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Chapter 4

Factors that Influence Firms’ Willingness about Abilities

Development of Non-regular Employees

Hiromi Sakazume, Wako University

1. Introduction

After the burst of the bubble economy in Japan, Japanese firms were forced to

cut costs for reasons of corporate finance, and with it, training was also substantially

reduced. The percentage of firms that provide OJT is declining from 74% in 1993 to

41.6% in 2002 (Ministry of Health, Labour and Welfare 2005). In terms of capital,

spending for education and training has trended downward since 1998, falling by

¥100 billion during a period of over ten years after 1998 (Ministry of Health, Labour

and Welfare 2003).

In the Study Group on Human Resource Management’s report (2006), which

touched on the characteristics of Japanese firms’ human resource management of the

last 15 years, it was pointed out that changes of Japanese firms had brought in an

environment in which “it was difficult to train people” and that there was confusion

arising from a discrepancy between firms’ and individual workers’ perceptions on

training. The study group explained that there were four factors for this. First, it was

the “changes in the workplace.” Changes in personnel structure, resulting from a curb

on employment of regular employees and an increase in employment of non-regular

employees, made the workplace busier than ever before and together with

prioritization of achievement of short-term goals, made it difficult to provide OJT.

Second, it was the “changes in the message that firms were sending to their employees

about training.” As investments in training (capital, time, efforts, etc.) were restricted

and as the restricted investments were made into a limited number of employees, it

was reducing workers’ motivation. Third, it was the “confusion on the perception of

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training” prompted by introduction of performance-based pay. Performance-based

pay with an emphasis on achievement of short-term goals led to the loss of long-term

perspective inherent in training of improving workers’ abilities through work, the

perspective of which was immanent in the skill grade system (shokuno shikaku seido)

of the past, and brought about confusion arising from differences in firms’ and

individual workers’ values regarding training. Fourth, it was the “decrease in

growth-inducing opportunities as the era of high economic growth ended.” Corporate

growth results in providing more opportunities for employees to improve their

abilities. As corporate growth stagnated, however, opportunities for providing training

in the same format as before were substantially reduced.

Since the 1990s, when Japanese firms started to substantially reduce training,

the number of non-regular employees, including part-timers and arubaito (workers in

a side job) as well as dispatched workers, contract workers, and contract laborers, has

been increasing rapidly. The two are linked by the keyword, “cost reduction.” Since

the 1990s, firms have been giving top priority to cost reduction in the face of

economic slowdown, and employment of non-regular employees has contributed to

cost reduction not only by keeping personnel costs down, but also by allowing firms

to adjust personnel costs. In a number of studies conducted on reasons for employing

non-regular employees, the reasons mentioned most often by firms included “to save

personnel costs,” “to adjust employment according to economic fluctuations,” and “to

secure personnel without increasing the number of regular employees” (Ministry of

Health, Labour and Welfare (2005), the Employment and Human Resources

Development Organization of Japan (2006), etc.). In the above report of the Study

Group on Human Resource Management, it says with respect to employment of

non-regular employees from the 1990s to today that “with firms taking the stance of

giving top priority to cost reduction, it was very much ‘“non-regularization for cost

reduction” while maintaining the assumption of the gap in the treatment of regular

and non-regular employees.’”

As Japanese firms substantially curtail training and set a limit on who can

receive training, non-regular employees, who are employed with the principal

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objective of cost reduction, were structurally not likely to become objects of training.

On the other hand, examining how non-regular employees are being utilized, we see

that they are not employed in supportive work but are becoming core workers. This

shifting of non-regular employees is both quantitative and qualitative. By a

quantitative shift, it means that the number of non-regular employees is growing.

According to the Labour Force Survey, the percentage of non-regular employees

among all employees (excluding directors) from July to September 2006 remained at a

high level of 33.4%. Therefore, a quantitative shift of non-regular employees is

progressing. By a qualitative shift, it means that non-regular employees are given a

higher level of work and their abilities to perform work are approaching those of

regular employees. According to a survey on businesses conducted as part of the

Fact-Finding Survey on Part-Time Workers in 2005, 42.5% of businesses surveyed

replied that they employed part-timers whose work was virtually the same as that of

regular employees. Moreover, among the firms that replied they employed part-timers

whose work was virtually the same as that of regular employees, as much as 48.5%

answered that 50% or more of part-timers in their employment were engaged in such

work. As non-regular employees increase quantitatively as well as begin to take on

core work in addition to assisting regular employees as described above, the need

arises to provide training to non-regular employees as well.

Then what is the current state of affairs as regards abilities development of

non-regular employees? In the “Basic Survey on Abilities Development” of FY 2005,

it was reported that 17.4% of firms provided “off-the-job training (Off-JT)” and

18.3% provided “planned OJT” to non-regular employees, which are substantially

smaller compared with 60.1% and 48.9% of firms that provided “Off-JT” and

“planned OJT,” respectively, to regular employees. These results show that although

firms are not providing absolutely no education and training to non-regular employees,

there is a large gap compared with regular employees, and the percentage of firms

providing training to non-regular employees is low.

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2. Identification of Issues Dealt with in this Paper

We have examined above how non-regular employees are not likely to be

objects of training as Japanese firms reduce training generally. On the other hand, it is

also a fact that although training is still not sufficient compared with regular

employees, a small number of firms do provide Off-JT and OJT to non-regular

employees. What factors determine the willingness of firms about training

non-regular employees? Among non-regular employees, a number of studies have

been conducted on part-timers. Let us examine the results. On the abilities

development of part-timers, the Japan Institute for Labour (2003) showed that the

percentage of firms training non-regular employees was high in the retail and

restaurant industries. With 66% of firms in those industries having a part or all of

non-regular employees as targets of abilities development, the percentage was

considerably higher than the average rate of 47% for all industries. The Japan

Institute for Labour Policy and Training (2005) did case studies on the employment of

part-timers and showed cases where firms that had shifted part-timers to become core

workers were actively engaging in the abilities development of part-timers. Therefore,

it can be said that industry type and the way in which non-regular employees are

employed have an effect on the abilities development of non-regular employees.

