The Transformation of Japanese Employment Relations: Reform without Labor

The Transformation of Japanese Employment Relations 9780230_209084_01_prexiv.indd i 11/25/2010 8:21:42 PM 9780230_2...

Author: Jun Imai

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The Transformation of Japanese Employment Relations

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The Transformation of Japanese Employment Relations Reform without Labor Jun Imai Assistant Professor, Center for the Study of Social Stratification and Inequality, Tohoku University

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© Jun Imai 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–20908–4 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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Contents List of Tables

viii

List of Figures

x

List of Abbreviations

xii

Acknowledgments 1

xiii

Sociological Theory of Employment Relations Did Japanese employment relations change? Employment relations in sociological perspective Contract/effort Mobility State-firm-labor negotiations at societal, organizational and workplace levels Societal construction of labor markets Welfare- employment policies Labor management practices and authority relations Research strategy and the structure of the book

1 1 3 4 6 8 9 10 11 12

2 Employment Relations in Postwar Japan Introduction A brief history of employment relations in Japan The postwar labor struggle and its consequences The end of the rapid economic growth and belt-tightening management The characteristics of postwar Japanese employment relations Contract/effort Mobility Summary Regulations of employment relations: with or without labor ‘Corporatism with labor’ at work ‘Reform without labor’? 3

Political Segmentation of the Labor Market: The Establishment and Expansion of New Employment Forms The employers’ initiative for labor market reform Social organization of labor markets in the postwar period

17 17 17 17 22 27 27 35 40 42 42 43 50 50 53

v

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vi

4

5

Contents

The comparative strength of ‘flexible rigidities’ Initial expansion of the external labor market Deregulation of the labor markets Policy shift Descriptive characteristics of the labor market changes Inequalities between regular and non-regular contracts A high wall between contracts Reconfiguration of employment contracts and job mobility

53 57 59 59 64 77 82 89

The DWS: Deregulation of Working Time and Its Impact on the Effort-Bargain Working time regulation and employment relations LSA regulation and the company citizenship Working time reduction and renewed interest in the DWS Working time reduction for better quality of life Shifted aim of the reform of working time regulation The political dynamics of the working time deregulation Marginalization of labor in the politics of deregulation Decentralization of working time regulations The DWS: a legal base for the renegotiation of effort-bargain

92 92 93 98 98 104 111 111 116 119

Re-bargaining Effort: The Introduction of Results- Orientation at COMPUJ Labor management reform and white- collar effort The movement of labor management reform: the case of COMPUJ Employers’ movement to introduce results- oriented labor management COMPUJ in context Initiating the results- oriented labor management Management by objectives Old practice of rotation, old attitude of adaptation Conflict Rising concerns over the new system Intensification of resultsorientation Deliberation of the MBO and the diversification of career track Formalization of evaluation criteria: ‘competency’ management Self-management under control: job announcement and the DWS

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122 122 123 123 125 130 130 134 138 140 142 142 146 152

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Contents vii

Marketization, formalization and individualization of labor management Consequences of the changes within COMPUJ 6

Conclusion: Changes and Future Directions of Japanese Employment Relations Changing employment relations Contract/effort Mobility The declining presence of labor unions Remaking employment relations: risks and opportunities for Japanese workers ‘Deflation of employment’ in Japan Right to a career without organizational membership

156 158 161 161 162 166 167 170 170 173

Appendices A1.1 A3.1 A3.2 A3.3 A4.1 A4.2 A5.1 A5.2

List of interviewees Major reforms of labor market regulations in the post-WWII period Revisions of the limited-term contract Labor market changes Chronology of working time regulations Discretionary work regulations as of 2000 Future principles of labor management The COMPUJ organizational chart as of July, 1994

176 178 180 183 186 188 190 191

Notes

192

References

210

Glossary

223

Index

225

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Tables 1.1 1.2 2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 4.1 4.2 4.3 4.4 4.5 5.1

Domains of contention by the levels of regulation The structure and regulations of employment relations The ranking and qualification system The characteristics of employment relations in Japan (core regular workers) The advisory council: the case of the Central Labor Standards Council as of 2000 The list of deregulation committees since 1995 Members of deregulation committees, samples from 1998 and 2001 Nikkeiren’s employment diversification strategy Regular/non-regular composition of the Japanese labor market from 1956 Changes in labor market structure by employment status Changes in labor market structure by employment status and firm size Average hourly wages of temporary staff by occupational category Methods of wage payment by employment status Mobility within the labor force The number of workers who changed jobs (1997–2002) The number of workers who changed jobs (2002–7) Distribution of employment status, origin and destination Gradual implementation of 40-hours-per-week (manufacturing) Gradual implementation of 40-hours-per-week (commerce) Nikkeiren’s strategy for the application of the DWS Summary of opinions on the expansion of the DWS by related actors: early stage Changing working time regulations for white- collar workers The chronology of the labor management reforms at COMPUJ

9 15 37 40 44 47 48 52 57 65 68 79 80 83 84 85 86 99 100 108 110 118 129

viii

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Tables ix

5.2 The MBO evaluation sheet at COMPUJ (translation of the performance measures by rank) 5.3 Required capabilities in workflow 5.4 Employees’ assessment of the personnel evaluation, F Department 5.5 Three types of role in managerial rank 5.6 New categorization and definition of workforce 5.7 Basic competency at COMPUJ 5.8 Excerpts from the role-specific competency (system engineers) 6.1 Changes in employment relations since the 1990s (core regular workers)

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132 134 140 144 146 149 150 163

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Figures 2.1 The comparison of trade surplus: Japan and other G7 countries 24 2.2 Trend of overtime and business conjuncture by firm size (manufacturing) 25 2.3 The Japanese employment structure 28 2.4 Unpaid overtime work (hours per year) 34 2.5 Multi-layered structure of competition 39 2.6 The trend of unionization in Japan 45 2.7 The number of labor disputes in Japan 45 3.1 The rate of economic growth in Japan from 1956 to 2008 (GDP) 51 3.2 The trend of unemployment rates from 1970 to 2004 60 3.3 Proportion of regular employee by firm size 66 3.4 Proportion of regular employment by age 70 3.5 Reasons to use paato workers 70 3.6 Reasons to use haken workers 71 3.7 Reasons to use keiyaku workers 71 3.8 Changing occupational composition of Japanese labor markets 72 3.9 The Diffusion Index by occupation 73 3.10 Haken workers by occupation 74 3.11 Keiyaku/shokutaku workers by occupation 76 3.12 The number of yatoi-dome troubles reported by individual workers 78 3.13 Employment insurance coverage by employment status 79 3.14 Access to the rights of company citizenship by employment status 81 3.15 The trend in job mobility in Japan from 1962 83 3.16 The growth of the temporary help industry 88 4.1 The trends in working hours from 1960 to 2003 95 4.2 The trend in overtime and business conjuncture (economic growth rate) by firm size (manufacturing) 96 4.3 Estimated hours of unpaid overtime work 97 4.4 The amount of scheduled working hours by firm size 101 4.5 Expanding use of various working hour systems (large firms) 102 x

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Figures

4.6 Expanding use of various working hour systems (all firms) 4.7 Changes in the proportion of firms reporting excessive labor by occupation and firm size from 1992 to 1993 (manufacturing) 4.8 Employers’ reasons to introduce the DWS (multiple answers) 4.9 Increasing use of the DWS (large firms) 5.1 Future principles of labor management (firms with more than 5,000 employees) 5.2 The growing proportion of white- collar workforce at COMPUJ 5.3 Organizational restructuring at COMPUJ 5.4 Corporate System No. 4 jigyō-bu, organizational chart 5.5 An overview of the organizational role 5.6 An overview of the ‘salary band’ for workers in groups A, B, and C 5.7 An overview of promotion by tracks within group A 5.8 The structure of ‘competency’ 5.9 The composition of salary of the discretionary workers at COMPUJ 5.10 Diagram of the dynamics accompanied by the labor management reform

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xi

103

104 107 115 124 126 128 135 144 147 147 148 155 157

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Abbreviations ARC DI DWS ESL ILO IWHS LSA MBO MOL MHLW OffJT OJT TDW Law THA

Administrative Reform Committee Diffusion Index Discretionary Work System Employment Security Law International Labour Organization Irregular Working Hour System Labor Standards Act Management by Objectives Ministry of Labour Ministry of Health, Labour and Welfare Off the Job Training On the Job Training Temporary Dispatching Work Law Temporary Help Agency

xii

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Acknowledgments The research and writing of this book were made possible by the support of a number of individuals and institutions. I would like to thank all the individuals who kindly supported my research and field work at various sites and provided their time for the interviews. I cannot list them here due to the ‘anonymity’ that I promised to keep. Thus I only list the institutional support as follows. The main body of the research presented in Chapter 3 was conducted as a part of the project, ‘Employment Diversification in Japan: The Case of Temporary Dispatched Work’, funded by the DFG (Deutsche Forschungsgemeinschaft: German Science Foundation) from 2001 until 2004. The principal investigator was Professor Karen Shire, and there were two collaborators: Jun Imai and Katrin Vitols. The research for Chapter 4 and a part of Chapter 5 was funded by the dissertation research grant awarded from the Matsushita International Foundation (‘Japanese Management under the Industrial Structural Change and the Deregulation: the Introduction of the Results-oriented Labor Management Practices and the Discretionary Work System’). The grant funded several months of the research trip to Japan that included archival works and expert interviews during the period from October 2000 to September 2001. Some data presented in Chapter 5 were collected by the Knowledge Worker Project conducted by the group of scholars represented by Professor Steve Frenkel and funded by Andersen Consulting and the Australian Research Council in 1995–6. I am especially grateful to the Japanese team of the project headed by Professor Karen Shire, with Nobuyuki Ota and Madoka Ota as assistants. The Japanese research also received additional funding from the Matsushita International Foundation. The author participated in the project from the coding stage of the collected data and materials. The DFG and the Center for the Study of Social Stratification and Inequality (CSSI) at Tohoku University, the JSPS Global Center of Excellence (GCOE) program in Japan, provided funding for me to present most of the chapters of this book at various international and domestic conferences, which greatly helped me to refine the argument.

xiii

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xiv Acknowledgments

This book emerged from my dissertation presented to the State University of New York at Stony Brook, in 2006. I would like to thank the members of my dissertation committee, Professors Michael Schwartz, Ian Roxborough, Martin Albrow (London School of Economics) and Karen Shire (University of Duisburg-Essen) for the valuable comments during the course of writing the dissertation. I especially would like to thank Karen Shire, my de facto ‘Doktormutter’ and research collaborator, for her encouragement, guidance, and extraordinary patience.

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1 Sociological Theory of Employment Relations

Did Japanese employment relations change? The long economic recession after the serious asset deflation in the early 1990s marked the start of a series of reform efforts developed at various levels of Japanese society. During this period, the rate of economic growth was constantly below that of western advanced industrial countries,1 and this was seen as a clear sign of the maladaptation of economic and employment institutions towards liberalization pressures and industrial structural changes. Industrial policies and industrial organizations (for example, keiretsu and the main bank system) and also Japanese employment relations, characterized by a ‘lifelong’ employment and ‘seniority’ wage system, are particularly called into question2 (Kikkawa 2005). Against the backdrop of a struggling economy, mounting distrust against these institutions within the business sector, which had supported the rapid and stable economic growth until the end of the 1980s, spurred society-wide reform movements. ‘Deregulation (kisei kanwa)’ became the phrase of the period. Employment relations were a part of the main targets of the reform movements. Efforts were aimed at making the external labor markets more flexible, liberalizing and deregulating temporary dispatching work and job placement and expanding limited-term contracts in the hope of stimulating the Japanese economy. The Labor Standards Act underwent a major revision of working-time regulations for the first time since its enactment in 1947. It redefined the concept of working time by changing how it should be managed in workplaces, particularly for high- end professional and white- collar jobs. Companies were keen to use a number of regulatory changes to pursue labor management system reform. At the core of the corporate reform movement 1

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Transformation of Japanese Employment Relations

was ‘the introduction of the results- oriented labor management system’ (jitsuryoku-shugi, seika-shugi jinji seido no dōnyū). The goal of this new results- oriented system was to move away from seniority-based wages and long-term employment and bring about more flexible and marketoriented forms of employment relations. The purpose of this book is to evaluate the magnitude of these reforms from the 1990s on Japanese employment relations, mainly focusing on regular core employment. The debate on the employment of regular employees to date has found a tendency for a continuity of conventional practices. That is, the last decade has merely witnessed a readjustment of ‘Japanese management’ in the new environment despite the pronounced reforms toward market- orientation referring to employment security, a slight decline in the seniority wage profile (Rebick 2005) and undiminished commitment, particularly by employers, to cooperative labor relations (Thelen and Kume 2003). This book, however, seeks to produce more nuanced interpretations of the continuities and changes in relation to Japanese employment relations, viewing the reform process as complex institutional dynamics including formal and informal dimensions. Such a strategy, largely based on the schemes developed in economic sociology and sociology of work, enables us to point out several important issues and domains of conflict that may lead to a transformative change of employment relations even for regular employees of Japanese companies. To achieve this goal, the reform process is basically understood as the renegotiation process of the social pact in the field of employment. The first point emphasized in this book is that employment relations are social relations, which emerged together with factory labor/firm organizations and labor markets. It was shaped in the process to define the nature of an individuals’ involvement with these modern institutions. In short, employment relations are historical and dynamic constructs that coordinate the distinctive yet interconnected aspects of contract/ effort and mobility. These aspects of employment relations are shaped by the negotiation between state, firm and labor, and the mutual association between these aspects produces great complexity in employment relations. Another point of emphasis is that social institutions of employment relations, and their stability and change, are the products of multilayered social negotiations by state, firm and labor. I argue that employment relations are negotiated at societal, organizational and workplace levels, and the dynamic associations of these levels of negotiation contribute, uniquely, to shape and regulate aspects of employment relations.3

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Sociological Theory of Employment Relations

3

The purpose of Chapter 1 is to fully explicate why and how the conceptual framework is necessary and useful in the analyses of employment relations. First, referring to the unequal nature of the labor market and the indeterminacy of labor contracts, I will argue the necessity of the sociological theory of employment relations that emphasizes political and cultural construction of economic institutions such as labor markets. Second, two aspects of employment relations will be discussed followed by the argument how political- cultural contentions by related actors in societal, organizational and workplace levels shape and regulate these aspects of employment relations. Finally, the outline of the book will be explained that also introduces the methodological schemes adopted in the analyses.

Employment relations in sociological perspective Employment relations emerged at the intersection between industrialization and the formation of the modern state. The key transformation of social relations associated with these large scale social changes is the rise of citizenship, the shift from premodern feudal servitude in which ascribed social status defines individuals’ rights and duties to the individualistic authority relation, namely contract relations (Bendix 1996 [1964]). The core promise of the rise of contract relations is to grant individuals property rights, including the right to freely dispose of themselves in every sphere of life. ‘Employment’ is a new sphere of social life that arose out of industrialization, and ‘employment relations’ between employers and workers became important as they arrange labor ‘contracts.’ The core promise of contract relations has two expressions in the field of employment such as ‘free contract’ and ‘free mobility.’ On the level of ideology, these ideas play constitutive roles in establishing labor contracts and labor markets as modern institutions. The actual institutions built on these ideas, however, show significant variety and complexity in the different social and historical settings, which is due to the inherent issues of the labor market and labor contracts. The one is unequal power relations between buyer and seller in the labor market, and the other is the ‘indeterminacy’ of labor contracts. Unequal power relations between employers and workers is the fundamental nature of labor markets, and there are two major solutions to this, both of which are encouraged by the rise of the concept of ‘citizenship.’ First, the structure and mechanisms of labor markets are negotiated by state, firm and labor, to prevent employment relations that could be considered equivalent to slavery4 (Streeck 1992). Second,

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labor union movements are organized to form collective fronts in terms of the actual conditions of the labor contracts (Marshall 1992 [1950]). Instead of negotiating contract terms individually, labor unions seek to do so collectively in order to protect workers from economic fluctuations that brings uncertainty to workers’ lives. In addition to collective bargaining, the state’s capacity also impacts on employment relations through industrial and employment policies and welfare provisions (Manow 2001; Ebbinghaus and Manow 2001). The ‘indeterminacy of labor contract’ is originally formulated in Marx’s scheme that distinguishes labor and labor power. By the term ‘indeterminacy,’ he means that concluding labor contracts does not realize labor, but labor is realized in the organized labor process since what is traded in the labor market is only ‘labor power’ (Marx 1976 [1867], vol. 1: 270–1; 291). Contemporary scholars also see that the contract relation is ‘indeterminate,’ and that it is specific to the labor market compared to other markets. The indeterminacy of labor contracts is rooted in the fact that ‘labor power’ – the commodity of labor markets – is not separable from human capacity and not completely transferable (Polanyi 2001 [1944]). Therefore, the contract between buyer and seller is under constant negotiation, which is the key dynamic of the constitution of employment relations (for example, Erikson and Goldthorpe 1992; Goldthorpe 2007; Rubery and Grimshaw 2003). To comprehensively and systematically understand this complexity, the book proposes the analytical framework that sees employment relations being constituted by interrelated aspects such as contract/effort and mobility. Given the inherently political nature of employment relations, the book argues that these aspects are shaped by the political- cultural negotiations between state, firm and labor at various levels of regulation, covering societal and organizational-level politics to workplacelevel contention. In the following sections of this chapter, these aspects will be explained independently followed by clarification of the political dynamics that assemble these aspects in order to constitute employment relations. Contract/effort Contracts Contracts and effort point to two different aspects of employment relations, but are inseparable due to the ‘indeterminate’ nature of labor contracts. A contract is a distinctive and fundamental social relation in modern industrialized societies, and as mentioned, it is the core of employment relations that emerged together with the labor markets and

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firm organizations. A contract is concluded by employers and workers, and is represented by various types of employment contracts that contain different combinations of working conditions, different profiles (form, frequency and amount) of wages and benefits, different lengths to the term of contract, and other labor conditions including working time (Tilly and Tilly 1994: 286; also see Boyer and Julliard 1998). A contract also has informal side. For instance, Durkheim said that it is noncontract terms of contract which make labor contracts possible due to the function of normative obligation (Durkheim 1964 [1893]). Norms such as expectations and taken-for-granted recognitions about the terms of contract play important roles to give a concrete understanding about the contents of contracts. A contract relation is greatly shaped by the politics rooted in the attempt to equalize inherently unequal relationships between employers and workers. First, it is important to notice that labor market regulations and labor standards shape contract relations. State, firm and labor negotiate about the rules of labor market transaction, which specify the general/minimum standards of the contract relations. Second, labor relations at societal and organizational levels negotiate the substance of the relations since labor movements became increasingly legitimate as a tool for demanding social rights in contemporary society (Marshall 1992 [1950]). The pattern of collective bargaining became the determinant of the contents of contract and relations between contracts, which eventually segments and stratifies the labor force (Western 1998). It is argued, for instance, that the traditions of occupational guilds in western European societies greatly shaped the patterns of wage bargaining and employment security (Crouch 1993). The result of the bargaining was the stratification of workers into occupational status attached with specific set of wage and social rights (Marshall ibid.). It is this process of politics, from which a taken-for-granted notion of status emerges. The Japanese labor union movement in the period of early industrialization is a good example. Labor unions in Japan were formed based on communities at work sites such as factories and businesses. They demanded wage increases, employment security and career prospects in business organizations as proof of respected organizational membership.5 The rise of company unions segmented and stratified workers by their membership to firms, and the process of politics gave rise to the recognition of ‘organizational membership to a company’ as a specific notion of status, effective within Japanese labor markets (Smith 1988; Nimura 1987). This process – the rise of a version of industrial

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citizenship – established the authority relation at workplaces (Marshall ibid.; Streeck 1992). Effort The aspect of effort refers to the agreed intensity of work that completes a labor contract. The commodity that is exchanged under the conditions of a labor contract is ‘labor power.’ Since labor power does not realize labor, realizing the contents of a contract requires work organization and individual workers’ consent to what extent they provide ‘effort’ to the work processes considering the conditions of labor contracts. Thus, the negotiation of this aspect, effort bargain, is primarily about the issues of control and the legitimacy of authority relations at workplaces. The issues of control include systems such as simple control, technical control, normative control and self control and the implementation of them through the practices such as direction (supervision), evaluation, and discipline (Edwards 1979; Knights 1990). The evaluation of performance is a major tool of control and discipline (Shire 1999; Endo 1999), and depending upon its significance for wage determination (contract) and promotion (mobility), the legitimacy of the method and criteria of evaluation would be the issues of contention between employers and workers. Although it is primarily organizational and workplace levels where the aspect of effort matters, it is not that societal level regulation does not have an impact. The regulation of working time has an important impact on the practices of control. Labor movements in the early phase of industrialization demanded the regulation of working time (especially to shorten it) because, during this working time, workers were under the control of employers6 (Thompson 1993). Thus the legal regulations (at societal level) on working time such as the normal hours of work (per month/week/day) became substantial factors in contract relations (for example, Mori 2003). The regulations also set constraints on designs of labor management practices that organize the relationship between wage and labor. The development of the methods of control is understood as managerial efforts to extract maximum results given the constraints of working time and wage systems (Edwards 1979; Kalleberg and Epstein 2001). It should be also noted that the negotiation about the relationship between working time, effort and wages shapes a part of the taken-for-granted notion of control at workplaces. Mobility The aspect of ‘mobility’ refers to the types of movement that workers make in employment-related social space: job to job, occupation

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to occupation, organization to organization, employment to education, and upward and downward mobility. The main argument of the political- cultural approach is that the dynamics of state-firm-labor politics have significant impacts in constructing the structure of opportunity and constraints and the distribution of resources for those who move in the social space. The politics also define the notion of career, which is decisive in designing an educational system and its connection to employment and gives individuals a cognitive framework to understand the institutional logic of employment systems and to locate themselves within the structure of a career (Fligstein 2001). The combination of these elements produces the patterns of mobility, which in sociology, are seen as “a persisting and pervasive factor shaping the ways in which the members of a society define themselves” (Erikson and Goldthorpe 1992: 2). Realizing ‘free mobility’ of workers, meaning that workers have the right to dispose of themselves freely at their will in labor markets, is one of the foundations of building contract relations in modern industrialized societies. The legal framework of labor markets and labor standards, like constitutional endorsement of free mobility (or free choice of occupation), is the basic resource for individuals to move within the social space of employment. It is used particularly as a resource in conjunction with the politics that shapes contract relations since, in the process of the bargaining of contract, related actors compete to control labor supply (and skills) (Fligstein and Fernandez 1988; Streeck 2005). Here, it means that the control over the workers’ mobility is the subject of politics between related actors. Fligstein locates this politics at the center of his theory of employment relations. He defines an “employment system” as “rules governing the relations between groups of workers and employers that concern the general logic of how ‘careers’ are defined” (Fligstein 2001: 101). State-firm-labor politics sets up the ‘conception’ of workers’ careers, and the most powerful tries to keep the power relations to maintain the established model. Fligstein proposes three ideal types of employment systems realized by different patterns of the politics. Strong occupational labor unions result in vocationalism in which careers in a specific occupation or industry are taken for granted. Associations of expert peers (and their reliance on university for training) produce professionalism. Strong management characterized with company unions and firmspecific training takes shape managerialism in which workers typically move within internal labor markets. Real cases are mixtures of the ideal types. France is characterized as state professionalism with strong state

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intervention that controls credentials, the USA as a mixture of professionalism and managerialism, Germany as a pure type vocationalism, and Japan as the closest example of managerialism (Fligstein ibid.: 102). His scheme emphasizes the relationship between the state-firm-labor politics and the formation of a taken-for-granted notion of career, but also indicates that the politics shape the opportunity structure and the pattern of resource allocation necessary for individuals to move within the social space of employment (which could be conceptualized as resources for ‘mobility bargain’). Politically strong vocational and professional associations are able to secure opportunities of employment, and are also able to support workers in changing employers by providing the necessary resources such as skills (training and credentials) and networks. However in the case of managerialism, it is management that controls the practices of hiring and firing, assignment allocation and rotation (that have strong impacts on skill formation) within company organizations. In conjunction with the aspect of effort, upward mobility is also under the control of management depending upon the extent that labor unions are able to ease the influence of personnel evaluation and the competition among workers (Fligstein and Fernandez 1988; Streeck 2005; Kumazawa 1997). There is another distinctive characteristic about managerialism. Under the circumstances of managerialism, the labor markets outside company organizations tend to be left unorganized by major actors. The combination of managerial prerogative and company union produces collectively organized patterns of mobility developed within organizations (Kalleberg 1988). Subsequently, the distinction between the inside and outside of internal labor markets defines major differences in the experience of mobility among workers as well as contractual differences. It is important to notice that the organization of this external market is not a ‘free market’ in contrast to the organized mobility within internal labor markets. The political-cultural approach points to the absence of any institutional support for these workers, which means, depending upon the process of politics that defines internal/external labor markets, there tends to be less established opportunity structure, less resources available to move, and a weak concept of career that is recognizable by others and by themselves.

