This paper uses personnel micro-data of 5 years length from a food manufacturer with about 200 employees to clarify how promotion, advancement, and wage systems operate in a small Japanese company. In particular, it verifies the existence of early selection and seniority-based treatment.
Combined with interviews, a fundamental analysis of materials and data relating to these systems reveals that regular employees are divided into office and technical, skilled, and semi-skilled groups, which are managed according to separate evaluation and Shokuno-tokyu-seido (ranking system of the degree of competence by type of job group). The fact that differences such as these are applied from the time of initial hiring indicates that if three employees are treated identically under the single category of “regular employee”, differences will clearly be observed from an early stage.
Statistical analysis of panel data confirmed the existence of individual effects in the estimated formulas for job evaluation, promotion, and wages even with the employees in the same category in their early thirties. This supports the early differentiation of employees in small and medium-sized Japanese companies that has been discussed in other researches. Furthermore, the comparison of pooled data model, the fixed effects model, and the random effects model revealed the possibility that the evaluations and wages not on the basis of seniority that tend to be observed in those companies are due to the failure to consider individual effects in estimating them.