As regards development of non-regular employees, however, it is not only

factors related to non-regular employees that have an effect on their development.

Firms’ handling of regular employees, including diversification of regular employees’

working styles, firms’ policies on employment of regular employees, and

organizational changes, may also have an impact on abilities development of

non-regular employees. The diversification of regular employees’ working styles will

disrupt the often binomial, contrary relation between regular and non-regular

employees and will increase continuity between them. The question of how to manage

non-regular employees will force firms to answer the questions of how to define

regular employees and how they should be managed. In this paper, therefore, industry

types and the way in which non-regular employees are employed as well as

circumstances in which regular employees are placed are included in our examination

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of factors that influence firms’ willingness about training non-regular employees.

In this paper, the willingness about training of non-regular employees is

restricted to willingness about abilities development of non-regular employees carried

out through education and training. Training is defined as “a function of human

resource management whereby employees’ ability to contribute and their value is

increased through education and training, placement, job assignment, and

performance rating” (Morishima, 2004). As can be understood from this definition,

training is put into practice through different personnel practices. For instance,

performance rating is used to appraise employees, but by feeding back the results to

employees, it can also play a role in training. In this paper, abilities development is

selected from among various personnel practices as a focus of our discussion. And the

willingness about abilities development of non-regular employees is considered from

two angles, namely, firms’ willingness about introducing personnel practices for

abilities development and the range of employees targeted for abilities development.

A firm that is positive about abilities development of non-regular employees is

expected not only to be positive about introducing practices related to abilities

development of non-regular employees, but also to have introduced other personnel

practices that are designed to set a greater equilibrium between regular and

non-regular employees. Similarly, a firm that is positive about abilities development

of non-regular employees is expected to set an equilibrium between the range of

non-regular employees and regular employees who are targeted for abilities

development. We examine factors governing firms’ willingness about training

non-regular employees based on the above framework.

3. Outline of Data Used for Analysis

The data used for analysis in this paper are data collected from firms in the

“Survey on Workers’ Motivation to Work and Employment Management” (hereafter

called the “Survey”), which was conducted by the Japan Institute for Labour Policy

and Training in FY 2003, and the individual data were provided by the SSJ Data

Archive of the Institute of Social Science of the University of Tokyo and used in this

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paper by the Data Archive’s permission. The Survey was taken in January 2004 with

the objective of investigating on firms’ management and personnel policies. Firms

with 100 or more employees were surveyed, and effective responses were received

from 1,066 firms. Of 1,066 firms, 922 firms that replied that they employed both

regular and non-regular employees are the subjects of analysis in this paper. The

industry type and number of employees employed by these firms are shown in Tables

1 and 2, respectively.

In the Survey, employees were categorized into eight groups defined as shown

below, and Groups (2) to (8) were considered as non-regular employees. This

distinction between regular and non-regular employees is also used in this paper.

Therefore, non-regular employees, for the purpose of this paper, are a generic term

covering all those in Groups (2) to (8).

(1) Regular employees: employed workers with an indefinite contract (excluding

part-timers and employees on loan).

(2) Contract employees: workers employed based on a contract to engage them in

specialist duties and whose employment period is determined.

(3) Temporary employees: workers employed temporarily or from day to day and

whose employment period is a month or shorter.

(4) Part-timers (short hours): workers whose regular daily working hours or whose

regular weekly working days are shorter than the so-called regular employees

and whose employment period is longer than a month or is indefinite.

(5) Part-timers (others): workers whose regular daily working hours and regular

weekly working days are virtually the same as the so-called regular employees.

Their employment period is longer than a month or is indefinite, and they are

called by the title of part-timer or a similar title.

(6) Employees on loan: workers who are on loan from another company based on a

contract (irrespective of whether or not they have left their names on the rolls

of the companies they came from).

(7) Dispatched workers: workers dispatched from temporary employment agencies

based on the Law for Securing the Proper Operation of Worker Dispatching

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Undertakings and Improved Working Conditions for Dispatched Workers.

(8) Contractor’s employees: workers working in the offices of the surveyed firms

based on a service contract.

As non-regular employment takes a wide variety of forms, there may well be

differences in how non-regular employees’ abilities are developed depending on the

type of employment. In this paper, however, we examine firms’ willingness about

abilities development of non-regular employees in general for the following reasons:

One is that it is considered more important to understand the trend of non-regular

employees as a whole than the trend of each type of non-regular employees, and the

other is that there were limitations as to available data.

4. Current State of Abilities Development of Non-regular Employees

We first begin by looking at the current state of firms’ abilities development of

non-regular employees. To what extent are firms actually engaged in abilities

development of non-regular employees?

Examining those workers who were targets of abilities development in the past

three years, we find that at 47.5% of the surveyed firms, either all or a part of

non-regular employees in their employment were objects of abilities development.

Therefore, close to half of the firms considered non-regular employees for abilities

development in one way or another (Figure 1). As for the future, 58.9% of the firms

will have all or a part of non-regular employees in their employment as targets of

abilities development in the next three years. It can be said, therefore, that more

non-regular employees are expected to become targets of abilities development in the

future.

As indicated in the “Basic Survey on Abilities Development” of FY 2005, it

was confirmed that the percentage of firms carrying out abilities development of

non-regular employees was substantially smaller than the percentage of firms doing

likewise for regular employees. The percentage of firms that carried out abilities

development of all or a part of regular employees in their employment in the last three

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years was 94.0%, much higher than 47.5% for non-regular employees. A similar trend

can also be observed as respect to the comparison of abilities development in the next

three years. It can be said, therefore, that while abilities development of non-regular

employees is expected to expand in the future, there is still a large gap when

compared with abilities development of regular employees.