State–firm–labor negotiations at societal, organizational and workplace levels The constitution of the aspects of employment relations involve three major actors – state, firm and labor – in various domains of politics

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in societal, organizational and workplace levels of regulation.7 In the discussion about employment relations, it is common to perceive employers and workers as the only actors who negotiate the terms of contracts.8 It is true that examining politics between employers and workers is crucial. It is however important to recognize that the state plays a role in shaping employment relations, especially at the societal level. It is also important to consider the three levels of regulation in order to capture the political dynamics of employment relations. All these levels of regulation substantially associate with each other in constituting employment relations. As seen in the previous sections, there are number of domains of politics that include ‘collective bargaining’ and ‘labor market regulations and labor standards’ at societal level, ‘enterprise bargaining’ and ‘labor management’ at organizational level, and ‘control and authority relations’ at the workplace level (see Table 1.1). In the following section, the impacts of the dynamics at each level of social regulation will be explained focusing on the domains of politics. In the explanation on the societal level, the focus is placed specifically on the roles of state. Societal construction of labor markets Labor markets are social constructs. This means that state-firm-labor politics need to define ‘commodity’ and set the ‘basic rules of exchange’ in order for related actors to negotiate the terms of contracts (Campbell and Lindberg 1990; Fligstein 2001).9 The implication is drawn from the recent arguments in economic sociology that point to the socialconstructive nature of markets. It claims that any markets – including product and financial markets – are political- cultural constructs.10 In the case of labor markets, it is constructed by the negotiations between

Table 1.1 Domains of contention by the levels of regulation

Domains of contention

Societal

Organizational

Workplace

Industrial relations and collective bargaining Regulations of labor market and labor standards

Enterprise bargaining Labor management practices

Control and authority relations

Note: Italics indicate the domains especially emphasized in the book.

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state, firm and labor (Fligstein 1996, 2001). Fligstein especially emphasizes the state’s constitutive roles in the process of market formation in contrast to the economic view that sees the state only exogenous to it.11 In the case of labor markets, the economic sociological approach points out that the encounter between employers and workers do not automatically make markets, but the state as regulator is necessary to establish labor markets as modern institutions. The issues necessary to establish labor markets are negotiated at the policy domains of ‘labor market regulations and labor standards’12 set by state. The underlying assumption in these regulations of modern labor markets is the commitment to the extension of the standards of civil rights, especially emphasized by the state,13 which distinguishes modern labor markets from those with premodern practices (Nakayama et.al. 1999; Hamamura et.al. 2002). Although securing civil rights must be the foremost concern, which is underpinned by constitutions and/or international standards (provided by ILO or others), it is up to how the relevant actors define the standards, set actual regulations and interpret them. Thus, even the regulations to set up labor markets are not politically neutral, rather they reflect the politics and realize the interests, of the most powerful in the regulation-making process. For employers and workers, policy domains are the access points to participate in policy process, where they can show their interests and try to formulate regulations to serve their own interests. The negotiations in the domains that reflect the interests of the most powerful directly impact on the formation of the aspects of employment relations. Formally, they virtually cover all dimensions of contract relations. The regulation of labor standards especially concern rights and duties for both parties of contract relations14 especially in the forms that define responsible participants of labor markets who can sell and buy labor power (set by age, health and legal capacity with consideration for nondiscriminatory clauses). The minimum wage is also set. There are other regulations that also influence workers’ mobility. Types of contract are set up that can be used in the markets. Various temporary periods of contract are defined in the context of a full-time/ part-time distinction and working-time limitations per day to month. There are regulations on hire and fire, as well as the regulations on the functions of labor market intermediaries. Welfare- employment policies The state’s capacity to influence employment relation is not limited to the issues dealt with in the domain of labor market formation.

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Employment relations are actually shaped directly and indirectly by industrial, employment and welfare policies set by the state. Scholars from comparative welfare- employment regimes argue that they are especially influential in the areas of wages and employment security (Miyamoto 2008). The state’s interests in the formation of labor markets may also reflect the direction of these policies. This view is rooted in the idea that it is not just labor unions that are concerned with the workers’ well-being, but the state and even employers have interests in this to ensure economic growth and stability of society (Swenson 2002; Manow 2001; Ebbinghaus and Manow 2001). The style and extent of states’ involvement in the issue differ greatly depending upon the economic and political trajectory of the society (Fligstein 2001). Thus Miyamoto argues that it is necessary to closely examine how welfare and employment policies are linked to understand the institutional coordination of workers’ well-being (Miyamoto 2008). Labor management practices and authority relations Recognizing the indeterminacy of labor contracts, Streeck argues that “the distinction between labor and labor power opens the door for a sociological theory of work organization” (Streeck 1992: 42). This recognition encourages the view that businesses are the actual sites of contention for both organizational and workplace levels. Employers assemble the production process and organize employment and work organization to face market competition and technological changes. For workers, actual terms of contract, actual work intensity, and actual mobility prospects are all organized and decided at these levels. In this sense, there is no doubt that firms are major sites for management and workers to directly negotiate their relationship. At the organizational level, the politics is about labor management systems (as well as enterprise level bargaining). Labor management systems impact on employment relations through the coordination of hiring and firing, work assignment, wage systems, opportunities of skill formation and career, working time, and the methods of workplace control – thus covering all aspects of employment relations. Workplace level negotiation is about whether workers take the employer’s right to manage for granted, including the notions of status, control and career. Thus there is a close association between organizational and workplace level. The negotiations in labor management systems between management and workers are about the design of the system as well as the taken-for-granted notions of the aspects of employment relations assumed in the system.15

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The regulations at these levels are broadly contoured by the outcomes of societal level negotiation that can be both a constraint and a resource. At the same time, these levels are the sites where new necessities and solutions emerge, which may change the societal level regulation mainly through the institutionalized channels of collective representation. In general, the relative importance of these levels compared to societal level is largely dependent on the historical trajectory of labor relations in a society. For instance, in the societies where a corporatist arrangement is dominant, societal level negotiation plays a guiding role, while in the societies with pluralist traditions, it is less so. In any case, the details of the regulative arrangements are different from society to society. Thus it is important to carefully examine the historical development of the regulative regime and the politics behind it and how they relate to the actual employment practices (Pontusson 2005).

Research strategy and the structure of the book The reform efforts described above put the complex dynamics that regulate the employment relations under pressure for change in Japan. The purpose of this book is to explain how and to what extent the reform efforts after the 1990s have changed Japanese employment relations under the circumstances of liberalization and industrial structural changes. To pursue this goal, the book generally is structured to compare the employment relations for core regular employees before and after the reforms by setting a point of comparative reference to measure the impacts of those reforms. It is, of course, difficult to distinguish before and after in clear- cut way, and the historical point that distinguishes before and after may be different from one employment and labor market institution to another. To overcome these challenges, two strategies are adopted in the book. First, a general overview of the historical development of Japanese employment relations will be presented and examined with regard to the aspects of employment relations and the power relations behind the development in various levels of regulation (Chapter 2). The trajectory of the development of employment relations is described as the constant renegotiation of the aspects in all three levels responding to the industrial structural changes and market environmental changes. The historical period here is up until the start of the decadelong economic stagnation during the 1990s, namely the end of so-called ‘bubble economy’ of 1991 to 1992, that triggered the waves of socioeconomic reforms ‘without sanctuary.’ It is a reasonable periodization of the

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history especially when the impact of the reforms on the previous institutional arrangement, known as ‘Japanese management,’ are the points of concern. Second, in each of the chapters that deal with specific reforms, I try to preserve the unique historical development of the employment and labor market institutions in question and the great complexity of the dynamics of reform efforts as much as it is necessary. For instance, Chapter 3 deals with the labor market reforms that include the liberalization and deregulation of temporary agency work, liberalization of the private labor supply business, and the relaxation of regulations on limited-term contracts. These reforms are mostly relevant to the features of contracts and mobility. The most radical reforms for these labor market institutions came in the late 1990s. It is, however, not possible to evaluate the impact of the reforms without having any contextual knowledge about the reforms and their relevance to the aspects of employment relations. It is the establishment of the Temporary Dispatching Work Law in 1986 and even the history of labor lending in the Japanese labor market that provides this information. Although the general overview of the postwar situation in employment will be given in Chapter 2, the contextspecific history that is closely knitted with the general overview will be given again with regard to these labor market institutions to fully uncover the meanings of the reforms. The same strategy will be applied to the topic of Chapter 4 that deals with the establishment of the Discretionary Work System in the Labor Standards Act, which is a specific working-time regulation. Under the Discretionary Work System, work time is no longer documented, therefore no overtime premium is paid, for the expanding group of whitecollar workers. This reform is concerned with the aspects of contract and effort in employment relations. Again the radical reforms were made in the 1990s in an attempt to expand the coverage to a broader domain of white- collar workers to mobilize more effort from these workers. However, why it is important can only be understood in contrast to the system first established in the late 1980s for a limited number of professionals, or in the context of the relations of working-time regulations with the workplace control and the organization of effort at Japanese companies. Although the book emphasizes the historical context of the institutions, it is not to point out how history constrains actors in the fields. As the scholars of the historical institutionalist analysis claim, it is important to assume ‘agency’ in actors (Steinmo, Thelen, and Longstreth 1992) under given historical institutional settings. Here, agency means actors’

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capability to respond to endogenous and exogenous factors in potentially creative ways to influence others, although their resources may be heavily constrained by the institutional arrangement and power relations behind them. It is important to examine how actors understand the situations in which they are located in the specific circumstances of history to understand the dynamics of politics. This theoretical emphasis necessitates a specific research strategy in addition to the emphasis on the historical context: a focus on actors. In each of the stories of reforms, the analytical foci are the state’s, firms’ and labor’s understanding of the situation and their tactics for the situation. Research methods are tailored to understand them and include the collection of documents from the government, labor unions and employers’ associations, as well as interviews with the experts (see Appendix A1.1 for the list of interviewees). Government documents mainly included all the records from the advisory committees of the labor ministry16 (to follow the policy discussion on the reforms of the labor market and the working-time regulations). Records of the parliament sessions were also collected. Documents from labor unions and employers’ associations included their programs and appeals. Statistical data collected from the government ministries and agencies are used to examine how these institutional changes impacted on the reorganization of labor markets and the organizational practices of employment. After the examination of two societal level reforms, the book finally recasts its focus on a company, the central actor that actually coordinates employment relations in practice. In Chapter 5, the re-bargaining process that occurred in association with the introduction of the resultsoriented labor management system at a case company is analyzed. The reform was seen as the firm responded to the globalization and market environmental changes, therefore the chapter analyzes the reorganization process of the new necessities of labor management. In practice, the reform primarily transfers results responsibility to individual workers through changes in the wage system. Stimulated by the change, the bargaining with regards to other aspects of employment relations are (re)activated, and start to shape workplace-level authority relations dialectically. This analysis will be accomplished by drawing evidence from a case study of the reform at a major electronics firm in Japan. The case study is located at the end of the empirical part of the book not because the chapter should come chronologically at the end but because to clarify how firms utilize the fruits of regulative reforms (or not). Chapter 5 is based on the research I participated in between 1995 and 1996 entitled ‘knowledge worker project.’ The company case study

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used in the chapter is a part of this project. The investigation at the case company was in- depth. The study team conducted three weeks of workplace observation at a chosen work unit (one department with about 40 workers) and collected various documents including statements of corporate and organizational strategy, products/service information, labor management materials including personnel evaluation and wage determination, and statements of labor relations. Interviews were also conducted with the division manager, department managers, workers, union representatives and the manager of the personnel department. In 2000 and 2001, follow-up research was conducted at the same company. At this time, I interviewed the manager of the personnel department, and collected documents from labor unions. Additional interviews were conducted with the members of an alternative labor movement at this case company (see Appendix A1.1 for the list of interviewees). In sum, these three regulatory reforms nicely cover all aspects of employment relations and all levels of social negotiations in different ways. First, the issues treated in these regulatory changes touch on all three aspects of employment relations, though with different foci. The expansion of non-regular employment deals with the aspects of contract and mobility; the new working-time regulations concern the nexus of contract/effort; and results- oriented labor management system relates Table 1.2 The structure and regulations of employment relations

Contract

Societal: collective bargaining, labor market and labor standard regulations

Organizational: enterprise bargaining and labor management practices

Workplace: control and authority relations

●

●

Different types of employment contract Profiles of wage and benefit Work assignment Expectations on different forms of employment

●

Notion of status

Direction Personnel evaluation

●

Notion of control

Promotion and career formation Assignment allocation and rotation Internal/external

●

Notion of career

●

Labor market regulations Labor standard regulations

●

● ●

Effort Mobility

●

●

●

Working time regulations

●

Labor market regulations Labor standard regulations

●

●

●

●

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to all aspects with a special focus on effort. The interrelations between these three reforms are also strong, and covering all three gives a comprehensive understanding of changing employment relations. Second, the three reforms cover all three levels of social negotiations: societal, organizational, and workplace. The first two reforms deal mainly with societal and organizational-level changes, and the third focuses more on the organizational-level of practices and their relations to control relations at the workplace level. The interrelations between these three levels of regulation are thus also highlighted. The major issues that will be discussed in the book are summarized in Table 1.2. In the next chapter, I begin by portraying the postwar development of employment relations in Japan. Following the historical account, the postwar Japanese employment relations will be analyzed in terms of the aspects of employment relations – contract/effort and mobility – to set up comparative references to estimate the impacts of current reform efforts. The characteristics of social regulation in three levels of negotiation – societal, organizational and workplace – will also be analyzed, and the chapter finally raises the hypothetical framework of the book: ‘reform without labor.’

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2 Employment Relations in Postwar Japan

Introduction The first part of this chapter describes the historical development of the key institutions of employment relations in postwar Japan, focusing on the politics between state, firm and labor unions that made the status of regular (and non-regular) employment. The second part of the chapter looks at the historical development of Japanese employment relations; first, in terms of the aspects of employment relations: contract/effort and mobility by shedding light on the employment structure of the Japanese firm, and then the major characteristics of Japanese employment relations are conceptualized at the end of the section. In the third part, the structure of the regulation of Japanese employment relations will be summarized, and the recent trend in labor relations will be introduced to analyze specific issues of employment and labor markets from Chapter 3.

A brief history of employment relations in Japan The history of postwar Japan starts with a broad attempt to establish ‘democratic’ government and society. The reestablishment of employment relations is a part of this endeavor based on the principles of individual freedom of choice, rights of association, and collective bargaining. The postwar labor struggle and its consequences The reconstruction of the private sector, which had been required to come into line under the state’s wartime policy, was the primary focus of Japan’s postwar economic recovery. The government adopted 17

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a priority production system (keisha seisan hōshiki) for its priorities of iron and coal production, both of which were an urgent necessity in order to restore the socioeconomic infrastructure in the wake of the postwar devastation. The labor market was also in turmoil. The destruction of industry and the returning military personnel were two major causes of labor market chaos. The government could only avoid the social unease caused by this chaos, by trying to supply these extra labor forces to the focused industries of primary production system (Ujihara 1989b). In many of these work sites, such as the iron mill, workers used facilities to produce extra goods after their regular operation to sell on the black market. Given the dire economic conditions, these black market practices were silently accepted, and the work sites became more than just a workplace – more the center of life for the workers (Gordon 1998). The sense of community shared by workers at these work sites was the major resource for the postwar labor movements (Nimura 1987).1 The postwar employment relations that grew out of this economic chaos was designed on the basis of ‘democratic’ principles, distinct from the militant social regime during the war. Various laws were passed to achieve democratic employment relations including the Labor Standards Act (rōdō kijun-hō: hereafter, LSA), the Employment Security Law (shokugyō antei-hō: hereafter, ESL) the Minimum Wage Law, and the Trade Union Law. The rising expectation towards ‘democracy’ and the support by the GHQ, the occupation government, encouraged a significant surge of labor movements between 1945 and 1950, which in some cases even achieved production management by labor (Gordon 1993; Hyodo 1997). Up until 1950, when the GHQ fundamentally reversed its policy to support the establishment of managerial authority, the labor disputes during this period laid the foundations for some key employment institutions (Gordon 1998). The bases of secured employment, seniority wages, and stable and equalized status of ‘employee’ were all established during this period, and characterizes the specific pattern of labor market segmentation. These ideas were, however, not necessarily postwar inventions. According to Gordon, the continuity throughout pre- and post-war employment relations in Japan was the powerful claim by male workers to be treated as full members of the company, and ‘humane’ treatment as the social equals of managers, which was articulated after decades of turbulent relations from the early 1900s (Gordon 1993: 378). And he claims that “this historical context of demands and expectations significantly directed the efforts of workers and managers” after the war (Gordon ibid.: 378). Given such a

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Employment Relations in Postwar Japan

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legacy, through the militant labor struggle mainly between 1945 and 1950, this ‘powerful claim’ attained two concrete expressions: job and wage security and the abolishment of the discrimination against bluecollar workers (shokkō sabetsu no teppai) (Gordon ibid.: 379; Kumazawa 1993: 84–5). Job security and wage security are actually the results of a different, yet strongly interconnected, series of events in these days of labor struggle. For instance, Gordon lists that the cases of JNR (Japan National Railway) and Toshiba disputes confirmed job security, while the case of Densan (labor association of the electric power industry) represents the establishment of wage security (Gordon 1993: 379). The prototype of the so- called nenkō chingin, seniority wage system, is an integrated achievement of these disputes. The idea and the prototype of the seniority wage system can be found in densan-gata chingin (wage system of electric power industry). And it is possible to say that the basic philosophy of the system based on the assumption of job security had a broad influence on the Japanese wage system throughout the postwar Japanese history (Kawanishi 1999; Hyodo 1997; Kumazawa 1997).2 According to Kawanishi, densan-gata chingin is characterized as follows. ●

●

●

●

Densan-gata chingin established two basic criteria: regular wages and non-regular wages. Regular wages are divided into three components: life security (seikatsu hoshō-kyū), competency and ability (nōryokukyū), and seniority/length of service (kinzoku-kyū). Non-regular wages include various allowances. The regular wage is mainly to secure workers’ livelihoods and to stop the uncontrolled expansion of the latter as in the previous systems. Among the three components of regular wages, life security is especially emphasized and is designed to compose 80 percent of the total wage. This part is designed to be a social safety net. In addition to this life security component, there are merit and seniority components, which are limited within 20 percent of total wage. These components are added to consider differences between workers in terms of an individual’s competency and skills. Seniority is treated as the best index to measure skills and competency. Competency is measured by personnel evaluation (Kawanishi 1999: 5–7, translated by author).

