Question

With the increasing economic uncertainty and problems of the 2008 global financial crisis, enterprises should focus their HR policy solely on downsizing and retrenchment, rather than activities such as recruitment and retention. Comment on this statement.

Overview of the recent changes in the labor market policy and regulations and assesses their impact on HRM policies and practices in Asia, in particular in the area of employee resourcing, i.e. recruitment, selection, and retention. We will use four significant Asian economies as examples: Japan, Taiwan, China, and Vietnam. Recruitment and selection practices in these four

Asian economies seem to be different. What are the reasons for these differences?

Answer 1

With the increasing economic uncertainty and problems of the 2008 global financial crisis, enterprises currently focus primarily on downsizing and retrenchment. The cut-throat competition that companies face in the post-crisis era induces them to reduce their labour costs by employing casual workers who do not receive benefits such as social security, allowances or even retrenchment compensation. As such the permanent pool of workers that companies hire is decreasing globally. The activities of recruitment and retention are less focused on as working through freelancing or the gig economy is a cheaper alternative to retaining workers. It also gives the benefits of outsourcing work to third world countries that provide good quality work at abysmally low rates. Global trade and investment pattern tend to privilege capital, especially companies that can move quickly and easily across borders. Companies also set up production units in third world countries to take advantage of the low labour cost and the process exacerbates informality of the economy. While all this is beneficial to the firms, the workers suffer through such a mechanism. However, from the viewpoint of a firm, this alternative is a very feasible one which operates on the lowest cost.

While Japan and Taiwan are developed economies, China and Vietnam are socialist market transitional economies. Labour force and participation indexes show that there was more than 70 per cent male labour participation rate among these economies and female participation were also very high in China and Vietnam with more than 70 per cent. In Japan, three ‘pillars’ have been identified as the foundation of the traditional Japanese HRM model, namely lifetime employment, seniority-based wage system and promotion, and enterprise labour unions. The management pattern in post-war Japan has been defined as paternalist and the company is seen as a ‘family’ with harmony, hierarchy, and group-orientation. These management characteristics have a significant cultural background rooted in Confucianism that emphasizes a system of well-defined networks of mutual obligations.

The Taiwanese management system is rooted in the traditional Chinese culture and values and includes predominantly small-sized family businesses, coupled with strong family control and an extensive subcontracting business network. The key characteristics of Taiwanese management system can be identified as hierarchy, paternalist beliefs, personal loyalty, harmony, and the tendency to cultivate individuals into a family- and group-oriented and socially dependent being. Both Vietnam and China are high on hierarchy and collectivist values, similar on uncertainty avoidance, but China favours long-term orientation more favourably.

The differences in their HRM policy can thus be attributed to their historical, cultural, political, legal and economic underpinnings.