Secondly, we look at the relation between abilities development of non-regular

employees and that of regular employees. We prepared a cross tabulation of the firms’

policy on whom to include as targets of abilities development for both regular and

non-regular employees in the last three years (Table 3). As for the range of targets,

there are three tiers of “all,” “some,” and “not included.” From Table 3, we can

mention the following three points. First, the firms that included a broad range of

regular employees for abilities development were more likely to include non-regular

employees as objects of abilities development. Of the firms that included all regular

employees for abilities development, 60.5% included non-regular employees for

abilities development in one way or another. On the other hand, of the firms that

included some of their regular employees for abilities development, 28.2% included

non-regular employees for abilities development in one way or another; and of the

firms in which regular employees were not included for abilities development, only

2.8% included non-regular employees for abilities development. Second, the extent to

which non-regular employees were included did not go beyond the extent to which

regular employees were included. There were hardly any cases where a firm that

targeted only some regular employees for abilities development to include all

non-regular employees for abilities development or where a firm that did not target

any regular employees for abilities development to include non-regular employees.

Lastly, the extent to which regular and non-regular employees were included was at

the same level at 20 to 30% of the firms. At 20.4% of the firms, all regular employees

and all non-regular employees were objects of abilities development; and at 28.2% of

the firms, some regular employees and some non-regular employees were objects of

abilities development. If we limit ourselves to firms that targeted non-regular

employees for abilities development, the extent to which regular and non-regular

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employees were made the objects of abilities development was at the same level at

46.7%, or roughly half, of the firms.1

How will the trend be in the future? Using a same method as Table 3, we

prepared a cross tabulation of the firms’ policy on the targets of future abilities

development (Table 4). Based on a comparison with Table 3, we can mention the

following two points. First, the extent to which non-regular employees are made

targets of abilities development will expand. The percentage of firms that target all

non-regular employees will increase from 12.9 to 18.1%, and the percentage of firms

that target some non-regular employees will increase from 34.6 to 40.8%. Second,

even though there is this trend of expansion, the percentage of firms in which regular

and non-regular employees are made the target to the same extent, among firms that

target non-regular employees, will remain unchanged from the last three years at

46.7%. This is probably because firms will expand the scope of regular employees

who are made the target more so than they will do so with non-regular employees.

From these results, it can be said that as firms will generally become more positive

about abilities development of their employees, they will likely be carrying out more

abilities development of their non-regular employees. However, their willingness

about expanding abilities development of non-regular employees will not be as much

as to raise the level of abilities development of non-regular employees to the same

level as that of regular employees.

5. Introduction of Personnel Practices for Abilities Development of Non-regular

Employees

In this section, a framework in which factors that influence firms’ willingness

about abilities development of non-regular employees is explained. As factors that

influence firms’ willingness about abilities development of non-regular employees,

six factors shown below were included in our analysis (Table 5). The first was 1 Firms in which regular and non-regular employees were made the target to the same extent

were firms “in which all regular employees and all non-regular employees were the target” and “in which some regular employees and some non-regular employees were the target.” The number of corresponding firms was 191. The total number of firms in which non-regular employees were made the target was 409. Therefore, the percentage was 46.7%.

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corporate attributes of industry type and number of employees. The industry type was

divided into manufacturing industry and non-manufacturing industry. The number of

employees was broken down into five groups of “100 or less,” “100 to 299,” “300 to

499,” “500 to 999,” and “1,000 or more.”

The second was factors related to firms’ employment policies. In the Survey,

nine variables were used to investigate on firms’ employment policies of the last three

years. For our analysis in this paper, we decided to choose, from among the nine

variables, three that were expected to be related to abilities development of

non-regular employees, namely, “maintain long-term employment mainly of regular

employees,” “actively utilize part-timers and other non-regular employees,” and

“reinforce abilities development of employees2.” The firms responded on a scale of

one to five, ranging from “correspond” to “do not correspond.”

The third was factors related to organizational changes in the last three years.

In the Survey, eight variables were used to investigate on organizational changes of

the last three years. For our analysis, five variables of “flattening of corporate

structure,” “organizational consolidations,” “increase in outsourcing,” “wage cut,”

and “workforce reductions” were chosen from among the eight variables, and we

checked whether each of those changes occurred. A dummy variable of “1” was used

if there was a change, and a dummy variable of “0” was used if there was no change.

The fourth was quantitative shift of non-regular employees to core workers. As

more non-regular employees become core workers, firms are likely to try to utilize

them effectively to increase the firms’ competitiveness. Therefore, we included the

degrees of quantitative and qualitative shift of non-regular employees in our analysis.

In the Survey, firms were asked to describe changes in the number of regular and

non-regular employees in the last three years on a scale of one to five, ranging from

“increased,” “slightly increased,” “unchanged,” “slightly decreased,” and

“decreased.” For our analysis, changes in the number of non-regular employees were

chosen as the variable of a quantitative shift. In addition, we examined the effect of

2 The “employees” of the last variable is not limited to either regular or non-regular employees.

The variable refers to reinforcement of abilities development of employees generally.

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changes in the number of regular employees. It would have been desirable to obtain

the percentage of non-regular employees by dividing the number of non-regular

employees by the total number of regular and non-regular employees, but because of

the limitation of available data, we chose changes in the number of non-regular

employees as the variable of a quantitative shift.

The fifth is the factor of a qualitative shift. The percentage of non-regular

employees engaged in similar work as regular employees was used as the variable.

