Exactly! You accidentally hit the nail on the head here.

The goal of the company is to get rid of employees. But they have permanent hire, so the bosses can’t simply fire them without cause (and the bar for cause is very high in Japan). They want employees to quit, or they want employees to clearly fail to perform their duties.

What the employees want is to keep doing decent work at that company, probably until they retire at age 65. Permanent hire is highly treasured, for good reason. The reason permanent hire exists, and is so widespread as required by law, is that Japan values employee well-being more than it values the bosses’ well-being. It’s hard to get a big loan (for a house or apartment) if you don’t have permanent hire. Many companies will not give you good positions if you’re over the age of 35, too, which makes changing employers in your 40s-60s very challenging.