Sacking employees is all the rage these days in Japan. Carry out 'restructuring' or 'downsizing' - in other words, fire workers - and your company's stock price will go up. And the more you fire, the higher your stock goes. This is the peculiar 'law' that is not to be found in any economics text, but that is being offered as a guide for today's troubled executives.
It is true that cutting apparently redundant employees causes a momentary increase in competitiveness. But it is clear from demographic statistics that over the long run the supply of labor in Japan is going to shrink.
The reason there is a surplus of labor now is that the economy happens to be stuck in a recession. But eventually the time will come when companies have to struggle to raise funds. What are companies going to do then?
Corporations that casually slash their payrolls are sure to lose workers' trust. When the labor supply tightens up, they will be unable to hold on to superior human resources, and their competitiveness will suffer as a result.
The current focus on movements in the stock market, where prices are buffeted by short-term movements in each company's financial performance, reminds me of the 1980s. At the time, banks vied with each other to lend to businesses, taking every available piece of land as collateral.
Some media commentators and analysts discuss the stock market, which stresses short-term profits, as if it represents the 'will of God.' Of course it represents no such thing. In fact, it does not even represent the people's interest. In reality it reflects the interests of market players.
Analysts often use the term gurobaru sutandado (global standards), a peculiar Japanese coinage masquerading as a borrowing from English.
Singing the praises of the market is their business. But the rest of us must not let ourselves be swayed by their every pronouncement.
People are saying that Japanese businesses are burdened with excess weights in three areas: employees, production capacity and debt. Talking about 'excess employment' makes it sound as if employees multiplied at their own initiative.
But that is of course not what happened. The real problem is with the executives who allowed their payrolls to swell and operations to shrink to the point that there is not enough work to keep everybody occupied.
If a company in fact has more employees than it needs, then its chief executive officer and other top managers should be striving to make use of redundant personnel in new businesses. People who cannot do this are unworthy to be called corporate executives.
Never before has the talk of a crisis in the Japanese economy reached such a level. Even so, most major corporations, while running considerable losses, show no signs of going under. Perhaps that is partly due to the cash reserves built up over the long period of prosperity since the end of World War II.
These companies continue to be managed as before. Even though their companies are in the red, executives can still be seen flying first class, playing golf and frequenting pricey drinking establishments. These same executives are avidly 'restructuring' their companies by slashing payrolls.
This sort of absurd behavior obviously should not be permitted. If executives are going to make employee's heads roll, they should also give up their own jobs.
I realize that some companies are in a condition where they cannot hope to survive unless they cut back on their use of human, physical and financial resources. Many small and medium-sized enterprises are in severe straits and have no choice but to let some of their employees go.
I wonder how many executives nowadays have the sense of responsibility that was displayed by the late Mikawa Eiji of Yokogawa Electric. He was a splendid CEO who saw to it that each dismissed employee was helped to find a new job.
We have been seeing altogether too many cases of irresponsibility on the part of executives telling employees, 'Your job terminates today. As to what is to become of you from tomorrow on, that's not my responsibility but the government's.'
Some people accuse me of displaying a victor's mentality, saying that I am able to argue against layoffs and restructuring because my own company, Toyota, is currently one of the winners.
But as an executive, I too am resolved to cut jobs as the measure of last resort if it comes to the point where there is no alternative. In that case, I am resolved to tender my own resignation to take responsibility for the cuts.