The last factors were those related to diversification of regular employees’

styles of working. In the final report of the Study Group on Part-Time Work (2006),

the study group asserted that there was a need to break away from the situation where

one only had two choices—either to work as a highly shackled full-time regular

employee or as a part-timer engaged in supportive work—and that, for that purpose,

there was a need to diversify the employment system of workers, including regular

employees. As an example, the group mentioned an intermediate form of employment

where a worker would have less constraint than regular employees with respect to

overtime and transfer and would be engaged not in supportive work but in what can be

considered as core work on a full- or part-time basis. It can be considered that

diversification of regular employees’ working styles will contribute to building a

continuous framework between regular and non-regular employees and will have a

positive effect on abilities development of non-regular employees. For these

considerations, we included these factors in our analysis. More specifically, we used a

variable of the short working hours system and another variable of a regional-specific

working system that does not entail a transfer that requires a worker to change his or

her address. The firms were asked to give answers on a scale of one to three, ranging

from “we have introduced the system,” “we have not introduced the system but plan

to do so in the next three years,” and “we do not plan to introduce the system.” Using

13 variables described above, we examined firms’ willingness about abilities

development of non-regular employees.

Next, we look at the criterion variables. As already mentioned, we examine

firms’ willingness about abilities development of non-regular employees from two

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angles, namely, firms’ willingness about introducing personnel practices for abilities

development and the range of employees targeted for abilities development. On firms’

willingness about introducing personnel practices for abilities development, we used

two variables of (1) firms’ willingness about introducing personnel practices for

abilities development and (2) firms’ willingness about introducing other kinds of

personnel practices in parallel. When a firm engages in abilities development of

non-regular employees, the first requirement is to introduce personnel practices for

abilities development. Therefore, we chose, as a criterion variable, (1) firms’

willingness about introducing personnel practices for abilities development. When a

firm tries to further utilize non-regular employees to enhance the firm’s

competitiveness, it is likely that they will introduce other kinds of personnel practices

in parallel, in addition to introducing practices for abilities development. To examine

firms’ willingness about abilities development in greater detail, we decided to include

(2) firms’ willingness about introducing other kinds of personnel practices in parallel

as a criterion variable.

To prepare variables of (1) and (2) above, we conducted a factor analysis

based on questions used to survey personnel practices for non-regular employees. In

the Survey, the firms were asked to give answers on 13 personnel practices, namely,

“Off-JT,”3 “planned OJT,” “a system for supporting employees’ self-development,”

“bonuses,” “periodic pay raise,” “employee benefit plans,” “retirement allowance

system,” “mental health,” “a system for hearing employees’ complaints about

placement and treatment,” “a system for promoting work-life balance,” “equal

treatment with regular employees engaged in the same work,” “a system for

expanding non-regular employees’ discretion regarding work,” and “a system for

transferring non-regular employees to regular employee status,” on a scale of one to

three, ranging from “we have introduced the system,” “we have not introduced the

system but plan to do so in the next three years,” and “we do not plan to introduce the

system.” Data on 13 personnel practices were used to conduct a factor analysis 3 In the Survey, Off-JT was considered as “education and training provided to employees, who

will be temporarily away from their regular work for that purpose” and planned OJT as “education and training provided while employees are engaged in their daily work.”

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(maximum likelihood, promax rotation). Factor loadings and factor correlations are

shown in Tables 6 and 7, respectively. We called the first factor, as it is composed of

questions of abilities development, such as Off-JT and OJT, as the factor related to

“abilities development.” The second factor, as it is composed of questions on

monetary remuneration such as bonuses and period pay raises, is the factor related to

“monetary remuneration.” The third factor, as it is comprised of questions on systems

for facilitating working such as mental health and a system for hearing employees’

complaints, is the factor related to “facilitation of work.” The fourth factor, as it is

composed of personnel practices such as equal treatment and transfer of non-regular

employees to regular employee status that are needed to further utilize non-regular

employees to increase firms’ competitiveness, is the factor related to “strategic

utilization of non-regular employees.” Considering that the factor loading of “a

system for promoting work-life balance” was greater on the third factor than the

fourth factor, the system was not included in the fourth factor.

As already mentioned, we look at firms’ personnel practices in this paper to

examine firms’ willingness about abilities development of non-regular employees in

two stages: (1) willingness about introducing personnel practices for abilities

development and (2) willingness about introducing other kinds of personnel practices

in parallel. With regard to the variables of (1) above, we prepared the “willingness

about introducing personnel practices for abilities development” scale, using two

items constituting the first factor on “abilities development” from four factors

extracted from the above factor analysis. The item of “a system for supporting

employees’ self-development” may be considered as a personnel measure for abilities

development, but because its factor loading on the first factor was small at 0.256 and

there were hardly any differences in its factor loadings on the first, third and fourth

factors, it was not included as a variable. The average value of the scale was 3.25, and

the standard deviation was 1.49.4

4 In the Survey, the scores on firms’ responses to the questions on introduction of personnel

practices for non-regular employees were as follows: “We have introduced the measure” = 1 point; “we have not introduced the measure but plan to do so in the next three years” = 2 points; and “we do not plan to introduce the measure” = 3 points. In this paper, we changed the order of

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The variables of (2) willingness about introducing other kinds of personnel

practices in parallel were prepared using the first and fourth factors. As already

mentioned, the fourth factor is composed of personnel practices such as equal

treatment and a system for transferring non-regular employees to regular employee

status that are needed to further utilize non-regular employees to increase firms’

competitiveness. As one of the challenges facing non-regular employees is the

difficulty in emerging out of unstable non-regular employment and as the Study

Group on Part-Time Work pointed out the importance of equal treatment, it is

probable that firms that have implemented practices related to such challenges are

willing to more actively utilize non-regular employees. Moreover, personnel practices

with high factor loadings on the fourth factor are concerned with utilization of

non-regular employees over a relatively long time span just as practices on abilities

development are. From these reasons, we decided to include the fourth factor in

preparing the variables corresponding to (2) above. First, we prepared the “strategic

utilization of non-regular employees” scale, using three items with high factor

loadings on the fourth factor. The method used for preparing the scale was the same as

the method used for preparing the “willingness about introducing personnel practices

for abilities development” scale. The average value was 4.31, and the standard

deviation was 1.52.

