THROUGHOUT this decade, as Japan's intransigent recession has caused deepening worries that more severe economic turmoil may lie ahead, some Japanese officials and executives have kept the faith.
Yes, they concede, it is troubling that Japanese companies have been moving production offshore. And yes, Japan's traditionally low unemployment rate has been inching upward.
But not to worry, these believers insist, Japan will develop new industries and products, innovations that will keep the domestic economy strong even as the country's corporations expand their presence in the rest of Asia, the United States, and Europe.
Don't look now, but the diehards may be right. Yoichi Morishita, the president of Matsushita Electric Industrial Company, a corporation better known outside Japan as the maker of Panasonic, National, Quasar, and other brand-name electronic goods, quietly says he plans to increase domestic employment.
He qualifies that promise by saying the increase will be "slight." But for the past three years Matsushita, like many other Japanese corporations, has been trimming workers. In 1993, Matsushita and its subsidiaries employed 157,296 people in Japan. This year the Matsushita companies have 4,000 fewer people on their payrolls.
These cutbacks hardly compare with those, say, at IBM Corp., but Japanese firms are famous for keeping workers on the payroll in the interest of national well-being. That companies have been freezing or shrinking the number of workers has been one of the surest signs of Japan's recent economic malaise.
This summer, the rate of unemployment reached 3.2 percent - the highest since the current tracking system was initiated in 1953.
Because of statistical differences, academics debate how easily the Japanese unemployment rate can be compared with typically higher rates in other developed countries. But even if the Japanese system does not count certain groups, it is still true that the country has very few soup kitchens feeding the jobless.
These days Mr. Morishita is upbeat about optical digital technology. Matsushita and eight other electronics and entertainment firms announced last week that they agreed on most of the technical details for a new type of disc. The digital videodisc looks like a CD-ROM but holds more data and runs faster. DVD machines will be able to link up with TVs and computers and play back high-quality digital video and sound.
Making the players, discs, and other products related to optical digital technology could allow Matsushita and other big Japanese consumer electronics makers to stop cutting domestic employment - just as government officials and economists have been hoping. If this trend can be replicated, then Japan may climb out of its recession without forcing many more people into the ranks of the unemployed.
Morishita, in a recent interview at his company's Osaka headquarters, states the theory:
"We cannot just sit back and watch ... serious unemployment [take place]. Rather, Japan's mission is to create new businesses," he says. Where an American executive might talk about what shareholders demand and the need to cut workers to raise productivity, Morishita talks about the national interest and the need to maintain employment.
It is, perhaps, too early to argue that the Japanese companies are proving themselves able to innovate their way out of a prolonged slump. "It's hard to imagine that DVD will save the Japanese manufacturing sector," says Koichiro Shiwata, an analyst in the Tokyo office of Salomon Brothers.
Toshiya Iwamoto, an official of Japan's Labor Ministry, notes that very few companies - 6.6 percent - said in a September survey that they were predicting increases in domestic employment. Among firms with more than 1,000 workers, only 3.5 percent responded so optimistically. Still, he adds, Matsushita's example is one others should follow: "Japanese companies must create high-tech industries."
Robert Feldman, Salomon Brothers' top economist in Japan, says the deregulation of the cellular phone industry and the creation of the cheaper, less powerful "handy phone" market has created many new jobs. But he and other observers remain frustrated with the slow pace of deregulation.
Japan's employment problem reveals some of the contradictory facets of this society's economic management. While officials, politicians, and especially executives agree that the economy needs deregulation so companies and individuals can create the new businesses of the future, it seems unlikely traditional employment practices will change.
From a worker's perspective, that means that full-time company employees can continue to bank on lifetime job security. From a manager's perspective, that means less flexibility to fire workers in the interest of productivity.
"Companies will maintain traditional employment practices of keeping workers on a long-term basis," Mr. Iwamoto states flatly.
By one rough calculation, lifetime employment applies to 40 million workers in a nation of 124 million people. Most of them are male heads of households - the group Japan's bureaucrats want to see on the job in the interest of the country's economic and social stability.
All of this is not to say no one gets laid off in Japan. Takeshi Ariga says he was recently "restructured" out of a job he held for 20 years in the business-planning department of a furniture company. His own experience notwithstanding, Ariga says: "I don't think Japan will stop the lifetime employment system," he says, even though "we can't expect a high level of economic growth."