving. Employees are shifting from working "for the company" to "providing labor for specific tasks." In addition, younger Japanese people are shying away from traditional seniority structures that demand excessive overtime and drinking after work. With the promotion of diverse working styles such as remote work, job-based employment is seen as a system that facilitates a better work-life balance.