We then used each of the scales to group the firms. The score of two points on

the “willingness about introducing personnel practices for abilities development”

scale meant that a firm had neither introduced practices for abilities development of

non-regular employees nor planned to do so in the next three years.5 Therefore, firms

with a score of two on this scale were grouped into the lower group, and firms with a

score of three or more into the higher group. As for the “strategic utilization of

the scores to “we do not plan to introduce the measure” = 1 point; “we have not introduced the measure but plan to do so in the next three years” = 2 points; and “we have introduced the measure” = 3 points; and added up the scores for each item. The range of the scores was 2 points to 6 points.

5 As already mentioned, the score for “we do not plan to introduce the measure” = 1 point, and the score of each item is added up. The score is 2 points only when a firm replies, “we do not plan to introduce the measure” for both items. The same also applies to the “strategic utilization of non-regular employees” scale.

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non-regular employees” scale of the fourth factor, a score of three points meant that a

firm had neither introduced any of the personnel practices constituting this scale nor

planned to do so in the next three years. Firms with a score of three were grouped into

the lower group, and firms with four points or more into the higher group. Cross

tabulation is shown in Table 8.

Lastly, we looked at the cross tabulation to categorize firms into three groups

of (1) “not introduced abilities development practices,” (2) “introduced only abilities

development practices,” and (3) “introduced abilities development practices with

other kinds of personnel practices.” In other words, 403 firms in the lower group of

“willingness about introducing abilities development practices” fall into the “not

introduced abilities development practices” group. One hundred and eight firms in the

higher group of “willingness about introducing abilities development practices” and

in the lower group of “strategic utilization of non-regular employees” fall into the

“introduced only abilities development practices” group. And 268 firms in the higher

group for both “willingness about introducing abilities development practices” and

“strategic utilization of non-regular employees” fall into the “introduced abilities

development practices with other kinds of personnel practices” group. These three

groups were used as variables of (2) willingness about introducing other kinds of

practices in parallel.

The results of an analysis in which firms’ willingness about introducing

abilities development practices is the criterion variable are shown in Table 9. From

Table 9, it was confirmed that four factors, namely, the employment policy of abilities

development, number of non-regular employees, percentage of non-regular employees

engaged in similar work as regular employees, and short working hours system, had

an effect on firms’ willingness about introducing personnel practices for abilities

development of non-regular employees. More specifically, it was confirmed that

abilities development practices for non-regular employees were actively introduced in

firms that adopted the employment policy of reinforcing abilities development of their

employees. On the other hand, significant correlation was not recognized as regards

the employment policy of “maintaining long-term employment mainly of regular

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employees.” Therefore, it was confirmed that the way in which firms employed

regular employees did not have an effect on introduction of personnel practices for

abilities development of non-regular employees.

It was also recognized that willingness about introducing personnel practices

for abilities development was high in firms in which the number of non-regular

employees was increasing and in which the percentage of non-regular employees

engaged in similar work as regular employees was high. The same trend was also

recognized in firms that had introduced the short working hours system. In summing

up these results, we can say that willingness about introducing practices for abilities

development of non-regular employees was high in firms that were positive about

abilities development of their employees and, at the same time, in which a progress

was being made in a quantitative and qualitative shift of non-regular employees to

core workers. On the diversification of regular employees’ working styles, correlation

with regional-specific working arrangement with no transfer requiring a worker to

change his or her address was recognized, but we did recognize correlation with

introduction of short working hours system. Therefore, it was confirmed, albeit

partially, that willingness about introducing abilities development practices for

non-regular employees was high in firms where regular employees’ working styles

were being diversified.

We then analyzed, by multinominal logistic analysis,6 factors that had an

effect on firms’ willingness about using abilities development practices in conjunction

with other kinds of personnel practices. For the criterion variables, we set three levels

of the abovementioned (1) “not introduced abilities development practices,” (2)

“introduced only abilities development practices,” and (3) “introduced abilities

development practices with other kinds of personnel practices.” Table 10 shows the

6 Multinominal logistic regression analysis is an extension of logistic regression analysis to

multiple cases. For each individual i, the logarithm of the ratio of the probability Pij (j>1) of each category j of the criterion variable to the probability Pi1 of the reference category (j=1) is given by

where Xjk is the individual j’s distribution of kth predictor variable and βjk is the regression coefficient showing the effect of Xk for each comparative category j.

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results of the “introduced only abilities development practices” group and the

“introduced abilities development practices with other kinds of personnel practices”

group when the “not introduced abilities development practices” group was the

reference group, and the results of the “introduced abilities development practices

with other kinds of personnel practices” group when the “introduced only abilities

development practices” group was the reference group. This allows us to pair each of

three groups to each of the other groups and examine the factors that differentiate one

group from another. In each case, the maximum likelihood method was used for the

estimation, and the odds ratios of the group in question to the reference group were

indicated.

What were the differences between firms that had “not introduced abilities

development practices” and firms that had “introduced abilities development practices

with other kinds of personnel practices”? As variables that significantly raised the

probability of firms to be identified with the “introduced abilities development

practices with other kinds of personnel practices” group, four variables, namely, the

employment policy of reinforcing abilities development of their employees, changes

in the number of non-regular employees, percentage of non-regular employees

engaged in similar work as regular employees, and short working hours system, were

recognized. When a firm has a strong employment policy of reinforcing abilities

development of employees, when the number of non-regular employees is increasing,

when there is a high percentage of non-regular employees engaging in similar work as

regular employees, or when a short working hours system has been introduced within

a firm, the probability of a firm to be identified with the “introduced abilities

development practices with other kinds of personnel practices” group significantly

rises. No variables were recognized to significantly lower the probability of firms to

be identified with the “introduced abilities development practices with other kinds of

personnel practices” group.

