Japanese video game developers experience significantly greater job security compared to their Western counterparts, a difference largely attributed to distinct legal frameworks and cultural expectations surrounding employment. While the global games industry faces market volatility, Japanese companies navigate these challenges with a focus on long-term employee stability.
Japanese law imposes strict conditions on dismissals, making it difficult for companies to lay off staff. To manage workforce reductions without violating these regulations, Japanese firms often utilize temporary contract workers who are more easily released. Alternatively, they may resort to a practice of 'managing out' employees, where staff are given no tasks but continue to receive a salary, with the implicit encouragement to seek employment elsewhere. This approach ensures legal compliance while attempting to streamline the workforce.
Layoffs are not entirely absent in the Japanese game industry, but they are often conducted in overseas subsidiaries. Recent examples include Nintendo's restructuring of its product testing department, ending contracts for some temporary employees, and Square Enix's layoffs of over 100 employees in its UK and US offices. Sony has also undergone several rounds of layoffs in the past two years.
The perception of greater stability in Japan is bolstered by visible evidence of employee-centric business practices. Former Nintendo President Satoru Iwata famously took pay cuts following the underperformance of the Nintendo 3DS and Wii U. In contrast to Western trends, Japanese developers have seen salary increases, with Nintendo granting employees a 10 percent raise in 2023 and Capcom increasing average salaries by 5 percent in 2024, alongside a 28 percent bump in starting pay.
These employment practices are not solely a result of a benevolent industry culture but are also driven by market necessity. A shrinking labor pool in Japan compels companies to compete for employees, making higher wages and job security attractive incentives. This aligns with a persistent corporate culture that traditionally emphasizes lifelong employment, a stark contrast to the decline of similar ideals in the Western manufacturing sector decades ago.
The imperative for Japanese companies to retain employees for extended periods has shaped their business models, paradoxically leading to increased profitability. The rapid development cycle of titles like Final Fantasy VII Rebirth and its upcoming sequel, for instance, is partly due to Square Enix's ability to maintain its development teams. This retention accelerates game development, improves the final product, and ultimately benefits shareholders.
In contrast, the prevailing capitalist ethos in the West, particularly in the United States, is seen as less conducive to implementing employee protections similar to those in Japan. The focus on replacing workers with automation and the power of corporate interests hinder the adoption of more stable employment models. However, the rise of labor unions in the Western game industry offers a potential avenue for incremental changes toward a more secure work environment.