This excerpt shows specifically and clearly the objectives of the system. In this system, the wage is pegged primarily to objective items such as age and the length of service. The intended purpose is to secure workers and

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their families with a predictable wage system reflecting the egalitarianism of the day (Kawanishi 1999). In this sense, this wage system is a ‘life-stage adjusted wage system’ rather than the seniority wage system. Contrary to the discussion typically made by economists such as Koike, this wage system was not primarily designed to compensate for the high skills of elderly workers (for example, Koike 1999). This idea of wage and job security based on life-stage adjustment prevailed and carried over to other related systems such as public social insurance system. And, as we will discuss later, the institutionalization of these related systems established the deep foundations of the corporate-centered social structure (Osawa 1993). Another achievement of the postwar labor struggle was the abolishment of discrimination against blue-collar workers. Before the war, white-collar and blue-collar workers were sharply divided, reflecting their separate employment tracks with different wage and promotion systems. Shokuin, white-collar workers who are supposed to be managers, were paid monthly and had a full package of corporate welfare. Kōin, blue-collar workers, were paid daily and had only limited access to welfare programs. This discriminatory approach disappeared with the integration of these two statuses into one called shain, which means ‘employee’ (Gordon 1993; Kumazawa 1993; Hisamoto 1998). This change promised shain, all regular employees, the same wage system and promotion prospects, and achieves the same ‘humane’ treatment of all employees.3 The counterthrust to reestablish management authority at workplaces was comprehensive. The GHQ’s support of the government’s decision to call off the general strike planned in 1947 was the start of the reverse movement. In 1948, Nikkeiren, one of the employers’ associations especially focusing on the issue of labor management, publicized its opinion on the reestablishment of management authority. The revision of the Trade Union Law in the following year helped set aside the agreements on labor participation (Kume 1998: 80–1). Many of the labor rights on managerial decisions were expected not to be renewed and the labormanagement council began to have merely an advisory role (Gordon 1993). The start of the Korean War in 1950, which pushed Japan into the anticommunist front, legitimatized the red purge executed by the Yoshida cabinet. In 1953, a year after the end of GHQ occupation, the USA and Japanese governments cooperatively funded the establishment of the Japan Productivity Center to encourage the productivity movement (Gordon ibid.:376). Encouraged by these activities, in the late 1950s and early 1960s, management started to replace militant ‘first labor unions’ (dai-ichi kumiai) with cooperative ‘second labor unions’ (dai-ni kumiai) (Fujita 1955; Gordon 1993; Kume 1998).

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The economy gradually took off after the start of the Korean War. Although the manufacturing production expanded by around 2.5 times between 1950 and 1954, employment increased just about 10 percent as employers understood that the economy was still volatile and the boom might be temporary. Employers tried to adapt to the volatile but expanding economy by increasing the number of temporary laborer (rinjikō) and increasing flexibility of regular workers in terms of working hours and firm-internal job transfer. This caused friction with labor unions with regard to personnel planning and the requirement of other flexibility measures. Labor unions at that time still had influence on personnel planning, but had begun to accept the flexibility requirements for the sake of the development of firm organizations (Hisamoto 1998). Because of the continued expansion of the economy, the problem of temporary laborers disappeared without causing any further struggles between employers and labor unions. It should, however, be noted that in Hisamoto’s description about the labor disputes at the companies of the chemical textile industry, labor unions ‘tapped the shoulder’ of married women when employers claimed the necessity of personnel cuts (Suzuki 1999; Hisamoto 1998). The start of the institutionalization of the status of regular employee marks the elimination of temporary laborers and women from its ‘membership.’ The later years of the 1950s confirmed the steady economic growth, and the issue of employment was changed from the cleanup of the imperfect employment (precarious employment) to perfect (or full) employment. The Income Doubling Plan (shotoku baizō keikaku) of the Ikeda administration (1960) was designed to achieve that goal, and eventually helped support the rise of the middle class in Japan. This period of rapid economic growth throughout the 1960s was the era of expanding prospects. The institutionalization of the spring offensive (shuntō), started in 1955,4 brought workers steady wage increases, and expanding businesses assured better promotion prospects. Responding to the comprehensive thrust for managerial authority, labor unions tried to focus their efforts on the negotiation of economic redistribution rather than participation in management. As far as it concerns the wage increases, the spring offensive was successful. Until the first oil crisis in 1973, the spring offensive achieved the higher ratio of wage increases than the actual economic expansion (Kume 1998). This institutionalization of the redistribution system of economic expansion had a decisive role in creating a strong middle-class consciousness and the emergence of a mass consumer culture. Buying the three basic electric appliances, called ‘sanshu no jingi’ (three sacred treasures such as the television set, electric washing machine, and electric

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refrigerator, later replaced with color TV, air conditioner, and car) were the symbol of the affluence of the ‘middle-class’ consumer life. Behind the scenes was the gradual draw back of labor unions from workplace decision making. On the one hand, the policy change at Sohyo (Sōhyō), the national center of the labor unions at that time, from political participation to economic rewards enabled the success of the spring offensive. On the other hand, giving economic return was a major strategy of management to legitimatize the second union (dai-ni kumiai) “in exchange for a freer hand to introduce new technology, redefine jobs, rearrange work, and transfer employees”5 (Gordon 1993: 384). The same point is made by Koike (1977) and also by Kumazawa (1997); the measures of flexibility, the seeds of which can be already seen in the 1950s, were fully accepted by workers and firmly institutionalized in this period. The merits employers can extract from the existing labor relations were getting bigger towards the end of the 1960s, and this recognition encouraged the fundamental shift of employers’ attitudes towards life-stage adjusted wage systems. One of the major goals of the movement to reestablish management authority from the 1950s was the abolishment of the densan-gata life-stage adjusted wage system by the introduction of the job-rate wage system.6 However, through the experience of industrial structural change, from the emphasis on heavy and chemical industries to the additional growth of automobile and electric manufacturing, management recognized that unclear job demarcation and flexible job assignments were quite successful (Kumazawa 1997). After giving up the job-rate system (shokumu-kyū), management sought to install the system which broadly emphasized merit and ability by expanding the ‘merit’ component in the life-stage adjusted wage system. In the midst of rapid economic growth and expanding life prospects, workers accepted the process of evaluation and the inequality of income, as long as management decisions were not widely unjust. The new system is usually called shokunō-kyū or shokunō shikaku-kyū, ranking and qualification system. Under this system, wage was still pegged to components such as age and seniority, but workers’ acceptance of the evaluation of hard work, loyalty, and quickness at learning new skills, which Kumazawa calls ‘furekishiburu na tekiō nōryoku’ (the ability to be flexible), brought competition among workers (Kumazawa 1997: 40). The end of the rapid economic growth and belt-tightening management The two waves of oil crises in 1973–4 and 1978–9 marked the end of rapid economic growth. Given the high rise of the cost of resources, companies

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were forced to restructure their businesses; usually called genryō keiei (belt-tightening management). Consequences included the development of the ME (micro electronics) technologies and the emergence of outsourcing services,7 which had strong influences on industrial and occupational structure (Ujihara 1989b; Kumazawa 1997). After the oil shocks, Japanese companies tried to focus more on exports, which in return, brought about the abrupt appreciation of the yen in the 1980s. The Plaza Accord in 1985 accelerated the trend and the subsequent appreciation of the yen after the Plaza Accord immediately resulted in a slump in the export sector (endaka fukyō: high-yen recession). The government responded with a low-interest policy, and companies invested in computer and communication technologies to construct efficient networks of production, distribution and sales. They also invested in further refinement of the ME technologies along with the overseas transfer of production sites. The result was yet another drive of exports in the sectors of auto manufacturing, communications equipment, computer, semiconductor, and other business equipment (Ujihara ibid.; Kumazawa 1997). Japan’s emphasis on exports caused trade conflict in the 1980s and, as the excessive trade surplus began to expand from the early 1980s (see Figure 2.1), was a constant target of criticism from other advanced industrial countries, especially the USA. In 1985, the advanced industrial countries signed the Plaza Accord, an agreement aiming at devaluing the overly strong US dollar. The value of the yen jumped from ¥240 (=$1.00) to ¥150 in 1987. The issue of the exchange rate was not the only target of external criticism (gaiatsu: literally means ‘external pressure’). The USA was troubled with a twin deficit in trade and budget at that time, and was especially anxious for Japan to open up and to expand her domestic market. The issues raised included policies on food imports such as oranges, rice and beef, as well as antidumping policies with reference to semiconductors, and super computers. The Structural Impediments Initiative (nichibei kōzō kyōgi) from 1989 to 1990 was intended to alter Japanese trade customs and institutions rather than adjust the differences between Japan and the USA. Responding to these gaiatsu, the Japanese government also proceeded with its own initiative. Prime Minister Nakasone established the Study Group for the Adjustment of the Economic Structure for International Cooperation (kokusai kyōchō no tame no keizai kōzō chōsei kenkyū kai), and the report, called the Maekawa report, was published in 1986. This report was considered the major reform plan for Japan’s expansion of its domestic market. These external and internal initiatives strengthened the deregulation trend, which surfaced in the 1980s by the privatization

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1,000 (trade balance) 500 (current account) 0 ∆500

1990

1988

1989

1987

1985

1986

1984

1982

1983

1981

1980

1978

1979

1977

1975

1976

1974

1972

1973

1971

1970

(total balance of current account of G7 countries) ∆1,000

Figure 2.1 The comparison of trade surplus: Japan and other G7 countries (hundred million US dollar) Source: Economic Planning Agency (EPA) 1991: 280.

of some major state-owned enterprises such as Nihon Telegraph and Telephone (1985) and Japan National Railway (1986). The oil crises also had significant impacts on labor movements. The increasing legitimacy of the ‘principle of productivity’ started to limit the pay raise at the spring offensive (Kumazawa 1993: 88; Kume 1998: 171), and in turn caused a major rift between the leftist-leaning Sohyo and moderate Domei (Dōmei) lines of the labor movement (Hyodo 1997: 416). Having complained that Sohyo’s policy was inflationary, labor unions affiliated to Domei, mainly from the private sector, started to refrain from requiring substantial pay raises. Instead, they put more emphasis on employment security and maintenance of living standards (Kume 1998: 164). The employment adjustment subsidy (koyō chōsei kyūfu-kin) system introduced by the Employment Insurance Act (koyō hoken-hō) in 1975, for instance, reflects such a strategy. In the midst of the first oil crisis, the system was established to subsidize firms to keep their employees despite the downturn in the market, rather than paying to expand unemployment insurance that might allow layoffs for firms (Hamaguchi 2004). Further, Domei’s affiliates agreed upon a neoliberal policy turn in the 1980s, which appeared as the privatization of the state-run enterprises mentioned above (Hyodo 1997). Domei was closely allied with Nikkeiren, the management association, in this process, and achieved more participation in the policy process (Kume 1998: 256; Gordon 1993: 390). This increasing participation of the moderate group of labor in the policy formation is sometimes evaluated as “corporatism with labor” (Gordon ibid.: 391).8 Having failed to mobilize public support for the ‘strike for the right

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to strike’ (suto-ken suto) in 1975,9 the labor movements in the public sector, affiliated with Sohyo, failed again in their attempts during the battles in the 1980s: the privatization of NTT, JNR, and Japan Tobacco. The weakening labor movements in the public sector significantly damaged Sohyo.10 The growing Domei movement took the initiative to form one national center. This was realized as Rengo (Rengō) in 1987 (Hyodo 1997). The expanding cooperation from labor unions toward the ‘principle of productivity’ made further corporate restructuring possible within businesses, while maintaining employment security and living standards. The just-in-time production system was sophisticated and spread to all industries (Kumazawa 1997). Working time was increasingly used as one of the major tools to trim labor costs (Dore 1986). Dore observed that the easiest solution to trim labor costs among Japanese companies was to reduce working time, especially overtime (Dore 1986: 91).11 When firms face an economic downturn, they cut the amount of overtime instead of firing employees. Even when firms experienced growth, they expanded overtime rather than expand employment.

23 21 19 17 15 13 11 9 7

recession after recession after high-yen the first oil crisis the second oil crisis recession

recession after kin-yû kiki the bubble burst (crisis of financial system)

500–

100–499

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

5

30–99

Figure 2.2 Trend of overtime and business conjuncture by firm size (manufacturing) (hours per month) Source: Monthly Labour Survey*: MHLW 2008c. * The Monthly Labour Survey (maitsuki kinrō tōkei chōsa) is carried out every month by the labor ministry, choosing about 33,000 businesses with more than five employees, out of 1,900,000.

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The graph in Figure 2.2 demonstrates the direct association between the amount of overtime work and the ebb and flow of business conjuncture. The graph is based on reported overtime per month (shotei-gai rōdō jikan), and shows three groups of companies by their size: more than 500 employees, employees between 100 and 499, and ones between 30 and 99. The overall trend is clear; Japanese companies adjust overtime in response to the business conjuncture. Large firms have the strongest correlation between the amount of overtime and changes in business conjuncture compared to smaller firms, even though overtime is declining and with it the differences among firm sizes.12 Intra-(group) firm employment adjustment also became common during this period through the institutionalization of shukkō and tenseki, through which employers can adjust the labor force by transferring workers to other companies, usually to their own subsidiaries (Inagami 2003). Although these practices expanded in the 1960s as labor lending to subsidiary companies that were in need of managers and technicians, the main purpose of the practices began to change to employment adjustment through the periods of oil shocks and high-yen appreciation (Inagami 2003). In addition to the firm-internal flexibility, the use of paato expanded significantly during the period13 (Takanashi 1993). The strong drive towards efficiency required workers to gain an even more flexible attitude towards work assignments. This requirement for workers was deepened from ‘the ability to be flexible’ to ‘the ability to be flexible rooted in lifestyle’ (seikatsu taido to shiteno nōryoku) (Kumazawa 1997: 40). It is the ability to be fully adaptive to the assigned tasks, work environment, rotation, and regional transfer (with their family or, in many cases, alone). Kumazawa argues that the management prerogative in these issues forces workers to adopt a submissive lifestyle to satisfy corporate requirements. The term ‘kaisha ningen’ (company man, who completely dedicates his life to his company) appeared during this period. The personnel evaluation system started to play an important role during this period. The managerial effort was devoted to expanding the merit part to determine wages. By doing so, management sought to draw more effort from workers. The stricter implementation of selection signals the strengthened function of evaluation. It establishes the standard of a good worker, and encourages workers to conform to managerial expectations. This standard was established solely by employers under the managerial prerogative, and some argue that the range of what is evaluated is wider in Japan than, for instance, the USA (Kumazawa 1997, 1998; Endo 1999). Kumazawa cites Nikkeiren’s suggested range to include physical strength, aptitude, knowledge, experience, personality,

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and willingness (Nikkeiren 1969). Endo shows that this range even includes political thought. In his detailed case studies, he convincingly argues how personnel evaluation has been used to discriminate against labor activists (Endo 1999). Personnel evaluation determines the desired quality of labor performance and effort from concrete skills to normative values. Under the managerial prerogative, workers are encouraged to internalize these standards and this internalization completes the shop-floor control. Japanese style shop-floor control enables flexible allocation of workers and encourages a strong commitment toward work assignments.

The characteristics of postwar Japanese employment relations The previous section described the brief historical overview of the development of Japanese employment relations in the postwar period. It introduced the broad trend going back to the effort to establish a ‘democratic’ society, and described the history, focusing on the core dynamics that shaped employment relations. In this section, major descriptive characteristics of Japanese employment relations will be summarized with supplemental discussions referring to the further details of historical development. This section follows the conceptual framework by dividing the summary into the aspects of employment relations, contract/effort and mobility. Contract/effort Contract From the legal perspective, there were only two kinds of employment contracts in Japan until the mid 1980s: non-limited term contracts and limited-term contracts. Companies usually provided non-limited term contracts to workers whom they considered to be ‘regular employees’ (sei-shain) of the company. All other categories of employment fell into the category of limited-term contracts and were ‘non-regular employees of the organization’ (hi-sei-shain). Regular members of the organization, generally called sei-shain in Japanese, are expected to stay in the organization throughout their career as organizational members (see categories A, B and C in Figure 2.3), except for young female workers who are supposed to quit the company at the time of marriage (or childbearing at the latest) (see category D). Non-regular members, hi-sei-shain, are expected to fulfill temporary needs for labor and skills and here there are various forms such as paato (female part-time), arubaito (other

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E

A B

G

F C F

D G

D

G

H

H

Allied firms, Subcontractors

I, J, K, L

External Labor Market

G

Temp. Agency

A. Torishimariyaku (employer) B. Managers, administrators (mostly non-union eligible, some union eligible) C. Male regular employees (union eligible) D. Female regular employees (union eligible) E. Shokutaku (regular employees re-employed as contract workers) F. Tenseki, shukko (transferee: from and to allied companies) G. Haken workers (temporary agency dispatched workers) H. Shitauke, shagaiko (dispatched from suppliers) I. Paato (part-time middle age women) J. Arubaito (student and young part timers) K. Rinjiko, Kisetsuko (temporary labourers, seasonal workers) L. Gaikoku-jin rodosha (foreign workers) Regular ‘member’ employees A, B, C, D, F Non-regular employees E, G, H, I, J, K, L

Figure 2.3 The Japanese employment structure Source: Cited from Kumazawa, M., 1998 [1989]: 263, and modified by the author.

part-time, usually students), keiyaku (contract workers), and shokutaku (reemployed elderly workers as contract workers). According to the Employment Status Survey (shūgyō kōzō kihon chōsa) in 1987, 81.6 percent of all employees were regular employees.14 Especially focusing on the sector of large companies that employ more than 1,000 workers, 89.1 percent of employees were regular employees.15 Further, if we limit the same statistics to just male workers, the figure becomes 97.9 percent;16 nearly all men in large corporations were regular employees. Figure 2.3 visualizes the Japanese employment structure especially focusing on large- company sectors. These two forms of employment, regular and non-regular, are in reality referred to as regular and non-regular ‘members’ of the organization.

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Especially at the large firms, regular employees are the people who have succeeded in becoming members of the firm as soon as they leave school (Dore 1997: 21). Thus, those who are employed in non-limited term contracts are the ‘organizational members,’ and the primary identity of these workers is the membership of the organization rather than occupations or other categories, which gives a particular quality to the other aspects of employment relations for these core regular workers. The regular members of the organizations are selected on the basis of personal qualities, general intelligence and learning ability, and not on the basis of vocational capacities (Dore 1997: 21). Having been selected as organizational members, they are assigned to various tasks, without a clear job description. As we will discuss in the next section, regular members experience rotation within a certain breadth of expertise (Koike 1999). Each of these assignments does not have clear definition. This practice enables Japanese companies to develop functional flexibility. However, taking labor out of market competition through long-term employment also can form rigidity in terms of responding to environmental changes (Dore 1986). As an organizational member, regular employees are expected to take on new assignments in response to these environmental changes. This has long been the alternative to utilizing the external labor market for new skills or unanticipated labor needs. Employee qualities such as loyalty and the ability to quickly learn new skills are especially tested in these situations. The regular employees of firms who are covered by so- called ‘lifelong employment practices’ (shūshin koyō kankō), which are better described as ‘long-term’ rather than ‘lifelong,’ emerged out of the postwar labor struggle. It is not just an agreement between employers and workers; courts support the practice by restricting worker dismissals. Unless companies meet very strict conditions, their chances of winning a case of worker dismissal was slim. ‘Lifelong’ or ‘long-term’ employment for regular workers refers not only to job security, but also to the wage and benefit programs that are bestowed upon the regular employees of large firms. A life-stage adjusted wage system is applied to regular employees, who have full access to corporate welfare programs that include favorable health insurance, retirement allowances, corporate pensions, employee’s welfare facilities, low-interest housing loan and company housing. These programs, not only pension systems, but also retirement allowances, are supported by social security programs and tax exemption. Corporate employees, especially those who are employed by large firms, are allowed to have generous benefits from these programs (Osawa 1993).