Secondly, we compared firms in the “not introduced abilities development

practices” group and those in the “introduced only abilities development practices”

group. There were two variables that raised the probability of firms to be identified

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with the “introduced only abilities development practices” group, namely, the

employment policy of reinforcing abilities development of their employees and

percentage of non-regular employees engaged in similar work as regular employees.

When a firm has a strong employment policy of reinforcing abilities development of

employees or when the number of non-regular employees is increasing, the

probability of a firm to be identified with the “introduced only abilities development

practices” group significantly rises. On the other hand, there were two variables that

lowered the probability, namely, wage cut and changes in the number of regular

employees. When a firm has not cut wages in the last three years but the number of

regular employees in the firm is decreasing, there is a significantly high probability of

that firm to be identified with the “introduced only abilities development practices”

group.

Lastly, we examined the differences between the “introduced only abilities

development practices” group and the “introduced abilities development practices

with other kinds of personnel practices” group. Wage cut and changes in the number

of regular employees significantly raised the probability of firms to be identified with

the “introduced abilities development practices with other kinds of personnel

practices” group. When a firm has cut wages in the last three years and the number of

regular employees in the firm is increasing, there is a significantly high probability of

that firm to be identified with the “introduced abilities development practices with

other kinds of personnel practices” group. On the other hand, maintenance of

long-term employment mainly of regular employees was the variable that lowered the

probability. In other words, it was recognized that when a firm has a strong

employment policy of maintaining long-term employment mainly of regular

employees, there is a significantly high probability that that firm has only introduced

abilities development practices.

From the above results, the following can be mentioned as characteristic of

each group. At firms that have not introduced abilities development practices for

non-regular employees, the percentage of non-regular employees engaged in similar

work as regular employees is low, and therefore it is probable that a progress has not

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been made in a qualitative shift of non-regular employees to core workers at such

firms. It is also a characteristic of these firms that they do not have an employment

policy of reinforcing abilities development of their employees. Firms that have

introduced only abilities development practices for non-regular employees are

positive about abilities development of their employees and are making progress in a

qualitative shift of non-regular employees to core workers. The number of regular

employees is declining at such firms, but they have not cut wages. Lastly, firms that

have introduced not only abilities development practices for non-regular employees,

but also other personnel practices, such as equal treatment and transfer to regular

employee status, in parallel, are positive about abilities development of their

employees and are making progress in a quantitative and qualitative shift of

non-regular employees to core workers, and, moreover, at such firms, regular

employees’ working styles are diversifying and employment policy of maintaining

long-term employment of regular employees is not strong.

6. Extent to Which Non-regular Employees Are Included as Targets of Abilities

Development

We then analyzed, by multinominal logistic analysis, factors that had an effect

on firms’ decision about the extent to which non-regular employees were included as

targets of abilities development. As criterion variables, we set three levels, namely,

“non-regular employees are not included,” “non-regular employees are included at

lower levels than regular employees,” and “non-regular employees are included at the

same level as regular employees,” based on the extent to which non-regular

employees were included in abilities development. Therefore, 452 firms that replied

that “non-regular employees are not included as targets of abilities development” in

Table 3 corresponded to the “non-regular employees are not included” group.

Secondly, 216 firms that responded that “all of regular employees and some of

non-regular employees are targets of abilities development” were considered as the

“non-regular employees are included at lower levels than regular employees” group.

The characteristic of this group was that while non-regular employees are objects of

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abilities development, the range of non-regular employees targeted is narrower than

that of regular employees. Lastly, 191 firms that replied that “all regular and

non-regular employees are targets of abilities development” were considered as the

“non-regular employees are included at the same level as regular employees” group.

Table 11 shows the results of the “non-regular employees are included at lower

levels than regular employees” group and “non-regular employees are included at the

same level as regular employees” group when the “non-regular employees are not

included” group was the reference group, and the results of the “non-regular

employees are included at the same level as regular employees” group when the

“non-regular employees are included at lower levels than regular employees” group

was the reference group. Therefore, we paired each of three groups to each of the

other groups and examined the factors that differentiated one group from another.

What were the differences between firms in the “non-regular employees are

not included” group and firms in the “non-regular employees are included at the same

level as regular employees” group? When compared with the “non-regular employees

are not included” group, there were four variables that were significant in raising the

probability of firms to be identified with the “non-regular employees are included at

the same level as regular employees” group, namely, the industry type, employment

policy of reinforcing abilities development of employees, number of regular

employees, and percentage of non-regular employees engaged in similar work as

regular employees. With respect to the industry type, the probability is significantly

raised when a firm is in a non-manufacturing industry. When a firm has a strong

employment policy of reinforcing abilities development of employees, when the

number of regular employees is increasing or, if it is decreasing, it is decreasing by a

narrow margin, or when the percentage of non-regular employees engaged in similar

work as regular employee is high, the probability of firms to be identified with the

“non-regular employees are included at the same level as regular employees” group

rises. On the other hand, a variable that decreased the probability, in other words, a

variable that set firms in the direction of not including non-regular employees was the

employment policy of maintaining long-term employment mainly of regular

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employees.

Secondly, we examined the differences between firms in the “non-regular

employees are not included” group and firms in the “non-regular employees are

included at lower levels than regular employees” group. In comparison with the

“non-regular employees are not included” group, the variables that significantly

raised the probability of firms to be identified with the “non-regular employees are

included at lower levels than regular employees” group were outsourcing and the

percentage of non-regular employees engaged in similar work as regular employees.

When a firm has outsourced work in the last three years or when the percentage of

non-regular employees engaged in similar work as regular employees is high, it raises

the probability of firms to be identified with the “non-regular employees are included

at lower levels than regular employees” group. On the other hand, wage cut was the

only variable that significantly lowered the probability. When a firm has cut wages,

the probability of that firm to be identified with the “non-regular employees are not

included” group is raised.

