Lifelong employment, labor law and the lost decade: The end of a job for life in Japan?

The 1990s were a ‘lost decade’ for the Japanese economy. The asset price bubble burst in the early 1990s. Collapsing land prices caused a spike in the number of non-performing secured loans. The financial sector was beset by high-profile collapses and consolidations. The ensuing corporate credit crunch sapped business investment and confidence. Insolvencies reached record levels. Unemployment soared (Citrin and Wolfson, 2006; Cook and McKay, 2006). Having lost its edge as one of the world’s most dynamic economies, Japan also waned in global influence. After being admired for its economic success in the 1970s (‘Japan-admiring’) and then criticized for the structural barriers to trade in the 1980s (‘Japan-bashing’), a new phenomena emerged in the 1990s: ‘Japan-passing’ (Drysdale, 2004; Stockwin, 2003). Japan was largely forgotten as world leaders, policy-makers and academics rushed to engage with the emerging economic powerhouses of China and India. In the 1990s, Japan was not just ‘lost’; it was slipping into irrelevance.