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Until very recently, a limited-term contract in Japan meant a contract for less than a year of employment. There are important differences between types of non-regular employment contracts: paato, arubaito (although in many cases, arubaito workers do not conclude formal work contracts), keiyaku, shokutaku, and haken (as we will discuss later as a new form of employment since the 1980s). The boundaries between these categories are clearly defined based on the attributes of workers and their contribution to numerical and functional flexibilities. The largest form of non-regular employment is paato, which literally means part-timers. In 1987, 14.2 percent of total employees were paato workers (18.4 percent total were non-regular workers). Paato workers are predominantly middle-aged female workers. Paato employment started to expand, especially after the oil shocks of the 1970s, and has since been the major form of employment for women after (or during) their childbearing age (Takanashi 2001b). The name paato is nearly synonymous with middle-aged working women, and the actual skills and organizational roles they have may vary. In some industries, such as retail, paato workers play a central role, while in other industries they are in secondary or supplementary roles.17 In the former case, paato workers work as long hours as regular workers. Even the content of their work is sometimes as same as regular workers. This is an exemplary case of the distinctive character of the Japanese labor market segmentation between regular and non-regular employment. Arubaito is another form of part-time work covering workers who are mainly students and young workers. Paato and arubaito (and kisetsukō and gaikokujin rōdōsha18) are employed directly through the local labor market. The category of keiyaku sometimes overlaps with shokutaku. Keiyaku mainly includes those who independently conclude a contract with a firm on the basis of their specific skills, and they are mainly male workers. Shokutaku workers are also employed with a limited-term contract for their specific skills. However in the case of shokutaku, the emphasis is more on the aspect of ‘reemployment’ of the retired personnel of the company with a new fixed-term employment contract. Shokutaku is, in one sense, considered a benefit of ‘lifelong’ employment practices for regular workers, but at the same time, it is a strategic choice for companies to retain necessary skills at a lower wage level. In Japanese enterprise unionism, collective bargaining and union representation do not cover these non-regular workers. As we reviewed in the previous historical discussion, the withdrawal of labor unions from personnel decision making and the establishment of the spring offensive (shuntō) of wage bargaining eventually resulted in the cooperative

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forms of enterprise unionism, in which employers and labor unions each prioritized corporate performance. It is no surprise that many observers of labor relations in Japan note that the interests of both management and labor have been shaped more by the needs of organizational survival than the class theory teaches (Kumazawa 1982, 1993; Hyodo 1997; Gordon 1993, 1998). It is important to note that this is a ‘productivity coalition’ established between employers and regular employees only. Hisamoto calls this coalition ‘mutually trusted labor relations’ (sōgo shinrai teki rōshi kankei) and praises it as a successful conciliation of possible conflicts at work (Hisamoto 1998). Suzuki (1999) argues the opposite. He insists that it is the limit of cooperative enterprise unionism, in which ‘productivity coalition’ is only possible at the expense of insecurity among non-regular workers (Suzuki 1999). Other than these forms of direct employment, there are hidden forms of employment through the practices of labor lending based on interfirm relations. Shukkō (temporary transfers) and tenseki (permanent transfers) are major forms of labor lending that characterizes a specific association between contract and mobility. From the late 1960s, Japanese companies established subsidiary companies to diversify their businesses in new and growing industries. In order to fuel the necessary personnel needs, Japanese companies dispatched their employees, especially managers, engineers and technicians, to these subsidiary companies. In this sense, the practice means a lot for the aspect of mobility too. This form of labor lending became very common during the 1970s. Another form of labor lending, shagaikō (literally, the use of external firms’ workers), has a longer history than shukkō, and it involves a wider network of firms. During the time of economic expansion in the Korean War, Japanese companies started to (re)establish enterprise groups called keiretsu in order to secure stable yet flexible business relationships. Keiretsu relationships typically coordinate hierarchical linkages between large firms and medium and small size companies.19 Medium and small firms in the vertical keiretsu allied companies are called shitauke and ukeoi companies. When cost reduction is necessary, the small and medium size companies in the keiretsu usually carry more of the burden. When personnel reduction is necessary at large companies, their allied small and medium size companies may be expected to absorb the excess labor force. When large companies establish limitedterm projects, small and medium size companies may be called on to lend some workers to the projects, so that large companies do not need to hire extra workers. The workers from small companies who are sent to work at large firms or their clients’ worksites are mainly called shagaikō.

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In return, small and medium size companies can expect continuous business contracts with large companies. At the time of the Korean War, many employers were still skeptical about the prospects for the economy, since the wartime economic expansion could have been just temporary. Heavy industry and the chemical industry, which profited most from the war, relied heavily on shagaikō, or temporary external employees who were dispatched from shitauke or ukeoi supplier companies, to cope with high labor demand (Takanashi 2001a; Matsushima and Hazama 1987 [1960]). Although these practices were partly illegal, these forms of labor lending were constantly being practiced throughout the postwar periods. In particular, the reliance on some suppliers just to supply labor (kōnai ukeoi) became quite common for providing the labor and skills in need without hiring additional regular workers (Takanashi 2001a). Effort Institutions such as company welfare, ‘lifelong’ employment and the fusion of labor representation with company organizations in Japan contribute to a view of employment, which Gordon has characterized as ‘company citizenship’ (Gordon 1985). The social integration implied by the concept of company citizenship signifies the fusion of workers’ interests with managers’, to the advantage of the latter (Kumazawa 1993, 1997). Shire analyzes how company-based socialization merges the identities of ‘social adult’ and ‘company citizen’ so that young employees learn that to accept management goals as their own personal goals is the expression of adult behavior (Shire 1999).20 And this socialization is continual. Under the ranking and qualification labor management system, periodical training programs are organized to socialize workers who will be promoted to the next step in the firm hierarchy to cope with the expectations attached to their new roles. Constant implementation of personnel evaluation helps facilitate the socialization of mature but obedient company citizens (Shire ibid.). The creation of company citizenship historically parallels the establishment of the productivity coalition between managers and regular workers, which signifies the gradual decline of the labor unions’ influence on labor management and workplace control. Given that the aim of the personnel evaluation system is to choose ‘good organizational members,’ its subjective tendency has been clear for decades. The system is not based on job description and does not rely solely on measuring performance. Thus the evaluation system has tended to focus on employees’ personal qualities and contributions as organizational

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members. This tendency can be clearly seen in the specific evaluation criteria, of which there are three: performance, potential, and general attitude (Kumazawa 1998 [1989]; Endo 1999), with work attitudes playing a particularly important role. Given the wide and subjective nature of Japanese personnel evaluations, the socialization effect of the system is quite strong. Endo found that the personnel evaluation has been used to legitimatize discrimination on the basis of gender and political thoughts (Endo 1999). The managerial prerogative over determining any corporate internal mobilities and the fact that leaving the firm is not a realistic option for male regular workers, the personnel evaluation system generates further worker obedience to management, “since workers are under strong pressure to avoid at all costs any kind of behavior that might result in a poor evaluation” (Endo 1994: 79). Shire found that the socialization effect is clear from her detailed analysis of the evaluation criteria and the system of evaluation in terms of gender socialization in a business context (Shire 1999). In her empirical findings, the evaluation criteria cover general work performance and work-related and general attitudes. The criteria of these categories are marked by gendered expectations on workers, and evaluations encourage self-adjustment to management expectations via the methods of evaluation such as self-assessment and management by objectives (Shire ibid.: 88). Since evaluation takes place at least once a year in most companies, the evaluation practices mean continuous socialization of employees. Further, the linkage between self-assessment and future job assignments and employee development “encourage a long-term identification of one’s personal growth with company growth” (Shire ibid.: 88–9). The homogenous ‘company man’ (kaisha ningen) is a result of this socialization. Requiring workers to have a specific disposition complements management expectations concerning functional flexibility in Japanese companies. Kumazawa points out that competition among workers is achieved in terms of a flexible ability to cope with organizational necessities. The skill, according to Kumazawa, that workers eventually have to earn is the ‘ability to be flexible’ (furekishiburu na nōryoku). It is the ability to adjust to the assigned tasks, which emerge from organizational necessities and environmental changes. As the kinds of task vary, what workers have previously learned is less important than the ability to continue learning. The ‘ability to be flexible’ also shapes understanding about the temporal dimensions of work: the understanding of the normal working day and the distinction between work and life. In his study of the reasons for the prevalence of longer working hours of Japanese workers, Ota

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found that the system of personnel evaluation puts pressure on workers to advertise their work effort. This is most typically demonstrated by long working hours, which Ota calls ‘symbolic effort,’: symbolic because it does not necessarily correlate with higher productivity (Ota 1995). Given the wide-ranging and subjective nature of the personnel evaluation system, the small group reputation within ka (the section) or bu (the department) becomes crucial. This is especially true when the evaluation is conducted by direct supervisors, when workers’ performance, ability, attitude, and personality are evaluated in the context of a group, by benchmarking their relative positions in the group. Ota concludes that evaluations in such circumstances encourage competition among workers to show symbolic effort, most typically by working longer hours to demonstrate their dedication to the organization (Ota 1995). Ota’s 2600

Labor force survey Monthly labor survey

2500 2400 2300 2200 2100 2000 1900 1800

Figure 2.4

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1700

Unpaid overtime work (hours per year)

Sources: Labor Force Survey: ILO 2010; Monthly Labor Survey: MHLW 2008c* * The Labor Force Survey (rōdōryoku chōsa) is carried out every month by the Statistics Bureau. This survey chooses about 100,000 individuals from people older than 15 years of age from 40,000 selected households. (see note for Figure 2.2 of this chapter, for Monthly Labor Survey.). The numbers in this figure are calculated as follows: in the Labor Force Survey, the working hour is reported as weekly working hours. Thus, the reported number times 52 can be considered as annual working hours. In the Monthly Labor Survey, the monthly working hour is reported. Here, the reported numbers times 12 is the annual working hours.

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study clearly shows that working-time practices are deeply enmeshed with the social relations of control in the Japanese workplace.21 The existence of unpaid overtime work, which is commonly referred to in Japanese as sābisu zangyō, has been a constant characteristic of Japanese work practices, and it typically shows how ‘company citizenship’ is expressed in the working-time practice (see Figure 2.4). The Labor Force Survey report of overtime work, based on worker selfreporting is consistently higher than the employer reports which form the basis of the Monthly Labor Survey. This significant gap is the best indicator of unpaid overtime, and it constantly shows about 300 hours per year while the overall amount of overtime declined significantly. This practice of unpaid overtime can exist because regulations concerning working time are lax and unenforced. Working-time regulations encourage autonomous problem solving at the organizational level. Reporting shorter working time in official records is a sign of the devoted worker who seriously considers the total cost of the team or section, which, in principle, is a managerial concern (Kumazawa 1997). The seemingly contradictory anecdotal observations, which follow, begins to make sense when one considers that working-time practices are expressions of an aspect of workplace control at Japanese companies. Sometimes Japanese workers do not leave their workplace for as long as their colleagues stay at work (‘symbolic effort’). Sometimes they work late without reporting overtime and thus without overtime pay (unpaid overtime as an expression of ‘company citizenship’). Sometimes, however, they leave the workplace when they still have work to do because of a designated ‘no overtime work day,’ which is a measure of reducing working- time (worker obedience to management). Mobility The establishment of the corporate-centered society, under the circumstances of a restricted external labor market, had significant impacts on the labor force mobility of regular employees. First, the employment security that the labor movement achieved plays a significant role in setting up the pattern of (im)mobility for regular employees. Second, the life-stage adjusted wage system also plays a part. The wage system pegs income increases to anticipated household expenses, related to stages in a normal life course. In addition to wages, additional allowances are given to workers for specific events of life-stage. Consequently, the wage system contributes to ‘normalizing’ the life-course of workers, and it is reported that workers rely on the design of the life-stage adjusted wage system and the welfare contributions for their domestic household planning (Kimoto

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1995; Kyotani 1993). The strongest assumption of this system is based on the gender division of labor in paid and unpaid work. It assumes that male workers are the breadwinners and all other family members, wives and children included, are dependent on the male wage earners. The social and economic advantages of the wage and welfare systems, especially of large companies, came to be considered an ideal for society as it successfully provided affluence and prospects. For men, changing employers is not only rare but also a risk, both to himself and his family’s well being.22 Simply put, regular employees lose the ability to leave the company; an equivalent external labor market option hardly exists. Thus there is structurally no mobility bargain for male workers in the Japanese labor market. Mobility is constrained. This is especially true among the regular workers of large firms, where ‘lifetime employment’ is considered ideal, and interfirm mobility hardly exists. For women, not having a husband was the worst possible scenario since the Japanese labor market was only open to non-regular and peripheral employment options for women. Further, compulsory social insurance does not provide an alternative social safety net. For this reason, Osawa insists that there is nothing worse in Japanese society than being a single mother (Osawa 1993). Thus, since the period of rapid economic growth, life courses have been structured in gendered ways; women tend to be housewives, and men’s career mobility is quite low especially among workers in large companies (Watanabe and Sato 1999). This gendered division of labor peaked at the end of the period of rapid economic growth in the early-to-mid 1970s. Sugino and Yonemura (2000) measured the ratio of women who typically experienced the life- course pattern depicted in the M- curve of female labor participation. 23 They first demonstrate that the expansion of the nonlabor participation rate of females peaked between 1975 and 1980. They also argue that from 1995 the birth cohort of 1951–5 most typically experienced the M- curve life- course. Forty-seven percent of women in this period left the labor market to become full-time housewives. This rate was 42 percent for the older (1946–50) cohort and 37 percent for the younger (1956–60) cohort. The study also confirms that female workers were first employed as full-time employees, and that their reemployment later in life tends to be part-time (Sugino and Yonemura 2000). For men who successfully became regular employees of large firms, their entire career would be spent as such. Koike argues, in his theory of skill formation (chiteki jukuren-ron) that in Japanese companies, workers rotate between a “relatively wide range of assignments within a certain

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specialty” throughout their working lives (Koike 1999: 57). They learn necessary skills by OJT with OffJT as a supplement (Koike ibid.: 25). The required basic knowledge is gained by OffJT, and workers apply this to the real work process with the support of senior workers and colleagues. The accumulation of rotation gives regular employees an indispensable asset, a personal network (Shire and Ota 1998; Kimoto 2002). Frequent rotation develops workers’ skills in a relatively wide category of work, which can be described as a ‘careers.’

Table 2.1 The ranking and qualification system Qualification rank Managerial level

Supervisory level

Grade Name M3

San-yo

M2

Fuku Sanyo

M1

Sanji

6

Fuku Sanji

5

Shuji

4

Fuku Shuji

Entry level

3

Shain 1 kyū

(for university graduates) (for high school and associate college graduates)

2

Shain 2 kyū Shain 3 kyū

1

Definition

Corresponding official title

Minimum Maximum (year) (year)

Chief management

Buchō (department manager) Fuku Buchō (vice Advanced department management, manager) advanced professional jobs Management Kachō (section planning, manager) professional jobs Kachō hosa Advanced (vice section supervision, manager) advanced decision making jobs Supervision, Kakarichō (group decision manager) making jobs Lowest rank Shunin managerial (support jobs of group management) Complex jobs, No official title relatively skilled work Standard jobs Supplementary jobs

3

3

2

2

2

6

1

6

4 or 2

6

Source: Imano and Sato 2002: 55 (translated and arranged by the author).

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This process of career formation is controlled solely by management and can be considered a managerial prerogative. As Koike rightly points out, workers and labor unions have very limited influence in the decision-making process concerning assignment allocation, rotation, and career development (Koike 1977). Viewing the term ‘internal labor market’ as a misconception for describing a firm-internal mobility, Dore calls this practice the “personnel office career deployment system” in order to emphasize the aspect of managerial prerogative (Dore 1997: 24). Thus, the term ‘career’ in the Japanese context is a series of rotations assigned by the personnel department of one firm. While firm-internal horizontal ‘career’ mobility is shaped by management- determined rotation practices, upward or vertical mobility in Japanese companies has been most typically characterized by a ranking and qualification system (shokunō shikaku-kyū), which is also under the strong grip of managerial prerogative. The ranking and qualification system contains two types of ranks: the normal vertical progression through managerial ranks and a detailed system of skill-specific qualification ranks within these levels. Workers climb the closely knit ladder of these two rankings. In a typical case, the organization sets about 10 to 12 skill-specific qualification ranks, five or six to both the managerial and nonmanagerial class workers, which approximate the official titles of the hierarchical organizational ranks (see Table 2.1). Usually, the promotion in qualification ranks is called shōkaku (promotion in rank), and shōshin means the promotion in managerial ranks. Thus, workers in a managerial level in qualification rank may not have the official titles that correspond to that level. In the ranking and qualification system, minimum and maximum lengths of time that workers can stay are set (such as three years for the fastest and six years for the slowest). This system of labor management is based primarily on age group, and, accordingly, provides competition within the group. Vertical mobility is closely related to the effort aspect of employment relations through its close association with the selection process which is accomplished through evaluation. Imada and Hirata detect the patterns of competition which can be observed among white-collar workers in large firms, which can be seen in Figure 2.5. After workers become members of the firm, all workers in the same age group move up the promotion ladder for approximately 10 to 15 years. At this early stage of one’s career, the age component has a stronger influence on promotion prospects. While there is no clear competition during this period, the records of personnel evaluation are gathered

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(Ranking) bucho kacho shunin

(Tournament competition)

(Promotion speed competition) (Seniority)

(Length of service) Figure 2.5

Multi-layered structure of competition

Source: Imada and Hirata 1995: 150.

and accumulated for the decision of the first selection. After this first selection, selection based on work ability is emphasized. Competition is attained by the pace of promotion and competition to pass through the ranks as quickly as possible is essential. Thus, the hierarchical range where this competition occurs is from the entry level managerial position to the level of the section manager. After competition in terms of promotion speed is accomplished, continued competition becomes tournament style to reach the department manager level (Imada and Hirata 1995). The competition system carefully selects those who ‘delay’ rather than the front runners. Takeuchi clarified how this competition system is organized by using the method to make a ‘career tree’ of 67 employees who were accepted by one company in 1966 (Takeuchi 1995). According to the study, until the first selection, only a few fall off in the competition. During the competition relative to promotion speed, competition accelerates. Workers are stratified into fast achievers and slow achievers. Following this, significant numbers of workers gradually drop out of the competition. The fastest group of workers takes 12 years to reach the managerial positions, while the last group achieves this goal after 22 years. Despite the clearly fierce competition, the group-based competition system effectively motivates workers throughout their careers with

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the smallest possible number of workers dropping out from each stage of the competition (Takeuchi 1995; Kumazawa 1997). The treatment of workers who are ‘delayed’ in the competition is an important aspect of ‘long-term’ employment. Dropping out from the competition does not mean that they are discharged from the company. Shukkō and tenseki transfer practices relocate these workers from the parent company to subsidiary companies (Inagami 2003). Accordingly, ‘long-term’ employment practices are maintained within the group of allied companies, especially for workers in the parent company, by securing workers’ continued employment. Summary In this chapter, the historical development of Japanese employment relations was described by seeing employment relations as a socialhistorical construction arising out of state-firm-labor negotiations. After the historical description, the institutional characteristics of societal, organizational and workplace level of negotiation and the three aspects of employment relations are discussed. The model of Japanese employment regulation presented in this chapter is summarized in Table 2.2.

Table 2.2 The characteristics of employment relations in Japan (core regular workers)

Contract

Societal: collective bargaining, labor market and labor standard regulations



●

Non-limited term contract as dominant form Restriction on worker dismissal Spring offensive

●

No job description Seniority and competition on ability

●

Organizational membership (company citizenship)

36 kyōtei (Labor Standards Act, article No. 36 for overtime agreement)

●

Subjective criteria of personnel evaluation Labor force adjustment through working time

●

Organizational membership (company citizenship) Symbolic effort

Internal labor mobility Management prerogative

●

●

●

Effort

Mobility

●

●

●

Strict regulation on mobility Corporate centered social structure

9780230_209084_03_cha02.indd 40

●

●

●

●

●

Submissive attitude on ‘career’

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When we limit the subject to male employees in the large- company sector, the non-limited term contract has been the dominant form of employment with strict regulation on worker dismissal. These workers with non-limited term contracts are employed with no job descriptions as organizational members who are supposed to spend their whole career in the organization. ‘Organizational members’ are expected to take on new assignments that emerge within the organization as adaptations to environmental changes. The wages for the organizational member are designed on the basis of a life-stage adjusted wage system, and the privileged welfare programs are developed to be complementary to the wage system. Although the spring offensive, institutionalized during the period of rapid economic growth, had achieved significant pay increases, competition on ability among workers was widened after the oil shocks and high-yen appreciation. Postwar labor market regulations strictly limited labor mobility. Private job placement and worker dispatching were banned as they were considered feudal exploitation. In addition to the strict regulations, the establishment of the corporate- centered social setting, in which social and economic incentives are favorable for the members of company organizations, deeply structured the life courses of men and women in Japan. Especially for male employees, changing employer is not a realistic alternative. For regular members of the organization, rotation, solely controlled under managerial prerogative, characterizes firm-internal horizontal mobility. This mobility is an important source of workers’ skills. Upward or vertical mobility is shaped by the ranking and qualification system. The system is a complex knit of managerial ranks and skill-specific ranks, and promotion competition is regulated by the personnel evaluation practices. The productivity coalition between managers and regular employees facilitated a specific pattern of social integration called ‘company citizenship,’ which signifies the fusion of workers’ interests with those of the managers, to the advantage of the latter. A submissive attitude by workers towards rotation is one expression of ‘company citizenship.’ The ‘company citizenship’ is achieved through the socialization process, in which personnel evaluation plays a significant role that mainly measures performance, potential, and general and work attitude of the workers. Due to its subjective nature, Japanese personnel evaluation socializes workers effectively to be obedient to the managerial prerogative. The ‘ability to be flexible’ is a product of such socialization. Working-time practices are shaped by this ‘ability to be flexible.’ Given the wide range and subjective nature of the personnel evaluation,

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workers’ performance, ability, attitude and personality are evaluated in the context of a group. Such pressure encourages competition between workers to show ‘symbolic effort,’ most typically demonstrated as working longer. The existence of unpaid overtime work is another sign of the ‘ability to be flexible’ in terms of working-time practices. Reporting shorter working time in official records is a sign of the devoted worker who seriously cares for the cost- consideration of the work team. This practice is only possible under the lax regulation of working time. The LSA allows organizational level discretion, and there is no severe sanction on the violation.

