Dubbed “windowside employees” in Japan, a work-obsessed country, they are paradoxically being paid to do almost nothing at all. Japanese corporations have always had some of these people on staff, but, despite a weak economy, the ranks of the “in-house unemployed” are now estimated at 2 million and growing. The workers’ fate hinges on this broader question: Must Japan follow in America’s footsteps? by among other things, unleashing deregulation, fostering intense competition and creating a more flexible labor market? or can it sustain a wholly different Asian model of capitalism with a more human face?

That’s an issue that increasingly confronts Japan as the country digs out of a four-year recession. Battered by a strong yen, high production costs and weak domestic demand, Japanese firms have launched a fresh wave of restructuring. Companies like Nissan, the car maker, have adopted personnel practices aimed at trimming payrolls: hiring freezes, early retirement incentives and efforts to shrink jobs via attrition. But so far, Japanese corporations have drawn the line at American-style job cuts in which thousands of jobs are eliminated wholesale. Japan is a country where workers often refer to their company as home. “Lifetime” employment at the same large firm has been a national ideal for along time and a reality for about a fifth of the work force. Small wonder that corporations don’t want to risk opprobrium by putting people out on the street.

So they deal with overstaffing in a peculiarly Japanese way: They move it to another location. Thousands of Japanese workers have been packed off to corporate subsidiaries and affiliates, where they stay on the job but seldom do much meaningful work. By internalizing unemployment within firms? and saddling companies, rather than the rest of society, with the associated costs? Japan has kept the official unemployment rate low. Keeping workers on the job may also have minimized the social impact of the recession, since workers who still have a job may retain self-esteem and a sense of structure in their lives.

There is one obvious problem: This seemingly humane treatment of workers costs a lot of money. And because some of these on-the-job “unemployed” remain quite industrious? writing reports, shuffling paper and the like? “they create work for other people to do. It’s a vicious circle,” one prominent executive complains. Not surprisingly, some Japanese businessmen now speak admiringly of U.S. companies that have downsized and re-engineered their way to greater productivity in response to similar pressures.