TAGAJO, Japan Shusaku Tani is employed at the Sony plant here, but he doesn't really work.
For more than two years, he has come to a small room, taken a seat and then passed the time reading newspapers, browsing the Web and poring over engineering textbooks he dug up from his college days. He files a report on his activities at the end of each day.
Sony Corp., Tani's employer of 32 years, consigned him to this room because they can't get rid of him. Sony had eliminated his position at the Sony Sendai Technology Center, which in better times produced magnetic tapes for videos and cassettes. But Tani, 51, refused to take an early retirement offer from Sony in late 2010 his prerogative under Japanese labor law.
So there he sits in what is called the "chasing-out room." He spends his days there, with about 40 other holdouts.
"I won't leave," Tani said. "Companies aren't supposed to act this way. It's inhumane." The standoff between workers and management at the Sendai factory underscores an intensifying battle over hiring and firing practices in Japan, where lifetime employment has long been the norm and where large-scale layoffs remain a social taboo, at least at Japan's largest corporations.
Sony wants to change that, and so does Prime Minister Shinzo Abe. As Japan's economic recovery sputters, reducing the restraints on companies has become even more important to Abe's plans for energizing the economy. He wants to loosen rigid rules on job terminations for full-time staff.
Economists say bringing flexibility to the labor market in Japan would help struggling companies streamline bloated workforces to better compete in the global economy. Fewer restrictions on layoffs could make it easier for Sony to leave loss-ridden traditional businesses and concentrate resources on more innovative, promising ones.
"I have a single wish for Japan's electronics sector, and that's labor reform," said Atul Goyal, a technology analyst at Jefferies & Co.
Sony said it was not doing anything wrong in placing employees in what it calls Career Design Rooms. Employees are given counseling to find new jobs in the Sony group, or at another company, it said. Sony also said that it offered workers early retirement packages that are generous by American standards: In 2010, it promised severance payments equivalent to as much as 54 months of pay. But the real point of the rooms is to make employees feel forgotten and worthless and eventually so bored and shamed that they just quit.
Sony, a sprawling company with more than 146,000 employees, is under pressure. It has been outmaneuvered by more nimble competitors and its executives are trying to remake the company.
Fixing Sony is especially critical after it snubbed the American activist investor Daniel S. Loeb's push to spin off part of Sony's entertainment business. Its shares have fallen almost 10 percent since Sony rejected his proposal last week.
Critics of labor changes say something more important is at stake. They warn that making it easier to cut jobs would destroy Japan's social fabric for the sake of corporate profits, causing mass unemployment and worsening income disparities. For a country that has long prided itself on stability and relatively equitable incomes, such a change would be unacceptable. "That's not the kind of country Japan should aim to be," said Takaaki Matsuda, who leads the Sendai chapter of Sony's labor union.
It would be a radical change. A combination of lifetime employment, seniority-based pay and intense worker loyalty to the company was credited for Japan's postwar economic miracle, as stability and growth went hand in hand. But when the Japanese economy stumbled in the early 1990s, companies found that Japan's rigid labor practices made downsizing impractical. Instead, unneeded workers were left with little to do besides gaze out of the window, giving rise to the term madogiwa zoku, or the "window seat tribe."
Proponents of employment change point out that stiff protections for workers have prompted companies to make major cuts in hiring, shrinking opportunities for scores of younger Japanese.
Sony hired 160 fresh college graduates this fiscal year, compared with about 1,000 in 1991.
Companies have also adjusted by using a secondary class of temporary or part-time workers they can more easily let go.
Still, some fear that Abe's changes are not so much pro-market as just pro-business. A weaker yen has brought exporters like Sony windfall profits, yet no substantial increases in salary have followed, and many manufacturers continue to shift production overseas.
While details of the government plans are still being determined, Tani's managers at Sony are already upping the ante. Starting this month, the company has ordered him to work 12-hour shifts on an assembly line at a Sony plant in Toyosato, more than an hour's drive away. He says he will comply.