Reward Inequality Between Standard and Non-Standard Employment in the Japanese Labor Market: A Sociological Explanation

The reward inequality structure in Japan is different than other countries. Not only one’s employment status and occupation but also employment type and firm size have significant effects on reward determination. Concerning to employment type, various and large rewards inequality exists between standard and non-standard employment and it is becoming a serious social problem. However, today’s social scientists may fail to explain properly the reward inequality between these two types of employment opportunities in Japan. Economists tend to attribute reward inequality to personal attributes instead of employment opportunities; sociologists, who originally assume that rewards are connected to employment opportunities, describe the existing reward inequalities but show little interest in explaining why rewards are connected to employment opportunities. In this paper, the author attempts to explain why reward inequalities occur and is maintained between standard and non-standard employment in Japan’s labor market from a sociological perspective. For this purpose, the author focuses on the legitimization of the reward inequality based on society’s assumptions toward these two types of employment, which has been shaped under the unique Japanese employment system. Through the analysis, the two mechanisms of legitimization play an important role in the reproduction of reward inequality between standard and non-standard employment in Japan. Assumed differences in the extents of responsibilities and duties constitute one legitimization based on the idea of compensating wage differentials; the other is the assumed differences in opportunities for skill formation based on human capital theory. The author also argues why these two mechanisms play an important role in reward determination with a focus on human resources management in Japan.