[Outlook]A vision for the future

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[Outlook]A vision for the future

In our society, results and gains have become the most important values. Companies are ranked according to their stock prices. Wage earners are compared to one another by their annual earnings.
Some praise this as social development. But ironically, with an emphasis on results, a country cannot advance. It may sound strange but a mid-level manager in charge of field work would agree.
The reason is simple. When results are most highly valued, short-term gains are regarded as the most important.
But to become an advanced country, long-term investment is needed.
In practice, as too much emphasis is placed on results, long-term investment has lost momentum. These days, many companies produce profits but keep the cash instead of investing.
What’s more serious is a lack of investment in manpower. Large companies of more than 500 workers cut back their manpower significantly during the financial crisis. Even now, they have decreased employment of young people in their 20s by 16 percent, and of people in their 30s by 8 percent.
How does this dynamic work within the companies? It is true that thanks to a focus on results, we now have people who earn enormous annual salaries. But these people tend to care more about short-term results than long-term development. Other than these people, a majority of workers feel their efforts and work are underappreciated, feel jealous of people with higher pay, lose their motivation to work hard or leave the company. In light of this trend, it is hard to train and nurture the people who will be in charge of companies in 10 or 20 years.
Some may say an emphasis on results is a global trend. That’s right. But we need to distinguish a period to grow from a period to ripen. For instance, up until the 1960s in the United States, during its growth period, an emphasis was not placed on results. After that, the financial industry took the lead in the economy, and funds became popular, placing an emphasis on results. But there was a price to pay. The manufacturing industry, which requires long-term competitiveness, collapsed. Has Korea’s economy entered the phase where the financial industry can sustain the entire economy?
Even if the manufacturing industry is the main source of wealth in a country, it is hard for the country to avoid the focus on results in the flow of globalization. In Japan, since 1998, the emphasis on results has grown strong. But there is also quite a strong resistance against this trend.
There is a famous story about Toyota. When the U.S. credit rating company Moody’s lowered its rating for Toyota, saying that maintaining of its employees lowers the company’s competitiveness, Toyota refused to change.
Toyota decides employees’ pay not in accordance with results, but in accordance with their capabilities proven over a long time. A professor of business at Tokyo University openly declared that an emphasis on results is wrong and that the Japanese-style seniority system is most desirable.
This is applied not only to large companies but also to firms of smaller sizes. Juken Technology is a producer of the world’s smallest gears, 0.15 millimeters in diameter. The company has some 100 employees. There are no special technicians who develop items. There are no specific tests to hire new workers. Ordinary workers manufacture new products with devotion and craftsmanship. Their pay is decided according to their seniority. Motoo Matsuura, the president of the company, determinedly says that the duty of a company manager is to save money in ordinary times and provide workers with good equipment, and that this gives them the best motivation.
What we need is a sense of balance. Results are also important to some extent. But long-term results are more important than short-term ones. Money is not enough to make workers feel motivated. They need to feel rewarded by their work and they need to have the motivation to learn more and improve themselves.
The financial crisis was the bridgehead. At that point, we needed to change the reckless management style of running companies with borrowed money. At the same time, we should have had a focus on long-term growth. We needed to fix standardized pay tables, but at the same time we needed to develop a new pay system to encourage workers to develop their skills. But in reality, an emphasis was placed on short-term results, and long-term results were sacrificed.
Any person in their 40s has an experience of feeling joy from working. Youths in their 20s do not want only money.
We cannot make our country an advanced one with companies and workers that are not hopeful for the future. We need to restore a long-term prospective.

*The writer is a professor of economics at Saitama University, Japan. Translation by the JoongAng Daily staff.

by Woo Jong-won
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