Japanese game developers have much more employment stability compared to their Western counterparts. Learn more about how Japan's strict labor laws and long-term employment culture protect employees from mass layoffs with this article.
Japanese Game Developers Avoid Mass Layoffs Amid Industry Turmoil
Japanese Labour Laws Protects The Employees
Japanese game developers are notably avoiding the mass layoffs that have become prevalent in Western companies. As the gaming industry in the US and Europe sees record job cuts, Japanese studios such as Nintendo, Square Enix, and Capcom remain relatively stable. This stability is rooted in robust employment protections and a different corporate philosophy.
Japan’s strict labor laws make it challenging for companies to implement layoffs. Layoffs are permitted only in cases of severe financial distress, and even then, companies must first explore alternative cost-cutting measures such as reducing executive salaries, cutting working hours, or relocating personnel. For instance, during Nintendo’s financial struggles in the Wii U era, executives including Satoru Iwata and Shigeru Miyamoto took significant pay cuts to avoid layoffs.
The process of firing an employee in Japan involves several stringent steps designed to protect workers. Firstly, there must be a justifiable reason for dismissal, which is not taken lightly. Secondly, the company must provide adequate notice and compensation to the affected employee. Thirdly, companies are required to make sincere efforts to find alternative employment within the company for the employee before considering termination. This multi-step procedure makes it legally and culturally difficult to lay off employees without substantial justification.
Western Gaming Giants Values Profit Over People
In the West, layoffs have surged dramatically, with 10,500 gaming industry layoffs recorded in 2023 alone, and an estimated total of 10,800 starting January of this year up to the time of writing this article. Major companies like Microsoft, which laid off 1,900 employees in Activision Blizzard on January 25, and Sony, which cut 900 jobs in PlayStation Studios on February 27, highlight this troubling trend. Despite record profits, companies often resort to layoffs to appease shareholders seeking continual growth.
For example, Fortnite was reported to have made over $26 billion in lifetime revenue as of March 2024 and Activision Blizzard reported substantial profits, with CEO Bobby Kotick earning $154.6 million in 2020, that’s $77,300 per hour or about the same average of the salary of 1,560 employees, yet the company has still implemented significant job cuts. This dichotomy between executive compensation and employee job security has fueled criticism of Western corporate practices, which prioritize shareholder returns over workforce stability.
Japan's Commitment to Job Security
The cultural emphasis on long-term employment further bolsters job security. Lifetime employment is a cornerstone of many Japanese companies, fostering a stable and experienced workforce. Employees with decades of experience are common, and their retention is crucial for mentoring the next generation of developers. This long-term perspective contrasts sharply with the short-term profit maximization often seen in Western corporations.
Furthermore, Japan’s insular nature and language barriers make outsourcing jobs challenging, which in turn protects domestic employment. As the population ages and shrinks, competition for skilled workers increases, compelling companies to offer competitive wages to retain talent. This contrasts with Western practices, where outsourcing and offshoring are common strategies to reduce labor costs, often at the expense of local jobs.
Philosophical Differences in Employment Stability
The stark contrast in employment stability between Japanese and Western game developers underscores a broader philosophical divide. Western companies often prioritize short-term profits and efficiency, leading to frequent layoffs. In contrast, Japanese companies emphasize long-term stability and employee retention, even at the expense of immediate profitability. This long-term approach fosters a loyal and experienced workforce, which can lead to sustained success over time.
While no system is without flaws, Japan’s approach to employment offers valuable lessons. The protective employment laws and long-term strategies employed by Japanese companies could serve as a model for fostering stability and preserving talent in an ever-evolving industry. By prioritizing employee welfare and adopting a long-term view, companies worldwide can build a more sustainable and resilient workforce.
In conclusion, the contrasting approaches of Japanese and Western game developers to employment stability highlight the impact of corporate philosophy and labor laws on the industry. The Japanese model, with its emphasis on long-term employment and stringent labor protections, offers a valuable perspective on maintaining a stable and skilled workforce in the face of economic challenges.
Source:
GamesIndustry.Biz Article
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