Shushin Koyo

Shushin koyo is a Japanese term which can be translated as “lifetime employment.” It refers to the employment practice in which large Japanese firms hire new graduates as regular employees and retain them until retirement. Some scholars find its origin in historical roots while others observe its formation under industrialization. Shushin koyo became more widespread during the Japanese economic miracle and contributed to a low unemployment rate. However, small firms, part‐time workers, and women were largely excluded from this practice. It also led to more competition in education as students competed to enter top universities and later gain lifetime employment. After the long economic recession in the 1990s, shushin koyo was criticized for a lack of flexibility and incentives for employees. However, around 90 percent of Japanese individuals still support shushin koyo. Japanese firms are facing the challenge of balancing the need for flexibility with the demand for stability.