Many both in and outside Japan share an image of the Japanese work environment that is based on a and model used by large companies as well as a reputation of long work-hours and strong devotion to one's company. This environment is said to reflect economic conditions beginning in the 1920s, when major corporations competing in the international marketplace began to accrue the same prestige that had traditionally been ascribed to the daimyō–retainer relationship of feudal Japan or government service in the Meiji Restoration.
Large companies
At the very top, the most prestigious companies would recruit and retain the best workers by offering better benefits and truly lifetime job security. By the 1960s, employment at a large prestigious company had become the goal of children of the new middle class, the pursuit of which required mobilization of family resources and great individual perseverance in order to achieve success in the fiercely competitive education system.
Employees are expected to work hard and demonstrate loyalty to the firm, in exchange for some degree of job security and benefits, such as housing subsidies, good insurance, the use of recreation facilities, and bonuses and pensions. Wages begin low, but seniority is rewarded, with promotions based on a combination of seniority and ability. Leadership is not based on assertiveness or quick decision-making but on the ability to create consensus, taking into account the needs of subordinates. Surveys indicate a continued preference for bosses who are demanding but show concern for workers' private lives over less-demanding bosses interested only in performance on the job.
This system rewards behavior demonstrating identification with the team effort, indicated by singing the company song, not taking all of one's vacation days, and sharing credit for accomplishments with the workgroup. Pride in one's work is expressed through competition with other parallel sections in the company and between one's company and other companies in similar lines of business. Thus, individuals are motivated to maintain wa (harmony) and participate in group activities, not only on the job but also in after-hours socializing (nomikai). The image of group loyalty, however, is more of a matter of ideology than practice, especially for people who do not make it to the top.
Smaller companies
Not every worker enjoys the benefits of such employment practices and work environments. Although 64% of households in 1985 depended on wages or salaries for most of their income, most of these workers were employed by small and medium-sized firms that could not afford the benefits or achieve the successes of the large companies, despite the best intentions of owners. Even in the large corporations, distinctions between permanent and temporary employees made many workers, often women, ineligible for benefits and promotions. These workers were also the first to be laid off in difficult business conditions.
Japan scholar Dorinne K. Kondo compares the status of permanent and temporary workers with Bachnik's distinctions between permanent and temporary members of an "ie" (家, see Japanese family), creating degrees of inside and outside within a firm. Traditions of entrepreneurship and of inheritance of the means of livelihood continued among merchants, artisans, farmers, and fishermen, still nearly 20% of the work force in 1985. These workers gave up security for autonomy and, when economically necessary, supplemented household income with wage employment.
Traditionally, such businesses use unpaid family labor, but wives or even husbands are likely to go off to work in factories or offices and leave spouses or retired parents to work the farm or mind the shop. On one hand, policies of decentralization provide factory jobs locally for families that farm part-time; on the other hand, unemployment created by deindustrialization affects rural as well as urban workers. Whereas unemployment is low in Japan compared with other industrialized nations (less than 3% through the late 1980s), an estimated 400,000 day laborers share none of the security or affluence enjoyed by those employees with lifetime-employment benefits.