The Japanese employment system has long adopted the seniority wage system and the lifelong employment system as its tools for maintaining a stable employment relationship between employees and employers. However, with various external factors that have resulted in Japan falling into recession many times over the last decade, perhaps it is time to seriously reconsider the “stable” employment relationship that it has enjoyed up till now. Here, I will discuss the economic and psychological necessities to dissolve the present employment system and reflect on the causes (internal and external) and psychological consequences for their workers. These include issues of loyalty, identification and related issues of job security and efficiency. Specifically it would be interesting to see if the employment changes taking place are a result of globalisation or a more individualistic change amongst the new generation of Japanese employees. A short discussion will follow where I will describe the findings from interviews with top managers in German subsidiaries in Japan, giving practical viewpoints of the employment situation now, and a starting point of comparison between German and Japanese employment systems and their various merits and demerits.