Regulations of employment relations: with or without labor ‘Corporatism with labor’ at work The governance of employment in Japan has been characterized as a variety of corporatist regime, which has a strong decentralized tendency reflecting the tradition of enterprise unionism (Inagami et.al. 1995). It is true that labor relations and labor management practices at the organizational level have had a strong hold in coordinating employment relations. Especially in large firms, the organizational level negotiations have sole control over almost all of the aspects of employment relations, with the exception of wage determination at spring offensive, which is distinctively outlined with the practices of ‘lifelong employment’ (shūshin koyō). However, it does not mean that societal regulations are too weak in Japan: in many areas of regulation, it is actually quite the opposite. What regulative agents usually try to accomplish is to regulate organizational practices in the form of advice and consultation, expecting organizations to show the capability of autonomous problem solving (rōshi jichi) (for example, Schwartz 1998). The regulations on worker dismissal and working time, which were discussed at the end of the previous section, are the representative cases of the regulations emphasizing autonomous problem solving. In the case of worker dismissal, there is no regulation that clearly prohibits worker dismissal. Court awards, however, encourage deliberate interactive processes between employer and worker to build up consent on the conditions of dismissal based on the norms of ‘lifelong employment’ rather than simply decide cases based on the law (Dore 1986). The 36 Agreement, based on the article no. 36 of the LSA that sets out the rules on overtime work, allows each business organization to decide the acceptable amount of overtime work, which is also deliberated at

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organizational level labor relations (Schwartz 1998: 116; Yoroi, Wakita and Goka 2001). What the labor ministry tried to suggest, when excessive working hours were problematized, was to encourage companies to create a culture that allows for workers to take paid (or sick) leave (Morioka 1995). Thus, although the organizational level regulations appeared to have a strong hold on personnel and staffing decisions, it should not be ignored that societal level regulations provide the foundation of such practices in Japan. Societal level regulations of employment relations have been negotiated primarily at the advisory council called shingikai established under the labor ministry. The system of the advisory council was set up by the initiative of the occupation government immediately after the war to avoid the overcentralization of power of ministries and to achieve pluralistic policy making (Schwartz 1998). Advisory councils formed under the labor ministry are a tripartite commission composed of public-interest, employers and labor representatives, most typically seven members from each party (see Table 2.3). Employers and labor unions can nominate their own members to represent them in the advisory council. Public-interest representatives are deliberately chosen by the labor ministry, so as not to be radically opposed to one of each interest group (Schwartz 1998: 128). Due to this selection, publicinterest representatives are usually considered to be close to the government. Some scholars, however, found that the bureaucrats of the labor ministry accepted the importance of coordinating various interests more than the bureaucrats of other ministries (Tsujinaka 1987; Kume 1998). This suggests that public-interest representatives are not simply providing a convenient shield for the ministry in achieving its own policy goals. The role of advisory council is to set its own agenda based upon the agreement of the tripartite members and to deliberate the issues to send to the Diet session (Takanashi 2000:1).24 Since the advisory councils under the labor ministry basically adopt the principle of unanimous vote after deliberations, employment issues rarely become contentious in the Diet session (Kume 2000: Takanashi 2000). ‘Reform without labor’? The historical development of Japanese labor relations points to the gradual disarmament of labor unions and their withdrawal from substantial fields of labor management at business organizations. This poses a question on the ‘corporatism with labor’ argument, although some evaluate the advisory council arrangement as enabling a consensus of

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Table 2.3 The advisory council: the case of the Central Labor Standards Council as of 2000 Public-interest representatives

1

Research Associate, Japan Institute of Labor

2

Assistant Professor, The Sanno Institute of Management President, Japan Crane Association

3 4 (chair) 5

Professor, Faculty of Law, University of Tokyo

Professor, Faculty of Integrated Human Studies, Kyoto University 6 President, Japan Labor Health and Welfare (deputy Organization chair) 7 Professor, Saitama Medical School Worker representatives

1

2 3 4 5 6 7 Employer representatives

1

Secretary, The Japanese Federation of Textile, Chemical, Food, Commercial, Service and General Workers’ Unions Secretary, Japan Association of Metal, Machinery, and Manufacturing Workers Deputy President, Japanese Federation of Labor Unions Deputy President, Japan Commercial Workers Union Confederation Secretary, Japan Chemistry Workers Union Member of Central Committee, National Union of General Workers Japan Trade Union Confederation (Rengo)

3

Department Manager, Department of Personnel and Labor Management, Kobe Steel, Ltd Chair, Committee of Employment, the Chamber of Commerce (President of Japan Building Service, Ltd) Managing Director, IBM Japan Ltd

4

President, Aoki Construction Ltd

5

Senior Director, Nikkeiren

6

Managing Director and Department Manager of the Department of Personnel, Mitsubishi Chemical Corporation Managing Director, National Federation of Small Business Associations

2

7

Note: The table is translated by the author from the government document.

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40 35.4 35

34.4 30.8 28.9

30

25.2

23.8

25

21.5

18.7

20

18.1

15 10 5 0 1970

1975

1980

1985

1990

1995

2000

2005

2008

Figure 2.6 The trend of unionization in Japan (%) Source: Basic Survey on Labor Unions: MHLW 2009d* * The figure is based on the data from Basic Survey on Labor Unions (rōdō kumiai kiso chōsa), conducted by the labor ministry every year in July (based on the circumstances at the end of June). All registered labor unions are included in the survey.

9000

Non-strike

8000

Strike

7000 6000 5000 4000 3000 2000 1000 0 1970 1975 1980 1985 1990 1995 2000 2005 2007 Figure 2.7

The number of labor disputes in Japan

Source: Statistic Survey on Labor Dispute: MHLW 2008d* * The figure is based on the data from Statistic Survey on Labor Dispute (rōdō sōgi tōkei chōsa). The labor ministry requires reports from all the labor unions that had labor disputes with their employers. Information is collected every month, and an annual report is published.

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wide possible interests in the policy process (Takanashi 2000; Kume 1998; Tsujinaka 1987). There are however some facts that question the thesis of ‘corporatism with labor.’ First, it is possible to point out the decline of labor union organizing in Japan. Figure 2.6 shows the decline of unionization from 1970. The organization rate was 35.4 percent in 1970. By the start of Rengo, it was only little more than 25.2 percent by 1990. It continues to decline, and it marked a record low of 18.1 percent in 2008. These numbers show that the ‘representation’ of worker is, in reality, quite limited. Second, the cooperative tendency of enterprise unionism is clearly manifested by the declining number of strikes at the organizational level (see Figure 2.7). Having peaked in 1975, right after the oil shocks, the number of labor disputes has constantly declined. The number of participants in strikes declined from about 4.6 million in 1975 to 54,105 in 2007 when there were only 156 strikes nation-wide. 25 The growing Domei movement that was said to have achieved ‘corporatism with labor’ was actually a sign of the successful taming of the labor union movement. The historical period covered in this book overlaps with the time that Rengo succeeded the Domei movement and seems to show the taming of labor, especially at organizational level. The deregulation movements that emerged at the societal level in the mid-1990s were also the employer- led initiatives to liberalize and to deregulate employment relations. The Administrative Reform Committee (gyōsei kaikaku iinkai: hereafter, ARC) was established by the Murayama coalition administration (Social Democratic Party and Liberal Democratic Party) in 1994. The Special Committee on Deregulation (kisei kanwa shō- iinkai) was founded in April 1995. The ARC was chaired by Iida Yotaro, 26 the vice chairman of Keidanren, the most influential employers’ association. The Special Committee on Deregulation was first headed by Shiina Takeo, the Chairman of IBM Japan, immediately followed by Miyauchi Yoshihiko, the CEO of ORIX Corp. Miyauchi is an entrepreneur and one of the most radical deregulation advocates of the day, who has continued to serve as a chair for subsequent deregulation committees (see Table 2.4). These deregulation committees usually did not include any union representative (with a few exceptions in the early committees). It is also important to note that, as Iida admits, 14 observers for the Special Committee on Deregulation were chosen from the group of people

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Table 2.4 The list of deregulation committees since 1995 Month/ year

Deregulation committee

4/1995

Special Committee on Deregulation, Administrative Reform Committee (gyōsei kaikaku iinkai kisei kanwa shōiinkai) Deregulation Committee (kisei kanwa iinkai) Deregulation Committee (kisei kaikaku iinkai) Council for Regulatory Reform (sōgō kisei kaikaku kaigi) Council for the Promotion of Regulatory Reform and Liberalization (kisei kaikaku, minkan kaihō suishin kaigi)

1/1998

4/1999

4/2001

4/2004

Cabinet

Chairperson

Murayama (Social Democratic Party and Liberal Democratic Party)

Shiina Takeo (Chairman: IBM Japan) Miyauchi Yoshihiko (Chairman: ORIX corp.)

Hashimoto (LDP)

Miyauchi Yoshihiko (Board Chairman: ORIX corp.)

Obuchi (LDP)


Koizumi (LDP)


Koizumi (LDP)


Source: The table is constructed by the author from various government documents.

who were strong advocates of deregulation.27 Table 2.5. shows examples of membership composition from the Deregulation Committee (kisei kanwa iinkai) in 1998 and Council for Regulatory Reform (sōgō kisei kaikaku kaigi) started in 2001. Both committees are chaired by Miyauchi. A labor representative still holds a chair in the Deregulation Committee, but it certainly does not

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48 Transformation of Japanese Employment Relations Table 2.5 Members of deregulation committees, samples from 1998 and 2001

1998

Deregulation Committee

2001

Council for Regulatory Reform

Name

Title

Name

Title

Miyauchi Yoshihiko, Chair

Board Chairman, ORIX Corp.

Miyauchi Yoshihiko, Chair

Board Chairman, ORIX Corp.

Suzuki Yoshio

CEO, Asahi Research Center

Ikuta Masaharu

Board Chairman, Mitsui O.S.K. Lines, Ltd.

Iwata Kikuo

Professor of Economics, Sophia University

Okutani Reiko

CEO, The R, Co. Ltd.

Noguchi Hiroya

Vice Secretary General, Rengo

Kanda Hideki

Professor of Political Science, University of Tokyo

Makino Shojiro

Vice Chairman, Polyfibron Technologies, Inc.

Kono Eiko

CEO, Recruit, Co. Ltd.

Miwa Yoshiro

Professor of Economics, University of Tokyo

Sasaki Kawori

CEO, ewoman, Inc.

Yoshinaga Michiko

Author

Suzuki Yoshio

CEO, Asahi Research Center

Seike Atsushi

Professor of Economics, Keio University

Takahara Keiichiro

Board Chairman, Unicharm Corporation

Hatta Tatsuo

Professor of Economics, University of Tokyo

Murayama Rie

Managing Director, The Goldman Sachs Japan, Inc.

Mori Minoru

CEO, Mori Building Co. Ltd.

Yashiro Naohiro

President, Japan Center for Economic Research

Yonezawa Akinori

Professor of Computer Science, University of Tokyo

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represent one third of the committee such as shingikai advisory council. In the Council for Regulatory Reform, there is no labor representative advisory council. There are three characteristics with regards to the membership composition. There are representatives from: 1) the independent (non-firm-group) sector of companies (such as Mori Building, UniCharm and Goldman Sachs), 2) newly emerging sectors of business (such as personnel services in the cases of The R and Recruit), and 3) liberalization/deregulation advocates. All the stories this book picks up deal with the rise of these employerinitiated employment reforms. The reforms that occurred chronologically parallel to each other include: 1) the creation of new employment forms, 2) the establishment of new working time regulations under the Discretionary Work System, and 3) the introduction of the resultsoriented labor management system. Chapter 3, the first empirical chapter, examines the rise and the impacts of the movement on the organization of labor market in Japan.

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3 Political Segmentation of the Labor Market: The Establishment and Expansion of New Employment Forms

The employers’ initiative for labor market reform The sudden collapse of the asset-inflated economy in 1991 (usually referred to as ‘the burst of the bubble economy’) was the start of the period of low growth, or sometimes even shrinking, economy in the 1990s and in the 2000s. The crash of stock and land markets caused a serious credit contraction, by which business investment was radically decreased. The following period is often described as the ‘lost decade’ mainly referring to the lack of economic growth. Figure 3.1. shows the postwar trend of the rate of economic growth in Japan. The first oil shock reveals the end of the period of rapid economic growth. The following period shows significantly lower economic growth, although it is still higher than most of other advanced industrial societies. This was achieved in the midst of crises such as the end of Bretton Woods Regime, by which the yen was allowed to float, and the second round of oil shock. On the one hand, the competitive strength that Japanese companies showed was praised as ‘Japan as No.1’ during this period, but on the other, Japan’s excessive trade surplus was starting to be criticized. The end of this period came with the burst of the bubble. It clearly marks the start of a period of economic stagnation, and Japan even experienced the shrinkage of her economy several times during this period. Japanese companies used to achieve numerical and functional flexibilities in a very specific arrangement of employment institutions. However, in the wake of the economic downturn, Japanese employers 50

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Political Segmentation of the Labor Market

51

14.0 12.0 10.0 average 3.8% (1974–1990)

8.0 6.0 4.0

average 9.1% (1956–1973)

average 1.1% (1991–2008)

2.0

(2.0) (4.0)

1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

0.0

Figure 3.1 The rate of economic growth in Japan from 1956 to 2008 (GDP) (%) Source: System of National Accounts (SNA): Cabinet Office 2009* *

Prior to 1980, the numbers are based on 68SNA (thereafter, they are based on 93SNA), and the figures after 1995 are calculated based on the chain-linking method.

began to see the existing employment system as a burden. In December 1993, the year Japan experienced negative growth for the first time after the first oil shock in 1973–4, Nikkeiren1 organized a study group that reexamined the foundations of ‘Japanese management.’ The study group’s report was published in 1995 as New Age Japanese Management (shin-jidai no nihon-teki keiei) that proposed the future direction of the employment system in Japan. The following statements summarize the employers’ understandings about environmental changes and the agenda they wanted to set. ●

●

●

The transition to an era of low economic growth directly impacts on the supply- demand structure of labor markets. Although it is not realistic to expect high-rate growth, it still is necessary to maintain some growth to keep and create employment. Under the circumstances of low economic growth, it is inevitable to have excessive labor in the short term, especially in the white- collar sector and service sector. It is necessary to facilitate corporate restructuring in order to revamp high cost structure. By informatization and systematization, it is also inevitable to have excessive labor, particularly in the whitecollar sector.

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52 ●

●


Since there will be excessive labor in a shrinking manufacturing sector and a labor shortage in growing new industries and occupations, it is necessary to facilitate labor mobility between the sectors and occupations. High appreciation of the yen and rising Asian economies highlight the high employment costs in Japan and cause the hollowing out of industry that creates further excessive labor in Japan. (Nikkeiren 1995: 21–2)

The core of the proposal shown in the report is basically the strategy to diversify employment at firm organizational level and calls for regulative reforms to support such a strategy. The strategy divides the workforce into three groups and discusses differentiated labor management practices for each of these groups (see Table 3.1). With this new strategy, employers detach professional and flexible employment groups from the long-term employment group. Workers in the long-term employment group are still employed in unlimited-term contracts and have full access to corporate welfare programs (while the

Table 3.1 Nikkeiren’s employment diversification strategy

Work contract

Target workers (skill/career expectation) Career

Wage system

Retirement / pension

Long-term employment group

Unlimitedterm contract

Managers and careertrack workers (in clerical and technical divisions)

Promotion (titles) and advancement (ranking and qualification)

Monthly/ annual salary, ranking and qualification, base-up

Contributionbased retirement allowance/ lifelong comprehensive package by employer

Professional group

Limitedterm contract

Professional divisions (planning, sales and R&D)

Achievement evaluation

Annual salary, results-based, No base-up

Not applicable/ not provided by employer

Flexible employment group

Limitedterm contract

Clerical, technical sales works

Transfer to career track

Hourly salary based on job description, No base-up

Not applicable/ not provided by employer

Source: Adapted and translated from Nikkeiren 1995: 32.

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workers in this group are designed to be under pressure from the resultsoriented labor management system). Workers in the other two groups are anticipated to be employed with limited-term contracts and limited access to welfare programs. Workers in the professional group are hired on an occupational basis, and are intended to be assigned to divisions such as planning, sales and research and development. The performance expectations are purely based on results. Workers in the third group are hired by job description, and are to be assigned to clerical, technical and sales tasks. They are paid an hourly wage. To achieve this new flexible employment strategy, in addition to the reform efforts at organizational level, employers claimed the liberalization and deregulation of the private job placement and the temporary dispatching work system in order to facilitate labor mobility (Nikkeiren ibid.: 26–7, 95–6). The report was the direct trigger that initiated the era of reform. It was a major manifestation by employers to reform Japanese employment relations, which was also a part of the reform process underway since the mid-1980s. It needs to be located in the context of the historical development of Japanese employment relations, and it is also necessary to understand how other major actors such as labor unions and the state understood the situation and how they reacted to the employers’ initiative. To pursue these goals, this chapter starts from the detailed historical description about the ways the numerical and functional flexibilities are achieved by the coordination of employment contracts and labor mobility in Japan as a result of state-firm-labor politics. Based on the historical development, the employers’ reform initiative will be situated in the politics from the late 1980s focusing on the establishment and revisions of temporary dispatching work, the liberalization of job placement, and the expansion of the limited-term contracts. Finally, the chapter will evaluate the impacts of these reforms on the structure of labor market segmentation, organizational practices and the changes of employment relations.

Social organization of labor markets in the postwar period The comparative strength of ‘flexible rigidities’ From a comparative perspective, the Japanese labor market is categorized as one of the most strictly regulated, especially with regard to the difficulty of dismissal (Miura 2001a). It is commonly argued that taking labor out of market competition through long-term employment introduces rigidity against industrial adjustments to new activities and sectors. However, as Ronald Dore put it as ‘flexible rigidities,’

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Japanese employment relations developed numerical and functional flexibilities through specific combinations of contracts and mobility. Flexibilities emerged out of largely restrictive regulations of the external labor market and the regime of organized mobility within business organizations based on the lifetime commitment by regular employees. This institutional arrangement is a result of the historical developments of state-firm-labor politics with regard to labor market regulations and the welfare- employment arrangement including collective bargaining and the control of demand/supply of labor. These two developments had influence with each other on the development of the institutional arrangement of ‘flexible rigidities.’ Restricted external labor mobility The restrictions of the external labor market were established during the postwar reconstruction efforts of the society under the frame of ‘democratization.’ The occupation government tried to eliminate the labor supply business organized by ‘labor bosses’ (Takanashi 2001a). Since labor bosses dispatched their own subordinate workers to other employers and earned brokerage commissions, private temporary agency work was seen as a feudal practice and prohibited by the ESL. 2 The ESL only permitted public job placement except for the ones provided by schools, trade unions and a limited number of occupations. 3 The LSA Article No. 6 also prohibited such forms of intermediary exploitation and forced these labor bosses to become regular employers. The Japanese Public Job Placement Agency (shokuan, or shokugyō antei- jo) was set up under the strong initiative of GHQ, and through this system, workers were placed in the expanding industries by the policy of priority production system of the late 1940s and the 1950s (Ujihara 1989b). Although the public job placement service became less important afterwards, the job placement function provided by schools, especially high schools, became one of the representative cases of regulated labor markets (Rosenbaum and Kariya 1989).4 The concern over feudal practices by labor bosses also put restrictions on the regulations of limited-term contracts, which was only permitted for a one-year duration to avoid unduly severe constraints by labor bosses. Thus it was only after the oil shocks in the 1970s that paato, a dominant form of limited-term contract, became important to fill the needs of flexible employment (Takanashi 1993). During this period, Japanese firms were forced to execute their first serious restructuring

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efforts in the postwar history, which were viewed as a belt-tightening effort (genryō keiei). As mentioned, paato workers are primarily middleaged female workers who could be employed from local labor markets, and are considered suitable to fill the needs of numerical flexibility. For the needs of specific skills, workers are employed in other forms of limited-term contracts such as keiyaku/shokutaku. As described in Chapter 2, the employment security of regular employees is one of the major results from the postwar labor struggle, and it turned out to be the core of Japanese employment relations. Although it is the direct result of the labor relations, the state’s roles should not be ignored in maintaining the practice. Chapter 2 points out the role of state subsidy in the corporate welfare programs. In addition, it is also important to note the role of judicial ruling on employment protection. Superficially, as far as the laws are concerned, there is no strict restriction on worker dismissal in Japan. Article no. 627 of the civil law clearly provides the basis of the right of dismissal for employers. The LSA also does not prohibit worker dismissal except in some cases such as dismissal during sick or maternity leave (Ikezoe 2002: 1). However, in reality, the accumulated case law places strict restrictions on worker dismissal, and is called the doctrine of abusive dismissal (kaiko-ken ran-yō hōri) in conformity with the practices of ‘lifelong employment.’ The decisions of lower courts resulted in a body of law governing worker dismissal. The Supreme Court case of Nihon Shokuen Seizō in 1975, set forth the terms of the doctrine, and thus the standard by which the cases of worker dismissals are judged (Ikezoe 2002, Nogawa 2004). In this way, throughout the period of rapid economic growth, worker dismissal has become strictly regulated in Japan by putting emphasis on the norms and practices of ‘lifelong employment.’ Flexible rigidities Under these circumstances, Japanese companies developed some unique solutions to achieve numerical and functional flexibility in their workforces using various types of organized mobility of regular employees. The basis of the organized mobility is an interfirm network among Japanese companies. From around 1955, after the economy took off due to the Korean War, Japanese companies started to form enterprise groups called keiretsu, a distinctively Japanese practice of quasi- organizational structure among companies, in order to have stable and flexible business relationships. 5 Using the network, Japanese firms developed practices of labor lending (without a labor contract)

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which contributed to attaining required skills and dealing with labor adjustment. Subsidiary (ukeoi/shitauke) companies lent workers to the main companies when needed.6 Matsushima and Hazama reported in 1960 that there were as many ukeoi workers as regular workers in one plant of the petrochemical industry (Matsushima and Hazama 1987). This is called kōnai ukeoi. Some of the kōnai ukeoi workers who were dispatched to client companies worked under the direction of the clients. This practice was illegal, but the practice survives due to the lax enforcement of regulations.7 Ukeoi was extended in the manufacturing industries in the 1970s and 1980s, as was kōnai ukeoi. The expansion of the computer industry relied on the practice (Takanashi 2001a). Another form of labor lending that appeared in the 1960s is shukkō. Towards the end of the period of rapid economic growth, Japanese companies needed to expand their businesses in a new direction to cope with the industrial structural changes from heavy and chemical industries to auto and electronics manufacturing. To cope with such changes, Japanese firms deployed regular employees across sections through the practices of job rotation and job transfer. However, when firms expanded their business fields by establishing subsidiary companies, they sent necessary workers, especially managers and engineers, to those subsidiary companies to insure that they had sufficient resources for the task (Inagami 2003). Thus, the practice of shukkō started as a dispatching of technicians/engineers and managers to subsidiary companies from parent companies. In the case of shukkō, the workers are still employed by the parent company, and just perform work for the subsidiary. However, there emerged an extended form of shukkō in the midst of the struggle to survive the oil crises and its aftermath, which is called tenseki. In the case of tenseki, the workers are officially transferred to subsidiary firms with lower contract terms. During the 1970s and especially in the 1980s, shukkō and tenseki became the main measures of personnel adjustment by Japanese companies. Inagami reports that at Toray, a textile giant, management and trade unions agreed under the circumstances of oil shocks not to execute any layoffs but to use external personnel, limit the new hires, and facilitate (group) internal labor transfers to trim down the labor force (Inagami 2003: 21–3). Some employees were relocated to the subsidiary companies that were established in growing industrial fields as shukkō workers, and later in the 1980s, they all completely transferred to the subsidiaries (Inagami ibid.: 23–4).