Lastly, we compared firms in the “non-regular employees are included at lower

levels than regular employees” group and firms in the “non-regular employees are

included at the same level as regular employees” group. There was no variable that

significantly raised the probability of firms to be identified with the “non-regular

employees are included at the same level as regular employees” group. On the other

hand, the variables that significantly lowered the probability, in other words, the

variables that set firms towards including non-regular employees at lower levels than

regular employees were a strong employment policy for maintaining long-term

employment mainly of regular employees, outsourcing, and introduction of the short

working hours system.

From the above results, the following can be mentioned as characteristic of

each group. At firms where non-regular employees are not included as targets of

abilities development, the percentage of non-regular employees engaged in similar

work as regular employees is characteristically low and progress has not been made as

regards a qualitative shift of non-regular employees to core workers. It can also be

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said that such firms are negative about abilities development of their employees.7 A

characteristic of firms that are providing training to non-regular employees but to a

lesser extent than to regular employees is that outsourcing at such firms has increased

in the last three years. Harrison and Kelly (1993) gave three rational reasons for firms

to increase outsourcing: (1) to deal with new demand for goods and services that a

firm cannot meet by using its own human resources, (2) the need to secure people

with specialized knowledge and skills lacking within a firm, and (3) to cut personnel

costs. If we consider this, it is probable that firms that do provide training to

non-regular employees but to a lesser degree compared with regular employees are

strongly aware that they are employing non-regular employees with the objective of

cutting personnel costs, which leads to narrowing down the range of non-regular

employees targeted for abilities development compared with regular employees.

Lastly, as regards firms that provide training to non-regular employees to the same

extent as regular employees, such firms are found mostly in non-manufacturing

industries, they are positive about abilities development of their employees, and, at

the same time, they do not have a strong employment policy of maintaining long-term

employment of regular employees.

7. Discussion

We have considered firms’ willingness about abilities development of

non-regular employees from two angles, namely, firms’ personnel practices for

abilities development and the range of employees who are targets of abilities

development, and examined the factors that have an effect on each. Based on the

results, we discuss factors that have an effect on firms’ willingness about abilities

development of non-regular employees.

On introduction of personnel practices for abilities development of

non-regular employees, it can be pointed out as follows. A firm’s willingness about 7 It can be stated thus because even though the employment policy of reinforcing abilities

development of employees was not significant at the 10% level by a small margin, when firms in the “non-regular employees are included at lower levels than regular employees” group were compared with firms in the reference “non-regular employees are not included” group in Table 11, its regression coefficient was positive.

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abilities development of their employees influences their decision about whether or

not to introduce abilities development practices for non-regular employees. An

increase in the number of non-regular employees and a rise in the percentage of

non-regular employees engaged in similar work as regular employees, in other words,

the degree of a quantitative and qualitative shift of non-regular employees to core

workers, also have an effect on the decision. A qualitative shift, in particular, is an

important factor. As the comparison of the “introduced only abilities development

practices” group and the “introduced abilities development practices with other kinds

of personnel practices” group shows, however, it may be possible to say that for a

firm to become more positive about abilities development, human resource

management of regular employees, such as introduction of a short working hours

system to promote diversification of regular employees’ working styles and flexibility

in changing the policy of maintaining long-term employment mainly of regular

employees, will also have an effect beyond the scope of human resource management

of non-regular employees.

Next is the range of employees targeted for abilities development. It was

confirmed that the degree of a qualitative shift of non-regular employees to core

workers influences firms’ decision about whether to include non-regular employees as

targets of abilities development. This result corresponds with the results of the

analysis on the introduction of abilities development practices for non-regular

employees. On the question of to what extent should non-regular employees be

included on the premise that they are to be targets of abilities development, the results

of the analysis show that firms that provide training to non-regular employees at the

same level as regular employees and firms in non-manufacturing industries are more

flexible about changing the employment policy of maintaining long-term employment

mainly of regular employees. Based on these results, it may be possible to say that

while the degree of progress made in a qualitative shift of non-regular employees to

core workers, which is a factor related to non-regular employees, has an effect on

firms’ decision about whether or not to include non-regular employees in abilities

development, human resource management of regular employees, beyond the scope of

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human resource management of non-regular employees, will have an effect on to what

extent non-regular employees should be included as targets of abilities development.

This trend corresponds with the trend of introduction of personnel practices for

non-regular employees.

In light of the above, it may be possible to determine that different factors

come into play at different stages in firms’ willingness about abilities development of

non-regular employees (Figure 3). The first stage is a transition from a state where

non-regular employees are not considered for abilities development and no abilities

development practices have been introduced for them to a state where they become

targets of abilities development and practices are introduced. At this stage, firms’

willingness about abilities development of their employees has an effect; at the same

time, the degree of a qualitative shift of non-regular employees to core workers has a

considerable effect. It is reasonable to say that when progress is made in a qualitative

shift of non-regular employees to core workers, non-regular employees will be

targeted for abilities development as a consequence. On the other hand, while firms’

policy on abilities development of their employees has an effect, human resource

management of regular employees, such as maintenance of long-term employment

mainly of regular employees, does not have an effect. Therefore, it is probable that

firms consider the question of whether to include non-regular employees as targets of

abilities development as a question of how to deal with non-regular employees who

are making a qualitative shift to core workers, which is a question solely related to

non-regular employees.

