Coping with the economy downturn

Managers in Asia have always treated their staff with a touch of paternalism. Companies were not meant to be simply places of work, but big, happy families. In parts of north Asia, especially Japan and South Korea, employees spent more time with their co-workers, either at their desks slaving away until late at night or in regular evening drinking fests, than with their own families. Layoffs were considered unseemly. In many Asian countries, a social contract of "lifetime employment" guaranteed full-time employees they would have jobs until retirement. In China, communism brought the "iron rice bowl" and institutionalized cradle-to-grave employment with state-owned companies.

The spirit of lifetime employment has stayed alive even amid the worst economic crisis in memory. As unemployment rises throughout Asia Pacific, government officials and executives are scrambling to find ways to minimize layoffs. Part of the urgency is to reduce the risk of social unrest as the number of jobless escalates. But part of the motivation is a very Asian perception of corporate responsibility. For each employee, the workplace exists not only for earning a living, but also for making friends, growing up and making a contribution to the society!

Asia's approach to layoffs contrasts with attitudes in the US, where staff cuts are considered to be a standard corporate coping strategy during business downturns. In January, for example, US employers eliminated 598,000 jobs—the most in any month in 34 years—but there was scant public debate over whether the layoffs were necessary or justified. Then again, laid-off US and European workers are usually entitled to government support in the form of unemployment insurance and other financial aid. In Asia, governments have traditionally seen worker welfare as the purview of the company and family, not the taxpayer. Social security nets are far less developed. But because of the scale and severity of the global recession, companies appear to be fighting a losing battle. As losses mount and order books shrink, mass layoffs are necessary for survival.

Still, analysts expect extraordinary efforts to save jobs will continue. Asians "can't be as ruthless as in the West," says Pawan Budhwar, a professor of international human resource management at Aston University in Birmingham. "People are more sensitive in making these kinds of cuts. They will explore other options." As the global recession deepens, that's the best workers in Asia can hope for.