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Political Segmentation of the Labor Market Table 3.2 1956 (%)

57

Regular/non-regular composition of the Japanese labor market from

1956 1959

1962

Regular 88.93 90.27 92.19 Non11.07 9.73 7.81 regular

1965

1968

1971

1974

1977

1979

1982* 1987

92.17 92.98 92.69 92.21 90.28 88.92 84.23 81.59 7.83 7.02 7.31 7.79 9.72 11.08 15.77 18.41

Source: Employment Status Survey**: Statistics Bureau 1959, 1960, 1963, 1966, 1969, 1972, 1975, 1978, 1980, 1984, 1988. * From the 1982 survey, employment categories based on how they are called at workplaces (such as paato and keiyaku) became available. Numbers until 1979 are based on the terms of contract, and workers with less than a year of contract are categorized as ‘non-regular’ employees in this table. ** The Employment Status Survey (shūgyō-kōzō kihon chōsa) is conducted every five years by the Statistics Bureau. The survey is based on the method of the National Census. For instance, The Employment Status Survey in 1997 was conducted by choosing 29,000 areas based on the National Census. About 430,000 households were chosen in these areas, and about 1,100,000 people were included in the survey. The results are statistical estimations. In this survey, the categorization of the non-regular employment relies on the local customs of respondents (and their workplaces).

Until the end of the rapid economic growth, Japanese firms developed a system of organized mobility among regular employees inside the firm and firm network in order to achieve numerical and functional flexibilities. That they did not rely on the external labor market is clear from the statistics about the regular and non-regular composition of the Japanese labor market during the period (see Table 3.2). The percentage of non-regular employees declined from the 1950s to the 1960s.8 In 1968, it was only about seven percent of the total employees. Given the low unemployment rate during this period (about one to two percent throughout the 1960s), it was only a small part of precarious employment that the labor ministry recognized as a problem for the Japanese labor market. The impact of the oil crises is clear, and the expansion of non-regular employment seems to be the rising number of paato that became an important source of flexible employment. Initial expansion of the external labor market By the early 1990s, before the low-growth era, the demand for flexible employment grew for new and skilled lines of work connected with technological changes and internationalization. Various forms of worker dispatch grew to meet the demand. As noted earlier, kōnai ukeoi, partly a system of worker dispatch, was built into the vertical keiretsu

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relation, entrenched in the Japanese employment system, in order to utilize certain skills and ensure flexible employment due to the lax application of the ESL. Specialized dispatching agencies emerged as new players in the labor markets. Manpower Japan was the first that came to Japan in the 1960s, and many dispatching agencies, which became the leading firms of today, were established in the 1970s.9 They all started their businesses to dispatch clerical workers, utilizing female workers who sought the opportunity to return to the labor markets.10 Above all, when the labor ministry’s working group studied illegal dispatching, they found that the practice was common in occupations such as building maintenance, engineering works, information technology, clerical work and some other relatively skilled lines of work (Takanashi 1985, 2001a). With the expanding use of illegal dispatching, the government was unable to ignore the situation. The Administrative Management Agency (gyōsei kanri- chō) conducted an audit of the activities of the labor ministry and, in 1978, gave them an admonition for the illegal dispatching. The labor ministry immediately organized a study group of five scholars followed by, in 1980, a tripartite research committee. The debate between labor and employers was so contentious that a period of a few years was necessary to reach a compromise. Labor unions were opposed to the establishment of the system of worker dispatch, primarily due to its potentially threatening effects on the employment security of regular workers by replacement with temporary workers, rather than any concern over the employment conditions of temporary workers (Hamaguchi 2004: 68–9). The result is the Temporary Dispatching Work Law (rōdōsha haken-hō: hereafter, TDW Law) enacted in 1986,11 which legalized private temporary agency work under the recognition that the Japanese employment relations were modernized enough12 (Takanashi 1985: 122; Takanashi 2001a). Reflecting labors’ opposition and the labor ministry’s commitment to the policy to protect employment of regular employee13 (Hamaguchi 2004: 69), the new system was designed to create external labor mobilities under strict regulations. The TDW Law approved only thirteen relatively high-skilled and specialized occupational areas (the positive list system: a series of revisions added 13 occupations until 199714) for a very limited-term (one year) of dispatch. At the same time, however, it is important to note that the new system contained strongly marketized elements. The new law established two types of worker dispatch; one is the employment-type (jōyō-gata) by which dispatching workers have continuing employment with temporary help agencies (hereafter, THA),

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but in the registered-type (tōroku-gata) workers are only employed for the term of the dispatch. The initial expansion of the external labor market is characterized by the legalization of the private temporary agency work, which meant the liberalization of the business after forty years of state control. It was to capture the temporary worker dispatching practice that already existed informally as a particular form of kōnai ukeoi and a dispatch of relatively skilled clerical workers. It prevailed in various industries during the period of rapid economic growth responding to the rise of new industries and internationalization, and it had been overlooked by the lax application of the ESL. The establishment of the TDW Law put the practices under legal control, which also forced private THAs to become responsible employers. This arrangement of labor mobilities is however clearly located external to the traditional sphere of organized labor mobilities.

Deregulation of the labor markets Policy shift Changes in policy environment After the burst of the bubble economy and in the following economic stagnation employers started to recognize that traditional measures of flexibility had reached the limit of their ability to cope with the environmental changes. Tenseki started to have more importance than shukkō, and the number of workers to whom companies would like to apply these practices began to exceed the capacity of the company group, as the applicable age of these practices was becoming younger (Inagami 2003: 37–8). In addition, these practices were considered not suitable to fulfill the personnel needs of skilled workers, such as IT engineers, thus companies were under pressure to take further measures to reduce and diversify employment. It was in this context that Nikkeiren published the report, calling for collective efforts of reform that involve regulative changes. Employers claimed that external labor market mechanisms were necessary to achieve smooth labor mobility of the excessive labor force caused by its own restructuring efforts and to use workers with appropriate skills to cope with the emergence of new business fields. The government’s concern has been for labor market mismatches and unemployment rates. The unemployment rate in Japan barely reached 2.5 percent at the end of the 1980s. However, it started to rise after the burst of the bubble economy, and it reached a record high, in postwar

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Transformation of Japanese Employment Relations 7 6 5 4 3 2 1 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

0

Figure 3.2

The trend of unemployment rates from 1970 to 2004 (%)

Source: Labour Force Survey: ILO 2010.

history, of 2.9 percent in 1995 (and it continued to rise afterwards, see Figure 3.2). The ministry analyzed labor market policies in the USA and Europe, and concluded that it would take a middle position to avoid high social inequalities due to high flexibility (USA) and the long-term unemployment due to high labor protection (Europe) (MOL 1995a: 15). The government on one hand tried to solve the problem by facilitating the traditional mechanisms of labor mobility. It began with a series of special support plans within the framework of ‘labor transfer without unemployment’ (shitsugyō naki rōdō idō) for companies trying to facilitate labor transfers by shukkō and especially tenseki in the form of monetary subsidizing. This commenced in 1993 as a part of a comprehensive economic revival plan, and continued eleven times until 2002.15 These measures basically established subsidiary funds for companies in various situations, who were able to use the subsidies when they employed workers who were discharged by previous employers. These subsidies also included training funds and investments in information systems to dissolve employment mismatches. On the other hand, deregulation of the temporary agency work became the central agenda to strengthen the external labor mobility and facilitate the relocation of workers to new areas (MHLW 2001a). The White Paper on Labor in 1994 points to the necessity of the arrangement that achieves “smooth transfer of workers outside the firm and firm network” (MOL 1994a: 28, 207) especially for middle-aged and elderly workers in addition to the traditional Japanese employment practices. The revision of the TDW Law in 1994 reflects the shift of labor market regulation in

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Japan. It was the complete deregulation of the temporary agency work lifting occupational limitations for workers above sixty years of age adopting the negative list system (only the occupations that are not permitted are listed). This measure was expected to expand employment opportunities for elderly workers, especially after retirement, relocating those who are still capable of work (Takanashi 2001a:178–9). The emergence of the deregulation committees changed the political balance between actors and the policy process of employment and labor market issues. Accordingly, their emergence accelerated the deregulation of Japanese labor markets. During most of the postwar period, advisory council (shingikai) set their own agenda based on the agreement of the tripartite members (Takanashi 2000: 1). The deregulation committee emerged as a new actor in this process. As mentioned in Chapter 2, the Administrative Reform Committee was founded in December 1994, and the Special Committee on Deregulation was set up under ARC in April 1995. A series of proposals from the deregulation committee were included in the Cabinet’s decisions (kakugi kettei), and they started to function as the agenda setters for the following discussions at advisory council (Miura 2001b: 505). Although their proposals in 1995 and 1996 were not fully reflected in the 1996 revision of the TDW Law, the influence of the deregulation committee on the contents and the process of the revision is recognized by various authors (Takanashi 2000; 2001a: 180, 189; Araki 1999; Nakamura 2001). As their political power was strengthened by subsequent administrations, the trend of deregulation was accelerated. There was another level of regulation that was changed to support the political climate toward deregulation. The influence was from the international arena. In this case, it was the revision and the ratification of the ILO treaty. In 1997, after three years of deliberation, the ILO adopted ILO Convention no.181,16 which is the revised version of the ILO Convention no.096 enacted in 1949.17 The revisions and the subsequent ratification of the ILO Convention became an important resource for those who sought deregulation of the private labor market intermediary system. The liberalization of private job placement in 1997 and 1999 benefited particularly from this. The first revision was of the ministerial ordinance of the ESL. This revision loosened restrictions to start up business, to charge expenses, and switched the positive list of the applicable occupations to the negative list, including clerical work, sales,18 service,19 security, agriculture and fishery, transportation and communication, and manufacturing and construction. 20

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The revision (and the ratification) of the ILO Convention led the ministry to form the Study Group of the Employment Law (koyō hōsei kenkyū-kai) headed by Koike Kazuo21 and Sugeno Kazuo22 in 1997, and the group made a report proposing labor market reorganization in the following year. The report claims that the proposed reforms are to cope with the industrial structural changes, international competition and the change of the worker consciousness encouraged by the ratification of the ILO Convention 181. To achieve the goals, it states that the reorganization of the labor market should be based upon “market mechanism(s) through the private intermediate agencies with appropriate regulations on them” (MOL 1998a). Radical deregulation After the revision in 1996, the labor ministry immediately started preparations for further revisions due to pressure from the deregulation committee that required them to achieve a ‘negative list’ of the temporary dispatching work system with a time limit on discussions at advisory council (Takanashi 2001a, p. 190, Miura 2001b, p. 498). It was discussed at the Special Committee on Private Labor Market Intermediary System in the Central Advisory Council on Employment Security (shokugyō antei shingikai minkan rōdōryoku jukyū seido shōiinkai). Labor representatives opposed the radical deregulation of the system. The discussions however, were not about the rights or wrongs of deregulation of the system, but on the details of the implementation plan of the negative list system. For instance, the largest issue at the advisory council was whether the system was applicable to manufacturing lines. Here again the rationale behind labor’s opposition was the concern over the replacement of regular employees with temporary workers. Since the advisory council could not reach a compromise, initiatives by public representatives with the ministry behind them started to gain weight in advisory council decision making, although overall, the importance of advisory council was declining. Faced with the peremptory demand from the deregulation committee, the labor ministry changed its attitude on the mechanisms of labor mobility. In 1999, the annual White Paper on Labor sought to explain the ministry’s changing attitude towards employment security. For the first time, the labor ministry expressed little hope in the role of traditional firm-internal labor mobility practices to curb the historically high unemployment rate (standing at 3.8 percent in 1998). With regard to the balance between the benefits and deficits of longterm employment commitments, the labor ministry pointed out that

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employment security may even have been interfering with the ability of firms to adapt to the current economic changes (MOL 1999a: 242). This White Paper particularly suggested improving employability of workers, organizing labor markets for paato and temporary agency (haken) workers by the closer coordination between public placement agencies and private personnel placement service firms and improving the safety net for the unemployed, including retraining programs (MOL 1999a: 5, 247). The revision of the TDW Law and the ESL was passed by the diet in 1999 (enacted in 1999), and it was a turning point in the history of labor market policy (Suwa 23 2000: 9; Mawatari 2000). It radically deregulated the temporary dispatching system, and removed the public monopoly of job placement. The temporary dispatching work system was essentially deregulated except for a few occupations (the negative list). With respect to the length of dispatch, three years of dispatch were accepted for 26 relatively high-skill occupations, with a one-year limitation for all other occupations. After the revisions of this year, the temporary dispatching work system became quite complex. Simply put, there are two systems in one. One is the original 26 occupations which can be defined in terms of the relatively high skills required for workers. The term of dispatch for these workers is up to three years, while for all other occupations except for those on the negative list it is up to one year. Manufacturing line was not on the negative list, but by supplemental provision, it was excluded from the subject of the law. The revision of the ESL was also made in 1999. There was a revision in 1997 that loosened the conditions to start up a business and added many white- collar occupations to the positive list,24 but it still kept the baseline that the private job placement is not acceptable and permitted only in special cases. The revision in 1999 was a radical one that removed the principle to prohibit private job placement, 50 years after the establishment of the ESL, lifting occupational limitations (Tsuchida 2000: 74). The report from the Study Group of the Employment Law was the direct trigger for the liberalization of the system. The ratification of the ILO Convention greatly legitimatized the revision (Hamaguchi 2004: 87). The expansion of limited-term contracts were realized under the same trend. As with private job placement and the dispatching worker system, it began by admitting up to three-years contracts for small numbers of professional occupations, which can be defined by their official qualifications or credentials in 1997.25 The conditions for using

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limited-term contract employees also reflects the fact that labor unions were strongly opposed to the system since employers might use the system to replace regular workers with those on limited-term contracts. Thus, the law limits the business situation where employers can utilize workers with limited-term contracts. It can be used only when skilled workers are necessary “to start up, convert, expand, downsize or close down an enterprise which is expected to be completed within a definite period”.26 In 1994, the first deregulation committee was set up as a subdivision under the ARC. In 2001, the Council for Regulatory Reform (sōgō kisei kaikaku kaigi) was launched as an independent council in the cabinet office, in which there was no labor representative (ten business representatives and five scholars). The Koizumi administration (2001–2006) led the further deregulation of employment and labor markets that extended the radical reforms made in 1999. In terms of the TDW Law, the revision enacted in 2004 had significant impacts by introducing the system to the manufacturing line, the bastion of enterprise unionism. It also lifted the limit of the terms of dispatch for the original 26 occupations. The limited-term contract was expanded too. The conditions attached to the 1999 revision to use limited-term contract workers were removed from 2004. In addition, the revision extended the maximum contract term to five years, and relaxed the applicable occupations, so that highly qualified workers defined by a certain level of credential, the length of service and the amount of income could move from one employer to another as an independent worker. 27 Descriptive characteristics of the labor market changes During the initial phase of the reform, the expansion of the external labor market was well negotiated by state, firm and labor as equal partners. However, from the mid-1990s, labor was effectively excluded from the process of deregulatory reforms. Given the politics, it is clear that the reforms became primarily the resources for employers to cope with globalization and industrial structural changes. Thus, this section first analyzes how new employment forms are used, and how employers’ practices changed labor markets in Japan. Second, the impacts of the reforms on employment relations will be examined. The rise of new employment contracts may be a challenge to the company citizenship characterized by privileged access to corporate welfare and organized mobility. I will argue that the basic contractual terms for regular employment were preserved during the period, but the expanding

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sector of non-regular employment is clearly excluded from the entitlement to company citizenship and is facing fragmented career prospects. The segmentation between regular and non-regular statuses is deep and rigid as non-regular workers have difficulty obtaining regular employment status. Expansion of non-regular employments Taking advantage of the deregulatory reforms, Japanese firms increased the proportion of non-regular employment to about 30 percent of the total workforce. Table 3.3, based on the Employment Status Survey, demonstrates the dramatic changes in the employment structure – regular/ non-regular composition – from 1987 to 2007.

Table 3.3 Changes in labor market structure by employment status (numbers in thousands) 1987 % Regular employees

1992 %

1997 %

2002 %

2007 %

37,653

81.59

42,032 79.96

42,392 77.10

38,452 70.35

38,336 66.98

Non-regular 8,498 employees

18.41

10,532 20.04

12,590 22.90

16,206 29.65

18,899 33.02

6,563

14.22

8,481 16.13

10,342 18.81

12,062 22.07

12,935 22.60

87

0.19

163

0.31

257

0.47

721

1.32

1,608

2.81

730

1.58

880

1.67

966

1.76

2,477

4.53

3,313

5.79

1,118

2.42

1,008

1.92

1,025

1.86

946

1.73

1,043

1.82

46,151

100

52,564

100

54,982

100

54,658

100

57,235

100

paato / arubaito haken keiyaku / shokutaku others Total employees

Reported 46,153 total employees*

52,575

54,997

54,997

57,274

Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009. * Numbers are rounded to the nearest 1,000 in actual numbers. In percentage, numbers are also rounded to the nearest 0.1 percent. In all years, the statistics are first calculated based on legal contracts, then are recaped in terms of the employment status. The numbers of each employment status often do not add up to the total number of employees, which is especially true for the year 2002. This is because there is no clear definition of the employment statuses (paato, keiyaku and so on), it is up to respondents to which category they categorize themselves. And in some cases, they do not answer. If they answered ‘others’, they are categorized as ‘others’. But if they did not answer the category question, they are simply not included in the table. (telephone correspondence with Japanese Statistics Bureau).

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66 Transformation of Japanese Employment Relations

Almost 82 percent of the total employment was regular employment in 1987, which went down to around 67 percent in 2007. Accordingly, the non-regular employment expanded significantly from 18.4 percent to 33 percent of total employment. The impacts of the deregulatory reforms are clear here, especially the ones after the mid-1990s. The numbers in regular employment in 1987 and 2007 are much the same, 37.7 million in 1987 and 38.3 million in 2007, while total employment increased from 46.2 million to 57.2 million, indicating that the net increase is due to the expansion of non-regular employment. During the period of the bubble economy, the numbers in regular employment increased, while the pace of expansion of non-regular employment is slightly faster. From 1992 to 1997 – post-bubble period – the number of regular employment remained static and only non-regular employment grew. The change accelerated between 1997 and 2002. The numbers in regular employment declined by about four million, which is translated into a decline of seven percentage points . Conversely, the same magnitude of change occurred in the non-regular segment. The pace of change slightly lessened after 2002, but the trend is still continuing. Japanese firms not only expanded the non-regular employment but also diversified the employment. Among the non-regular categories of employment, paato is always the largest category and has been expanded from 14.2 percent in 1987 to 22.6 percent in 2007. The trend

90 85

1000~ 500~999

80

300~499 100~299

75

30~99 1~29

70

public total

65 60 1987 Figure 3.3

2002

2007

Proportion of regular employee by firm size (%)

Source: Employment Status Survey: Statistics Bureau 1988, 2004, 2009.

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of expansion, however, is quite steady, about two to three percentage points increase every five years. 28 Radical expansion can be seen in the categories of keiyaku/shokutaku and haken. Keiyaku/shokutaku stayed as low as 1.76 percent until 1997, but it expanded dramatically to 4.5 percent in 2002 and reached 5.8 percent in 2007. The workers in this category are employed by limited-term contracts, and one might actually find an employment through private job placement, although individually contracted workers and rehired retirees are also included. The fastest growing category among the various non-regular employments is haken. It was almost none in 1987 but it started to grow significantly, particularly after 1997, and reached about 2.8 percent of total employment in 2007, which is almost the same percentage as that in the USA, which is usually seen as the world’s most liberal economy. The expansion of the non-regular employment occurs regardless of the firm size. This fact proves that traditional measures of flexibility really hit the limit especially in large and medium size firms that represent Japanese economy. Figure 3.3 shows the changing proportion of regular employee by firm sizes. In average, the percentage of regular employee dropped from 81.6 percent in 1987 to 66.9 percent in 2007. The decline is more dramatic at larger firm sectors than the smallest ones. At the largest firm sector, which includes firms with more than 1,000 employees, the percentage declined from almost 90 percent to 65.7 percent. The decline at the smallest firms with less than 29 employees was 74.3 percent to 67.9 percent, a figure that is actually slightly higher than the largest firm sector. These observations indicate the declining capacity of employment and the limitation of the traditional measures of labor force adjustment within company groups, in which a redundant workforce at larger firms were sent to subsidiary firms with lesser contracts. All individual firms, especially large firms, needed to reduce regular employment, and instead, increasingly rely on non-regular contracts to utilize flexibilities. As a result, large and medium size firm sectors use new employment forms more than small firms. They use haken and keiyaku workers more than the smaller counterparts in addition to the increasing use of paato/ arubaito. Table 3.4 shows that haken is used most at the companies with 300–499 employees (5.1 percent is haken) followed by the sector with more than 1,000 employees (4.9 percent). At the smallest sector, this form of employment is not used (only 0.8 percent), and they almost solely rely on paato/arubaito. Keiyaku follows a similar trend. At the

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18.3

2.3 5.3

1,531 809 527 627 145 47

3,686

10,762

1000∼

6,831

1,693

217 487

paato arubaito haken keiyaku shokutaku others

Non-regular total

Total employee

2002

Regular employee

paato and arubaito haken keiyaku and shokutaku

500∼ 999

300∼ 499

300∼ 499

67 150

540 2.5 5.5

20.0 59 151

487

71.5 1,627

%

500∼ 999

868

360 164 127 158 48 10

5.1 2,486

34.2

14.1 6.8 4.8 6.4 1.8 0.3

65.7 1,617

%

2,948

1,009

416 201 142 188 52 10

73.7 1,933

%

18.8

34.2

14.2 7.5 4.9 5.8 1.3 0.4

65.7 1,938

7,072

Regular employee

%

1000∼

2007

100∼ 299

967 365 276 321 110 34

100∼ 299

2.5 6.4

137 329

20.8 1,325

69.5 3,822

%

4.3 5,757

34.9 2,073

14.5 6.6 5.1 6.4 1.9 0.4

65.0 3,681

%

30∼99

30∼99

2.4 5.8

105 306

23.4 1,781

67.5 4,692

%

10.1 7,046

36.0 2,534

16.8 1,292 6.3 532 4.8 232 5.6 298 1.9 112 0.6 69

63.9 4,506

%

1.5 4.4

25.5

67.2

%

12.3

36.0

18.3 7.6 3.3 4.2 1.6 1.0

64.0

%

%

%

55 302

0.3 1.9

4,382 27.3

10,862 67.8

1∼29

16,088 28.1

5,154 32.0

2,660 16.5 1,552 9.6 121 0.8 245 1.5 102 0.6 475 3.0

10,921 67.9

1∼29

others

9.0

20.0

6.0 2.0 0.5 2.4 5.4 3.7

total

15.5 7.1 2.8 3.9 1.8 1.8

6,345 11.1

70.3

720 2,477

1.3 4.5

12,061 22.0

38,452

total

57,274

2,126 33.5 18,899 33.0

8,855 4,080 1,608 2,255 1,059 1,043

66.5 38,336 66.9

1,170 18.4 218 3.4 96 1.5 256 4.0 207 3.3 179 2.8

79.9 4,219

%

public and others

5,168

1,036

312 105 25 127 278 190

4,129

public

Table 3.4 Changes in labor market structure by employment status and firm size (numbers in thousand)

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2.4

207

8,495

18.4

10.8

0.3

25

916

8.1

684

89.2

%

4,396

635

131

15

489

3,761

0.6

38

100∼ 299

962

198

20

744

9.5 5,521

14.4

3.0

0.3

11.1

85.6 4,559

%

4.3 5,661

30.3 1,829

Source: Employment Status Survey, Statistics Bureau 1988, 2004, 2009.

