What is Amakudari?

Amakudari (literally, "descent from heaven") in Japan refers to the post-retirement employment of senior bureaucrats in private and public corporations and non-governmental organizations, particularly those that fall under the jurisdiction of the ministry they retired from.

The practice has come under intense scrutiny amid a number of scandals linked to it over the past couple of decades, but attempts to tighten legislation around it have been largely ineffective as incentives for both the retired bureaucrats and their new employers to continue the practice remain strong.

Key Takeaways

  • Amakudari, which literally means "descent from heaven," refers to the post-retirement employment of senior Japanese government officials in the private sector.
  • It is considered compensation for those who miss out on promotion within the Japanese bureaucracy.
  • The practice is generally considered a cause for corruption in the Japanese bureaucracy.

Understanding Amakudari

Amakudari as a practice has both been associated with corruption and tied to outdated ways of doing business. It is directly linked to the traditional Japanese hierarchical mode of business, where emphasis is placed on seniority over merit.

As more people compete for fewer positions at the top of the bureaucratic ladder, amakudari is seen as a way of "compensating" those who retire to make way for others to gain seniority. Many of those retiring from the public sector would do so in their mid-50s, so with some years yet of lucrative amakudari jobs to compensate them.

It is important to note that this practice is not unique to Japan. Several senior government officials in the United States also parachute into the private sector after government service.

For example, Timothy Geithner, former treasury secretary during the recession, is now employed with private equity firm Warburg Pincus. Rahm Emanuel, who was President Obama's chief of staff and former Chicago Mayor, is now a counselor with Centerview Partners LLC, a boutique investment firm, and is responsible for opening their Chicago office.

Cause for Corruption

While proponents of the practice argue that it lubricates private-public sector relations (cutting through red tape), the potential for corruption of such a practice is evident too, in particular incentivizing bureaucrats to favor companies who might give them lucrative employment after they retire from public service.

A number of company scandals have been linked in this way to amakudari, including incidents such as rigging bids and avoidance of inspection records. Moreover, there is little incentive for proper oversight of industry by bureaucrats who hope to be offered positions within that industry once they leave the government.

For example, the Japan Times reported that in the past 50 years, 68 ex-bureaucrats landed senior positions at the nation’s 12 electricity suppliers via amakudari, and there were questions raised about whether lax regulatory oversight of the nuclear power industry due to this cozy relationship contributed to the Fukushima disaster.

A renewed spotlight on the practice occurred in 2017 when the Education Ministry was exposed as engaging in systematic attempts to circumvent legal requirements in order to arrange preferential hiring of retired bureaucrats by a range of organizations.

One of the regulations (enacted 2008) prohibits government officials from assisting in the placement of an official or former official in a business or nonprofit organization. The 2017 scandal showed that the Ministry of Education (among others) exploited a loophole by using retired officials to act as intermediaries.