Although there are quite a few positives to this system, permanent employment is not without its flaws. During Japan’s high growth years, permanent employment was popular and its negatives either did not exist or were irrelevant, however, as the times have changed and Japanese companies and workers alike continue to struggle, this system continues to make less and less sense. Ever since the collapse of the bubble, these flaws have become more evident, which calls into question whether or not permanent employment still has a place in the Japanese workforce. In this section, I will highlight the negatives that have manifested themselves.
Perhaps the biggest flaw to the system is that its benefits are only available to a limited group of people. Without almost any exceptions, permanent employment is only possible for an employee who enters a large firm after graduating from university. This practice was put into place because employers wanted fresh, young minds that they could shape to fit the company mold and doing so would also gain the fresh graduates’ trust and loyalty for life. However, because of this favoritism towards the younger generation, older people looking for work are out of luck when it comes to landing a full-time permanent employment position within a company. 
And older workers are not the only ones that are left out. Even university graduates who did not get hired a year or two after their graduation are not even considered for a permanent employment position. The Lost Decade Japan faced after the collapse of their bubble economy provides an example of this. As a response to the economic challenges of the time, companies stopped hiring fresh graduates for permanent employment positions and instead turned to temporary workers to fill the void. Temporary workers were much cheaper when compared to hiring new full-time permanent employees and the recruiters did not have to offer them the same benefits as full-time employees, which made hiring temporary workers an attractive solution. Unfortunately, this effectively meant that an entire generation of recent university graduates was blocked from taking part in Japan’s permanent employment system, forever.
As Japan’s economy continued to grow, certain fields like finance and securities and electronics had a shortage of labor and even today shortages still exist. Additionally, to increase their rate of survival, some companies decided to diversify into fields they normally did not do business in, which meant that workers with new expertise were needed. 
To solve some of those problems, companies looking to hire additional permanent employees could look towards women, who are generally cut off from permanent employment. “Female workers are hired mostly as non-regulars, without privileges and benefits which permanent employment workers enjoy,”. Despite making up nearly half of the Japanese workforce, they are rarely considered for permanent employment positions due to many women having children and needing time off to take care of them. Compared to years when permanent employment was first introduced, women are having children at an earlier age than before (and couples are having fewer children), so women are being freed from their child-rearing obligations at an earlier age.