Total employee

Non-regular total

paato and arubaito haken keiyaku, shokutaku and others

7,579

%

300∼ 499

Regular employee

13 710

500∼ 999

1000∼

1987

0.3

28.3 4.9 2,342

9,271

Total employee

9

766

16.9 2,704

0.4

26.2

34

2,431

Non-regular total

others

0.7

83

1.2

30∼99

%

269

17 3.8

0.2

12.0 7,144 15.5

17.4 1,413 19.8

3.6

0.4

13.5 1,127 15.8

82.6 5,731 80.2

%

10.3 6,978 12.7

32.3 2,275 32.6

400

2.5

%

4.7

0.1

15,491 33.6

3,976 25.7

734

10

3,232 20.9

11,514 74.3

1∼29

16,026 29.3

5,139 32.1

946

8,497

1,848

87

6,562

37,673

total

5,074 11.0 46,153

public and others

11,240 20.5 54,733

16,204

1.7

18.4

4.0

0.2

14.2

81.6

29.6

70


90 80 15-24 25-34

70

35-44 45-54

60

55-64 50

65total

40 30 1987

1997

2002

2007

Figure 3.4 Proportion of regular employment by age (%) Source: Employment Status Survey: Statistics Bureau 1988, 1999 2004, 2009.

1. To reduce personnel cost 2. For the daily/weekly.. 3. To adjust working hours 4. To reduce personnel cost other.. 5. To adjust labor force for.. 6. Unable to recruit regular..

2007 2003

7. To allocate important works to.. 0 Figure 3.5

10

20

30

40

50

Reasons to use paato workers (%)

Source: Employment Diversification Survey: MHLW 2008b.

sectors of firms with 300–999 employees, 6.4 percent of their employees are keiyaku workers, followed by the largest sector with 5.8 percent. These trends reflect the increasing demands of relatively skilled workers in flexible terms of contract (such as project-style work organization). This change did not happen equally to all segments of the working population. Reflecting the politics to protect the employment of regular workers and the detachment of clerical work from the sphere of regular

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1. To recruit capable personnel 2. Unable to recruit regular.. 3. To adjust labor force for.. 4. To allocate important works to.. 5. For the seasonal adjustments of.. 2007 2003

6. To utilize professional skills 7. To reduce personnel cost 0 Figure 3.6

10

20

30

40

50

Reasons to use haken workers (%)


1. To utilize professional skills 2. To rectruit capable personnel 3. To reduce personnel cost 4. Unable to recruit regular.. 5. To adjust labor force for.. 6. To re-employ elderly workers

2007 2003

7. To allocate important works to.. 0 Figure 3.7

10

20

30

40

50

60

Reasons to use keiyaku workers (%)


employment, the non-regular employment statuses are applied widely disproportionately to young workers and women. Figure 3.4 shows the proportion of regular employment by age. Although the proportion of regular employment declines in all age groups after 1997, the decline in the 15–25 group is significant: from more than 80 percent to just about 50 percent. It reveals that the replacement of regular with non-regular workers occurs as the generational replacement of workers. This resulted in problems in the transition from school to work for younger generations in career

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Transformation of Japanese Employment Relations 100 90

12.2

13.1

13.6

14.4

14.9

22.4

23.3

23.4

22.3

22.7

13.4

13.5

13.5

14.1

13.2

6.4

6.6

7.3

9.1

9.8

33.4

31.8

30.7

28.7

26.9

2002

2007

80 70 60 50 40 30 20 10 0 1987

1992

1997

Tech./pro.

Management

Clerical

Service

Sales

Security

Trans./comm.

Man./con.

Agri./fish.

Unclassified

Figure 3.8 Changing occupational composition of Japanese labor markets (%) Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009.

planning, learning skills, and employment, which led the government to take special measures to solve the problem. 29 In terms of the employment of women, more than half of women employees are employed by non-regular terms according to the 2007 Employment Status Survey, due to the expansion of paato and the inclusion of clerical work in the temporary worker dispatching system. The impacts of industrial structural changes The diversification reflects the necessities of Japanese firms to deal with the environmental changes. As shown in Figures 3.5, 3.6 and 3.7, firms use paato/arubaito for numerical flexibility and keiyaku/shokutaku and haken for functional flexibility.

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73

(D.I.Point) 30 professional and technical sales

20

service

Total

10 trans. and comm. 0

total

skilled workers

unskilled workers

−10 −20 −30 1996

managers clerical workers 97

98

99

2000

01

02

03

04

Figure 3.9 The Diffusion Index by occupation Source: MHLW 2004a: 21.

The steady increase of paato/arubaito clearly reflects the increasing demand for numerical flexibility. But the radical increase in other forms of employment reveal that the reforms helped Japanese firms to acquire necessary skills. Figure 3.8 is a representation of the industrial structural changes from a manufacturing- centered economy to the economy that has more emphasis on knowledge and service. The occupational categories that expanded during this period were service (6.4 percent up to 9.8 percent) and technical/professional (12.2 percent up to 14.9 percent), 30 while the manufacturing and construction declined about 6.5 percentage points from 33.4 percent to 26.9 percent. The Diffusion Index (DI) of occupations directly shows the changing demand towards necessary skills reflecting the industrial structural change. The Diffusion Index is calculated by the difference between the percentage of employers who see redundant labor from the percentage of employers who see a labor shortage. Thus, the positive number means the demand of labor (see Figure 3.9). Throughout the period that overlapped with the deregulatory reforms, occupational categories such as sales, service, and technical/professional were in strong demand. Managers and clerical workers have a surplus of supply. The demands on skilled workers and unskilled workers clearly reflect the ebb and flow of the business conjuncture,31 while it is clear that employers perceive redundancy of unskilled workforce more than skilled ones.

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*

1992

10.9% 1997

Haken workers by occupation (numbers in thousands)

1987

70.0%

11.7%

2007

39.6%

36.6%

4.7%

Unclassified

Man./con.

Trans./comm.

Agri./fish.

Security

Service

Sales

Clerical

Management

Tech./pro.

* The occupational categorization of the Employment Status Survey is based on JSCO, which refers ISCO 1968. Employment Status Surveys until 1997 use JSCO which was revised in 1986.

2002

26.6%

49.9%

6.1%

Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009.

Figure 3.10

0

200

400

600

800

1000

1200

1400

1600

1800


75

New employment forms are, in a way, used to cope with these changes, although each of them is used in a specific pattern. For instance, as shown in Table 3.3, haken is the fastest growing category of non-regular employment, expanding from almost none to 2.8 percent of total employment. It is however important to note that the character of the employment form changed after the revision in 1997, and the radical reforms of 1999 and 2004. At the start of the system, it was to put the illegal but common practice of interfirm worker dispatch of skilled workers under legal control and to enable the flexible utilization of relatively skilled clerical workers. As a result, the professional/ technical was the second largest category until 1997 (see Figure 3.10). In 2002, although the proportion of professional/technical workers in the total number of temporary dispatched workers declined, the increase of this category in actual number has generally been steady. The largest category was clerical, which was clearly the dominant one until 1997, and still consisted of more than 50 percent in 2002. The proportion of female workers in this occupation was 82.1 percent in 1987, 91.5 percent in 1997 and 92.0 percent in 2002. This is the reason why this employment status has long been considered as the one for women after its emergence. The deregulatory reforms in 1999 and 2004 changed the character of this employment form significantly. The almost complete deregulation in 1999 provided the approval to drive female clerical workers out of the sphere of company citizenship. Together with the increasing inflow of women from the selfemployed sector to paato, the reform contributed to move more than half of the employed women into non-regular employment status. The 2004 reform finally started to affect men’s employment. Triggered by the 1997 reform, manufacturing/construction had already started to increase from 28,000 in 1987 to 192,000 in 2002, but it jumped to 636,000 in 2007, in which 60.5 percent of the workers are men, due to the 2004 reform. Actually this is the only male dominant category in temporary agency work, and 63.2 percent of the male haken workers are working in manufacturing/construction. This expansion however is a clear sign that the manufacturing line, the basis of Japanese enterprise unionism, and the traditional employment relations system has been eroded by temporary employment. Sales and service also emerged as a main occupational category of temporary agency work in 2002. Close to 80 percent of the workers in these categories are women.

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1992

1997

2002

25.0%

10.5%

Keiyaku/shokutaku workers by occupation (numbers in thousands)

1987

23.2%

9.1%

29.3%

18.1%

12.0%

26.4%

15.3%


Figure 3.11

0

500

1000

1500

2000

2500

3000

3500

2007

24.1%

10.7%

11.0%

26.4%

14.5%

Unclassified

Man./con.

Trans./comm.

Agri./fish.

Security

Service

Sales

Clerical

Management

Tech./pro.


77

The expansion of limited-term contracts shows a similar trend as haken: deregulation facilitates the expansion, and it expanded on the lines of relatively skilled labor (see Figure 3.11). After 1997, contract workers radically increased, from 966 thousands in 1997 to 3,313 thousands in 2007. Although in haken the expansion is concentrated in work categories such as clerical and manufacturing/construction, it is slightly more diversified in the case of keiyaku/ shokutaku. It is increased in technical/professional, clerical, sales, service, and manufacturing/construction. The top three biggest occupations in this category did not change throughout the period. For instance in 2007, clerical workers consisted of 26.4 percent, manufacturing/construction was 24.1 percent, and technical/professional were 14.5percent. Inequalities between regular and non-regular contracts Non-regular employment forms became prevalent in Japanese labor markets in conjuncture with globalization and industrial structural changes. The analyses in this section compares the employment conditions of regular and non-regular workers with regard to employment security, wages and the access to other welfare measures. As the principle of ‘equal treatment’ has never been the issue within social bargaining,32 a significant gap between regular and non-regular forms of employment with regard to these employment conditions is expected to emerge. Employment security There is nothing immediately clear about the impact of the deregulatory reforms on the employment security of regular workers.33 After the burst of the bubble economy, there has been increasing unemployment while there is no change in the trend of bankruptcy, but the insecurity seems to be allocated radically disproportionately to non-regular workers rather than regular workers. Layoffs, or midterm termination of contracts, started to gain attention. In the case of the temporary agency work, employment-type workers are supposed to have better employment security than registered-type workers as they have continuing employment with THAs. Midterm termination of the contracts is particularly a problem for registered-type workers. According to the Survey on Temporary Agency Work by the Tokyo Metropolitan Government (hereafter, Tokyo Survey),34 43 percent of the THAs experienced midterm termination of the business contracts that were involved with the

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dispatching of registered-type workers (declined from 61.7 percent in 2002). The layoff of the limited-term contract workers (and temporary agency workers too) had been a problem even before the waves of deregulatory reforms called yatoi- dome. 35 Superficially, the termination of employment contracts at the end of the term is not a problem. However, Japanese firms tend to use limited-term contract workers over a long period of time by renewing contracts almost automatically. Thus the sudden disruption of an employment contract, even when it is at the end of the term of the contract, has been accused of as illegal and the courts have been often supported such a charge. The expansion of non-regular employment gave rise to the concern over the spread of yatoi- dome from lawyers, workers’ movements and other advocates of employment security for non-regular workers (see Figure 3.12). In the revised LSA enacted in 2004, clear principles were set out with regard to the start, renewal and the termination of limited-term contracts that sought ‘informed consent’ about their terms from those on these contracts.36 There is also a significant difference with regard to the coverage of employment insurance to non-regular employees. Figure 3.13 shows the situation of employment insurance coverage comparing regular and non-regular workers. In all non-regular employment statuses, the percentage of coverage is lower than regular employees.

6000

5242

5000

4270

4000 3000

2114

2000 1000

960

0 (2001)**

(2002)

(2003)

(2004)

Figure 3.12 The number of yatoi-dome troubles reported by individual workers* Source: MHLW 2005. * Reported number of individual labor-related dispute (kobetsu rōdō funsō sōdan kensū) accumulated by MHLW. ** In 2001, the number is accumulated from Oct. 2001 to Mar. 2002 (six months).

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7.5% 6.7% 1.8%

83.1%

Regular employee

79

0.9% 7.0% 1.1%

43.8%

44.4%

Paato

3.8%

Arubaito

60.2%

15.2%

8.2%

62.9%

Haken workers

12.9%

28.9%

3.5%

6.2% 0.0%

2.1% 66.5%

Keiyaku/shokutaku

24.5%

4.8% 1.6%

2.7% 29.5%

Other 0

Figure 3.13

10

20

3.4% 13.6%

51.1%

30

40

50 %

60

covered

not covered

d.k.

n.a.

70

80

90

2.3%

100

not eligible

Employment insurance coverage by employment status

Note: Sample population includes 1,559 regular employees, 559 paato workers, 171 arubaito workers, 97 haken workers, 188 keiyaku/shokutaku workers and 88 other workers. Source: Hara 2006: 100.

Table 3.5 Average hourly wages of temporary staff by occupational category (yen)

Software development Machine design OA operation Filing Marketing Sales Light work Manufacturing line Average

2002

2006

2,763 3,371 1,822 1,754 1,861 1,492 1,474 – 1,992

1,960 1,881 1,510 1,415 1,479 1,399 1,004 1,123 1,480

Source: Survey on Temporary Dispatched Workers: Tokyo Metropolitan Government 2007.

Wages and labor management practices It is well known that there is a significant wage gap between regular and non-regular employment even when assigned tasks are relatively similar. Not to mention the wage disparity between regular workers and paato,37 a dominant form of limited-term contracts, the situations

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Table 3.6 Methods of wage payment by employment status (%) Methods of payment / Employment Status Regular workers Shokutaku Keiyaku Haken Employment-type Registered-type

Hourly (women) 0.1 14.2 (23.0) 29.4 (33.9) 66.9 (81.9) 47.8 (65.3) 85.5 (90.2)

Daily 5.7 11.7 13.4 8.2 10.4 6.0

Monthly 86.3 59.6 49.6 22.5 38.1 7.3

Note: There are other payment methods such as weekly and annual payment, which are omitted from this table. Source: Employment Diversification Survey: MHLW 2008b.

of wage among temporary staff reveals the declining level and the volatility of their wages reflecting the market- driven nature. Tokyo Survey has data on the average hourly wages for temporary staff (see Table 3.5). In some occupational categories, workers experienced a radical decline of their wages, especially in those occupations that paid well in 2002. In the data available from Tokyo Survey, the only occupation that pays more in 2006 than 2002 is interpreter. In all other occupational categories, the wages declined, and it clearly shows the volatility of their wages. What is indicated here is the difference in labor management practices that cover regular and non-regular workers. The difference of the method of wage payment is symbolic as well as substantial in terms of the segmentation between regular and non-regular employment. Most of the regular employees in Japan are paid monthly: the Employment Diversification Survey in 200738 showed that 86.3 percent of them work under a monthly salary system (4.8 percent are paid under annual salary system). It is only 20.8 percent among non-regular workers: 64 percent of them are paid hourly, and about 10 percent are paid daily. However, it should be noted that there is significant variance among non-regular statuses and between sexes (see Table 3.6). It is no surprise that shokutaku is the closest to regular employment as it is, in part, an extension of regular employment. Keiyaku follows a similar pattern. But the majority of haken workers are paid hourly with a great disparity between employment-type and registered-

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Employee pension

Keiyaku Paato

Company pension

Regular Employee Keiyaku Paato

Retirement allowance

Regular Employee Keiyaku Paato

74.5 73.4

29.0 33.1

9.8 5.1 3.1

83.4

66.1

7.3

15.8 14.0

27.5

Bonus system Regular Employee Keiyaku Paato

79.3

37.4 Support for Regular Employee selfKeiyaku development Paato 0

19.0 13.9 20

60.2 51.5

90.4

69.4

41.8

24.7

6.3

Figure 3.14 (%)

1999 2003

41.1

23.0 17.0

81

36.8

40

60

80

100

Access to the rights of company citizenship by employment status

Note: The figure is made by the data collected by Employment Diversification Survey carried out by MHLW. Source: Modified from Ogura 2008: 97.

type. In all employment statuses, women are paid hourly more than men. Although the detailed data will not be presented here, different rules of promotion and pay raise are usually applied to non-regular workers. Corporate welfare In addition to the methods of wage payment, access to the measures of corporate welfare such as employee pension (kōsei nenkin), company pension (kigyō nenkin) and retirement allowance divides regular and non-regular workers and shows the depth of labor market segmentation

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in Japan. Figure 3.14 presents the percentage of business enterprises that apply various corporate welfare measures to workers by employment statuses. It is clear that there is a deep divide between regular and nonregular employees with regard to the access to various measures that characterizes company citizenship. As for the employee pension, the survey assumes that all companies provide access to regular employees. A relatively high percentage of, but not all, business enterprises give keiyaku workers access to an employee pension, while only one third of them give paato access. The company pension is a luxury item only for the employees in the large firm sector, thus only 41 percent in 1999, significantly dropping to 23 percent in 2003, of business enterprises gave regular employee an entitlement to receive this benefit. In 2003, only 9.8 percent for keiyaku and 3.1 percent for paato have access to a company pension. Retirement allowance is another major practice of company citizenship, and is clearly for regular employees. A high wall between contracts The mobility between employment statuses is a crucial indicator that measures the depth of labor market segmentation. The effects of the deregulatory reforms, which were supposed to bring fluidity within all segments of Japanese labor markets, actually created deep division especially between regular and non-regular employment statuses. The analyses show that regular workers tend to stay with their current employers, while mobility is increasingly distributed to non-regular workers. Mobility change of regular workers The Employment Status Survey shows that there is a trend in increasing job mobility in the Japanese labor market that clearly reflects the waves of regulatory reforms from the late 1980s. The numbers in Figure 3.15 represent the proportion of the current labor force who experienced job mobility from a year before the survey. Until the first oil crisis in 1974, job mobility was rising to 4.0 percent, and at that time, men moved more than women. After the oil crisis, during the heyday of Japanese management, mobility was low until the first wave of regulatory reform. The impact of the reform is clear. The average mobility rate rose to 4.3 percent in 1987, and the pattern of men and women started to diverge partially due

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Political Segmentation of the Labor Market 7.00

83

Total Men Women

6.50 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50

Figure 3.15

2007

2002

1997

1992

1987

1982

1979

1977

1974

1971

1968

1965

1962

2.00

The trend in job mobility in Japan from 1962 (%)

Source: Employment Status Survey: Statistics Bureau 1963, 1966, 1969, 1972, 1975, 1978, 1980, 1984, 1988, 1993, 1999, 2004, 2009.

Table 3.7 Mobility within the labor force (numbers in thousands)

Labor force with no status change Career changers

1987

%

1992

%

1997

%

2002

%

54,358

89.8

58,808

89.4

59,479

88.8

56,414

86.8 56,679

2,646

4.4

2,986

4.5

2,911

4.3

3,327

5.1

2007

% 85.9

3,683

5.6

employees

2,369

89.5

2,783

93.2

2,708

93.0

3,139

94.4

3,517

95.5

regular

1,381

58.3

1,659

59.6

1,486

54.9

1,217

38.8

1,372

39.0

3,422

5.7

3,850

5.9

4,480

6.7

4,391

6.8

4,044

6.1

60,502

99.9

65,756

99.8

67,003

98.7 65,978

97.6

New entrants Total labor force*

99.8 65,009

Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009. * It contains three categories, “labor force with no status change,” “career changers,” and “new entrants” have subcategories such as “selfemployed,” “family workers,” and “employees.” The percentages of all these categories do not add up to 100% due to the n.a. and d.k.