In the second stage, practices introduced for abilities development of

non-regular employees are further expanded or enhanced. It is a transition to a stage

where abilities development of non-regular employees is carried out even more

positively by expanding the range of non-regular employees targeted for abilities

development and by introducing, in addition to abilities development practices, other

kinds of practices, such as equal treatment and a system of transferring non-regular

employees to regular employee status. At this stage, it is not matters related to

non-regular employees, such as a qualitative shift of non-regular employees to core

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workers, that have an effect, but firms’ position on whether to maintain long-term

employment mainly of regular employees. Engaging in abilities development of

non-regular employees does not necessarily correspond with the essential purpose of

employing non-regular employees for cutting costs or responding to fluctuation.

Further promotion of abilities development of non-regular employees beyond the

scope of employment of non-regular employees for cost reduction will force firms to

answer the questions: how should regular employees be defined and how should they

be managed? In this context, it is possible to say that firms that were flexible about

changing the employment policy of maintaining long-term employment mainly of

regular employees, a policy that Japanese firms had traditionally considered as

important, began to engage more positively in abilities development of non-regular

employees.

As non-regular employees are expected to continue to be utilized in the future

and as firms’ eagerness for training trends towards recovery as an effect of Japan’s

economic recovery, abilities development of non-regular employees is considered not

only as a question of how to manage non-regular employees, but also a question of

how to manage regular employees.

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References

Ministry of Economy, Trade and Industry (2006), Report of the Study Group on

Human Resource Management.

Ministry of Health, Labour and Welfare (2006), Outline of the results of the Basic

Survey on Abilities Development of FY 2005.

Ministry of Health, Labour and Welfare (2005), General fact-finding survey on

diversification of employment styles of FY 2005.

Ministry of Health, Labour and Welfare (2006), Outline of the final report of the Study

Group on Part-Time Work.

Employment and Human Resources Development Organization of Japan and Mizuho

Information & Research Institute, Inc. (2006), Report on investigation and

research on firms’ human resource management of non-regular employees.

Harrison, B and Kelly, M.R. (1993), “Outsourcing and the search for ‘flexibility’”,

Work, Employment & Society, vol.7, no.2, 213-235.

Morishima, Motohiro (2004), Introduction to Human Resource Management, Nikkei

Inc.

Japan Institute for Labour (2003), Survey on firms’ personnel strategies and workers’

perceptions about working.

Japan Institute of Workers’ Evolution (2006), Fact-finding survey on part-time

workers.

Japan Institute for Labour Policy and Training (2005), “Balanced treatment between

part-timers and regular employees: a case study on labor and management of

general supermarket chains,” JILPT Research Report, no.34.

Ministry of Internal Affairs and Communications (2006), Outline of detailed results of

a survey on labor force (July-September 2006 average).

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Tables and Figures

Table 1: Industry Type of Firms Subjected to Analysis

Size Frequency %Less than 100 employees 17 1.8100-299 employees 362 39.3300-499 employees 195 21.1500-999 employees 157 17.01,000 or more employees 191 20.7Total 922 100.0

Table 2: Size (Number of Employees) of Firms Subjected to Analysis

Industry Type Frequency %Construction 118 12.8Manufacturing (consumption-related) 25 2.7Manufacturing (materials) 31 3.4Manufacutring (machinery) 58 6.3Manufacturing (others) 57 6.2Electricity, gas, heat and water supplies 7 0.8Telecommunications 25 2.7Transportation 102 11.1Wholesale and retail 108 11.7Finance and insurance 164 17.8Real estate 5 0.5Restaurants and hotels 9 1.0Healthcare and welfare 46 5.0Learning assistance 13 1.4Other services 108 11.7Others 40 4.3No response 6 0.7Total 922 100.0

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Table 3: Comparison of Abilities Development of Regular and Non-regular Employees (last three years)

Table 4: Comparison of Abilities Development of Regular and Non-regular Employees (next three years)

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Table 5: Variables Used in the Analysis

Concept VariableCorporate attributes Industry type

Number of employeesEmployment policy of the last three years Maintenance of long-term employment mainly of regular employees

Active utilization of non-regular employeesReinforcement of abilities development of employees

Organizational changes of the last three years Flattening of corporate structureOrganizational consolidationsIncrease in outsourcingWage cutWorkforce reductions

Quantitative shift Changes in the number of regular employeesChanges in the number of non-regular employees

Qualitative shift Percentage of non-regular employees engaged in similar work as regular employeesDiversification of regular employees Short working hours system

Regional-specific working system with no transfer that requires worker to change addressPositiveness about abilities development of non-regular employees Positiveness about introducing personnel measures for abilities development

Relation with other kinds of personnel measuresRange of non-regular employees targeted for abilities development

Expl

anat

ory

varia

bles

Crit

erio

nva

riabl

es

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Table 6: Factor Loadings after Promax Rotation

1 2 3 4Off-JT 0.853 Planned OJT 0.556 System for supporting employees’ self-development Bonuses 0.685 Periodic pay raises 0.491 Employee benefit plans 0.437 Retirement allowance system 0.435 Mental health 0.586 System for hearing complaints about placement and treatment 0.547 System for work-life balance 0.445 0.305Equal treatment with regular employees engaged in the same work 0.588System for expanding non-regular employees’ discretion regarding work 0.534System for transferring non-regular employees to regular employee status 0.349

Note 2: Factor loadings of greater than 0.3 are indicated.

Factor

Note 1: Extraction and rotation method: maximum likelihood, promax rotation

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Table 7: Factor Correlations

Factor 1 2 312 0.4773 0.515 0.4144 0.427 0.419 0.516

Table 8: Willingness about Introducing Abilities Development Practices and Advanced Utilization Practices

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Table 9: Factors Influencing Firms’ Willingness about Introducing Abilities Development Practices

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Table 10: Factors Influencing Expansion of Personnel Practices

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Table 11: Factors Influencing the Extent to which Non-regular Employees are Targets of Abilities Development

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Figure 1: Objects of Abilities Development (Non-regular Employees)

Figure 2: Objects of Abilities Development (Regular Employees)

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Figure 3: Factors Influencing Abilities Development of Non-regular Employees