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total %

selfemployed family workers regular employee paato/arubaito haken keiyaku/ shokutaku others 4

15 212 1.69

62 3 8

122 6 35

774 6.16

9 8 117

family workers

69 9 490

selfemployed

Source: Employment Status Survey, Statistics Bureau 2004.

previous job

2002

5,178 41.21

75

851 89 195

129 39 3,732

regular employee

4,314 34.34

44

2,503 62 125

131 60 1,346

paato/ arubaito

461 3.67

4

104 124 28

5 2 189

haken

current job

1,043 8.30

13

203 35 156

29 7 581

keiyaku/ shokutaku

Table 3.8 The number of workers who changed jobs (1997–2002) (numbers in thousands)

194

3,924 336 568

402 132 6,773

total

248 12,564 1.97

35

61 4 13

13 3 113

others

1.54

31.23 2.67 4.52

3.20 1.05 53.91

%

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9 401 111 10 46 18 672 5.31

total %

57

family workers regular employee paato/arubaito haken keiyaku/shokutaku others

selfemployed

112 0.89

4 51 38 3 8 2

4

5,176 40.91

32 3,527 857 211 327 77

98

4,033 31.88

40 1,044 2,476 121 175 48

105

selffamily regular paato/ employed workers employee arubaito

Source: Employment Status Survey, Statistics Bureau 2009.

previous job

2007

913 7.22

5 302 221 282 74 12

14

haken

1,216 9.61

6 596 249 70 226 15

28

223 1.76

3 96 50 7 17 39

8

keiyaku/ shokutaku others

current job

Table 3.9 The number of workers who changed jobs (2002–7) (numbers in thousands)

12,651

102 6,209 4,023 704 888 223

337

total

0.81 49.08 31.80 5.56 7.02 1.76

2.66

%

86


to the inclusion of clerical jobs in the temporary agency work that marks the separation of women from the sphere of organized mobility. The reform in 1999 accelerated the trend. Overall mobility rate rose to 5.58 percent in 2007, averaging the wide gap between men (4.74 percent) and women (6.74 percent) while men’s mobility started to rise too. This increasing mobility is disproportionately distributed to nonregular employment. Table 3.7 shows the changing trend of labor force composition among the workers who changed career. The percentages of ‘career changers’ match with the mobility rate shown in Figure 3.15. In 1987, 89.5 percent of career changers were employees, 58.3 percent were regular employees, and the rest, about 41.7 percent, were non- regular employees. In 2007, the proportion of regular employees who changed their job in the previous year dropped significantly to 39.0 percent, indicating more than 60 percent of career changers were non- regular employees. Cumulative statistics also show the same trend. Tables 3.8 and 3.9, constructed from the Employment Status Survey (2002 and 2007), showing the numbers of the labor force who experienced job mobility in the last five years (1997–2002 and 2002–7). They are constructed

Table 3.10 Distribution of employment status, origin and destination (numbers in thousands) Destination 2002

Regular

Origin Regular Non-regular Total

3,732 1,210 4,942

Non-regular 2,229 3,514 5,743

Total 5,961 4,724 10,685

Pure mobility

0.316

Odds ratio

4.799

Pure mobility

0.322

Odds ratio

4.862

Destination 2007

Regular

Origin Regular Non-regular Total

3,527 1,472 4,999

Non-regular 2,038 4,082 6,120

Total 5,565 5,554 11,119

Source: Employment Status Survey: Statistics Bureau 2004, 2008, calculated by author.

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87

in the style of a ‘mobility table’ commonly used in a social mobility study. The right- end column represents the employment structure by previous jobs (original employment status), and the bottom row represents current employment structure. In both Table 3.8 and 3.9, the total number of the current labor force who experienced job mobility in the last five years is about 12.6 million, slightly above 19 percent of the total labor force. In 2002, about 40 percent of the original employment status was non-regular, while it was 46.2 percent in 2007. The largest destination employment status is non-regular employment status, 48.3 percent in 2002 and 50.5 percent in 2007. In terms of the composition of job changers, the figures reveal that the job mobility in Japanese labor markets was increasingly distributed to non-regular employees. Considering the fact that the share of non-regular employment in total employment was somewhere around 30–33 percent between 2002 and 2007, it is possible to conclude that the share of non-regular workers among job changers is significantly higher. Mobility between regular and non-regular statuses Table 3.10 is a summary table constructed from Tables 3.8 and 3.9 in order to calculate the pure and relative mobility between the employment statuses. In a mobility study in sociology, it is common to calculate the ‘odds ratio’ that roughly measures, in this case, the chances of mobility for non-regular workers to regular employment relative to those of regular workers. The odds ratio for both years reveals that there was deep segmentation between regular and nonregular employment. Non-regular workers have only one-fifth of a chance to be regular workers compared to those who have regular employment. 39 There is not sufficient institutional support for non-regular workers to move up (in addition to the ineffective active labor market measures). The survey introduced in Figure 3.14 (Ogura 2008) reveals that there were only 31.1 percent of business enterprises in 2003 that had an institutional channel for limited-term contract workers to upgrade their employment status (declining from 38.6 percent in 1999). For paato workers, the figure is around 25 percent (rising from 23.1 percent to 26.7 percent). Given the situation, there is no sign of a lowering boundary between regular and non-regular employment in the Japanese labor markets.

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Transformation of Japanese Employment Relations 70,000

Annual sales (in hundred million yen)

60,000 50,000 40,000 30,000 20,000 10,000

Figure 3.16

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

0

The growth of the temporary help industry

Source: Business Report of Haken Industry: MOL 1998b, 1999b, 2000b; MHLW 2001b, 2002a, 2004b, 2005a, 2006a, 2006b, 2007a, 2009a.

The role of new actors in Japanese labor markets As a last point of analysis of the external labor market, we turn to examine the newly legalized private THA and its role in facilitating job mobility.40 Increasingly, the services offered by THAs have taken advantage of the deregulation of fixed-term contract work and the legalization of private job placement services through innovations in service products involving a mix of dispatching temporary workers; offering outsourcing of business services staffed by agency temps; job recruitment services involving an initial temporary contract; the placement of fixed-term contract workers; and, most recently, the development of outplacement services for redundant workers. Figure 3.16 shows the growth of annual sales reported by the THAs that registered with the labor ministry. In terms of the numbers of enterprises,41 sales, and the services offered, the temporary help industry has grown tremendously since deregulation in the late 1990s. In 2007 there were a total of 50,149 enterprises of the THAs, contrasting with 9,259 in 1997. Annual sales show close to a fivefold increase between 1997 and 2007, to reach 6,000 hundred million yen (approximately 60 billion dollars). The outplacement service seems to be a uniquely Japanese innovation tied to changes in large firm personnel practices aimed at shedding older workers. Under the general heading of jinzai bijinesu (personnel services business), THAs take on an entire group of older workers who in earlier times would have been transferred (tenseki suru)

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to allied or subsidiary firms within a firm group (keiretsu). The largest Japanese THA, Pasona, which calls this new product ‘restructuring services’ (risutora shien jigyō), reported almost a third of its profits in 2002 was derived from this business (Pasona 2003). In this sense, Japanese companies are not only turning to the external labor market to recruit (new) flexible personnel, but to new private placement services in order to separate themselves from redundant (especially older) employees. These changes are too recent to have an effect on overall job mobility, but do register in the continuing expansion of non-regular work.

Reconfiguration of employment contracts and job mobility In this chapter, we have examined the labor market reforms that included the liberalization and deregulation of temporary agency work, the liberalization of private labor supply business, and the relaxation of regulations on the limited-term contracts. There are several important findings from the analyses. First, the examination of the relationship between existing labor relations and the patterns of flexibility made possible by these relations makes it important to understand the interests that related actors form under the changing circumstances. Second, it became also clear that the changing platform of policy decision making had significant impacts on the creation of new employment forms and the relationship between them. Third, analyzing how firms use the fruits of the deregulatory reforms makes the actual segmentation and stratification process of labor markets clear. We analyzed the relationship between the existing labor relations and the patterns of flexibility made possible, in Chapter 2 and the first part of this chapter. The emergence of the regular employment status in Japan, that can be characterized by the rise of ‘company citizenship,’ developed out of the institutionalization of cooperative enterprise unionism. From the perspective of mobility and flexibility, it is the development of the mobility within firm and firm network (keiretsu) under the management prerogative, by which Japanese firms were able to cope with most of the necessity caused by environmental changes. Being able to smoothly adapt to the assignment change became an important part of workers’ ‘capability’ that is highly evaluated at personnel evaluation. Labor market reform became radical after the early to mid-1990s when employers started to recognize the limits of the flexible rigidities arrangement. It is possible to say that the deregulatory reforms were triggered, fueled and shaped by this recognition.

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The deregulatory reforms of labor markets were already undertaken from the mid-1980s in response to the technological changes and increasing internationalization. It established the TDW Law that was to institutionalize temporary dispatching as a legitimate employment relation. However at that time, it was negotiated at the tripartite advisory council set by labor ministry represented and governed by state, firm and labor. In this sense, the initial stage of the reform can be called negotiated or controlled liberalization/deregulation. The radicalization of the deregulatory reforms was produced by the changing platform of policy decision making that effectively excluded labor from the process. From the mid-1990s, the decision making on employment and labor market issues gradually shifted out of the advisory council into cabinet deregulation committees, in which labor representation was weak or nonexistent. This resulted in the radical deregulatory reforms. The reform proposals by deregulation committees started to be endorsed by cabinets, and because of this, tripartite bargaining at the advisory council gradually lost its grip on agenda setting. The labor ministry changed its attitude on the solutions to labor market mismatches and unemployment from one of emphasis on traditional measures to activating the external labor market due to the increasing pressure from the deregulation committees. The deregulatory reforms created and expanded the non-regular employment status, segmented by specific skills, generation and gender. Japanese firms started to use non-regular employment forms to utilize necessary flexibilities, taking advantage of deregulatory reforms under the current circumstances of globalization and industrial structural change. New employment forms were expanded rapidly in Japanese labor markets especially in the younger generations and in medium to large firm sectors. They can be found in the contracts of relatively skilled workers especially in traditional occupations such as clerical and manufacturing and also in expanding ones such as sales and service. Technical and professional are also increasingly employed with new forms of contracts. It is possible to observe increasing ratio of job changers where the proportion of non-regular employment is increasing. The gap between regular and non-regular employment statuses became visible. Since employers and enterprise unions were still committed to maintain company citizenship for regular workers during the reforms, non-regular employment statuses were created outside the sphere of ‘lifelong employment’ practices. These two broad categories of employment differ greatly in terms of the accessibility to various

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measures of corporate welfare, indicating the different state of entitlement to company citizenship. Mainly due to this disproportionate access to resources, we observed no change of job mobility among regular workers; job mobility is disproportionately allocated to non-regular workers. However it is difficult for non-regular workers to obtain regular employment, moving across the boundary between a regular and non-regular status. As a result, the difference between regular and nonregular employment became the hierarchical status difference contrasted by the accessibility to resources and by the pattern of mobility. Regular workers are still protected, experiencing organized mobility within firms, while non-regular workers lack any resources and experience individualized and unstable mobility without a distinctive idea of ‘career’ outside the firms.

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4 The DWS: Deregulation of Working Time and Its Impact on the Effort–Bargain

Working time regulation and employment relations The labor market reforms examined in the last chapter did not have a strong impact on the mobility aspects of employment relations for regular workers. The reforms did not provide institutional support for regular workers to change employers (as well as for firms to discard regular workers), which means the preservation of the institutional base of effective workplace control at Japanese firms. Concurrently, there has been another line of reforms in the last two decades that concerns working time regulations in order to reduce working time and also to reorganize workplace control especially for regular white- collar workers, the latter of which is the particular focus of this chapter. The workplace control was renegotiated through the reforms of working time since the organization of working time directly associates with the contract/ effort aspect of employment relations in two fronts. They are the issues of the work/nonwork boundary and the bargaining on wage and effort at workplace: inherently contested domains that deal with worker control (Rubery et al. 2005). There are three points that are crucial to the discussions in this chapter regarding this renegotiation. First, contractual coverage of different working time regulations directly associates with the workeffort expected from the different groups of workers. For instance, in Japan, men and women were regulated to work different hours corresponding to the different level of workeffort expected to each of them period.1 Second, the level of working time regulation is the level of monitoring workeffort. Legal regulations set societallevel constraints on normal hours of work (per month/week/day) that successfully monitor workeffort by working time and the line 92

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The DWS: Deregulation of Working Time

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between work and nonwork spheres of social life. Third, especially in conjunction with the organizational and workplace-level labor management practices, the tight relationship between working time and the bargaining on wage and effort was assumed in the advanced industrial societies (Rubery et al. 2005). The bargaining on wage and effort of factory workers provides an exemplary case; wage bargaining assumes a time-money exchange (Kalleberg and Epstein 2001), and workplace control is often conceptualized as a method to manage work-time intensity (Fagan 2001; Edwards 1979). The organization of the relationship significantly differs from society to society, and Japan provides a unique case. Thus the chapter starts with the description and the examination of the historical development of the relationship between working time regulation and employment relations in Japan.

LSA regulation and the company citizenship During the rapid economic growth, the relationship between working time regulations and employment relations in Japan had two major characteristics. First, the working hours were long compared to other industrialized countries, and second, it was used as a source of flexibility made possible by company citizenship. These were mainly due to the straightforward and relatively decentralized working time regulation set in the LSA. It has been relatively straightforward since the establishment of the LSA in 1947, in which the scheduled working hours have been eight hours per day and forty- eight hours per week, and the overtime premium was set at 25 percent (125 percent of the regular wage). The regulation uniformly covered all segments of the workforce. Working time regulations in Japan can be also characterized as relatively decentralized, emphasizing the autonomous governance of working time by labor relations, especially at firm level (ro¯ shi jichi). 2 For instance, the LSA set no official limit on the amount of overtime work (and work on a day- off) as long as employers and workers at each firm negotiates and agreed upon them. 3 As mentioned in the previous chapters, the establishment of the LSA in 1947 was to modernize and democratize Japanese employment relations. Working time regulation was no exception. The enactment of the rule of an eight-hours-per- day limitation for the whole population was the main pillar of the new law, primarily aimed at reducing working time. In addition, it was the first time that business with less than

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10 employees were subjected to working time regulation. The diffusion and the increasing compliance to the LSA by Japanese firms characterize the trend of working time from the immediate postwar period to the period of rapid economic growth. Figure 4.1 shows the trend of working hours from 1960 to 2003. In all available statistics (such as Monthly Labour Survey4 based on company reports and the Labor Force Survey based on workers’ self report), overall working hours declined from 1960 to the first oil crisis in 1973–4. In an attempt to facilitate the modernization, a two- daysoff per week system, in addition to the encouragement of an 8-hourper- day system, also played a role in the reduction that started to be implemented especially at large firms from the early 1970s, and was significantly expanded in the 1980s (Hamaguchi 2004). Although the overall working hours in Japan was declining, it was still more than 2,400 in 1960, 2,200 in 1970 and was about 2,100 in the late 1980s, according to the data from Monthly Labour Survey that the government usually relies on for official statistics. The reduction mostly stagnated in a decade after the oil crisis for several reasons. First, employment and wage security for regular employees became a more important social concern than a reduction in working time. It was a time when employment security for regular employees was reaffirmed; the establishment of the Employment Insurance Act and the institutionalization of the doctrine of abusive dismissal5 cemented the rigidity of regular employment at Japanese companies. Second, the economic downturn after the oil crisis made the labor market a buyer’s market; employers were released from the pressure to ‘improve’ working condition. Third, under the harsher market environment with a constraint to maintain all regular employment, Japanese firms shaped unique methods of flexible labor adjustment in the aspect of working time. This flexibility, which actually takes two major forms, was achieved in close association with the control of workeffort at workplaces. First, as it is clear from the Figure 4.2, Japanese firms began to use working time – especially overtime – as a source of flexible labor force adjustment (Dore 1986). Given the rigidity of employment security, employers relied more on working time adjustment than the adjustment of employment. The figure demonstrates that firms increase and decrease overtime work responding to the business conjuncture. It is especially evident among larger firms rather than smaller ones. Decentralized regulation, where cooperative labor relations were predominant, helped the realization of this flexibility as employers and

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2683

2117

2315

2039

1965

1960

1970

45

200

1946

2108

1975

50

127

1980

55

162

(annual overtime working hours)

2465

2480

2267

450

500

(hours per year: annual negotiated overtime based on 36 agreement)

1990

1995

2000

2 3 4 5 6 7 8 9 10 11 12 13 14 15

Source: Cabinet Office 2006, assembled by MHLW; additional information from Labor Force Survey: ILO 2010.

1985

60 61 62 63

0

50

100

190 200 189 186 178 178 175 172 150 149 146 145 150 137 139134137 133132137 133

400 2110 21112111 2102 2194 2088 2052 2016 350 1972 1932 1933 1913 19091919 19301922 1900 1898 1904 18791859 1866 1846 300 1841 1842 1848 1837 1823 1774 1780 1750 17721772 1742 1720 1700 250 170917141700

(annual working hours: based on worker’s self report)

The trends in working hours from 1960 to 2003

40

198

35

262

2064 1937

(annual working hours: based on firm report) 2239

(annual scheduled working hours)

2170

2432

Figure 4.1

1,000

1,100

1,200

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

(hours per year: annual working hour, scheduled working hour)

96


25

20

15

10 recession after the first oil crisis

recession after high-yen the second oil crisis recession

recession after kin-yu kiki the bubble burst (crisis of financial system)

5

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

0

−5 500–

100–499

30–99

economic growth rate (%)

Figure 4.2 The trend in overtime and business conjuncture (economic growth rate) by firm size (manufacturing: hours per month) Source: Monthly Labour Survey: MHLW 2008c; System of National Account: Cabinet Office 2009).

workers are able to agree upon the length of overtime work. When business expands, they agree to increase working hours instead of employing more workers, and when business shrinks, they reduce overtime for workers to keep their employment. Second, it is possible to observe increasing amount of unpaid overtime (sābisu zangyō) from this period. Unpaid overtime, as introduced in Chapter 2, refers to unreported overtime. Regular employees voluntarily (or by enforcement) do not report a part of their overtime so that the firms do not need to pay an overtime premium, which is obviously a great advantage for the financial health of the companies. It is not entirely sure when this practice began, but it is safe to conclude from Figure 4.3 that the amount of unpaid overtime seemed to increase significantly from the end of the 1960s and especially after the oil crisis. It also shows that the practice has become common in Japanese firms since then.

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97

410 390 370 350 330 310 290 270 250 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

230

Figure 4.3

Estimated hours of unpaid overtime work (hours per year)

Source: Monthly Labour Survey: MHLW 2008c; Labour Force Survey: ILO 2010.

The emergence of these two practices is greatly associated with the changing effort-bargain of the regular work contracts during this period. It is important to note that employers shifted their labor management policy right before these practices became common. In the early to mid1960s, employers sought to replace the life-stage adjusted wage system with a job-rate system. Instead, by this policy change, they started to commit to expand ‘merit’ component of the life-stage adjusted wage system in personnel evaluation, wage determination, and promotion competition, which led to shape ranking and qualification system. The publication of Merit-based Personnel Management (nōryoku-shugi kanri) in 1969 by the employers’ association was the official declaration of this shift (Nikkeiren 1969). As discussed in Chapter 2, this shift and the following oil crises in the 1970s deepened ‘the ability to be flexible’ to the extent that it forced regular workers to change their lifestyles for the sake of firm’s concerns. This renegotiation shaped ‘kaisha ningen’ (company man), who are the flexible workers, with company citizenship, that indicates the fusion of workers’ interests with those of the managers’, to the advantage of the latter. When labor adjustment becomes necessary, regular workers cooperate to increase and decrease their overtime work in exchange for the maintenance of their employment security. When overtime becomes too long, which is more costly than scheduled working hours, they dedicate a part of their overtime labor to the

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firms by not reporting them. It is possible to say that these practices are the two concrete expressions of the company citizenship in the aspect of working time, which are evaluated positively, and workers compete to show their ‘ability.’ This complex intermesh between working time and the organization of effort was achieved by the straightforward and relatively decentralized regulation of working time. It was however put under pressure for change again from the mid-1980s due to increasing gaiatsu (external pressure) to reduce trade surplus and working time. After the burst of the bubble economy, another wave of pressure for change came, but this time it was carried out in light of the endogenous demands for further flexibility. Both involved legal regulative reforms, and the latter particularly concerned the working time regulations of whitecollar workers. By these reforms, I argue that the effort-bargain of regular white- collar employees was intensified by cutting overtime work and justifying unpaid overtime by altering working time as the result of workeffort rather than the prerequisite of it. The labor’s role in bargaining and monitoring workeffort through working time regulations has been undercut by making workers responsible for their own results. The following sections analyze the politics of, and the consequences for, the deregulation of working time.

Working time reduction and renewed interest in the DWS Working time reduction for better quality of life From the mid-1980s, there was increasing pressure from the international community to reduce working time in Japan, as it was considered one of the major causes of her excessive trade surplus. While the working time reduction in Japan stagnated around 2,100 hours after the oil crisis, it decreased significantly in western European countries and the USA. During the 1970s it decreased from about 2,000 to 1,800, and in the 1980s, continental Europeans headed towards 1,600 while English- speaking countries stayed at around 1,800 hours. In these societies, 40-hours-per-week was already adopted and became the norm, and an upper limit of overtime work was officially set. Responding to international criticism, the Japanese government considered reducing working time as a national goal. The Nakasone administration framed the policy as a transfer of the benefits of a strong economy to the people by improving the quality of life. It

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became the major initiative that successive administrations followed and included in their cabinet decisions (MOL 1991b). The basic tone of the policy initiative was set at the informal advisory committee for Prime Minister Nakasone called the Study Group of the Adjustment of Economic Structure for the International Cooperation (kokusai kyōchō no tame no keizai kōzō chōsei kenkyūkai) headed by Maekawa Haruo, the former governor of the Bank of Japan. The study group was later formalized as the Special Committee on Economic Structural Adjustment under the Advisory Committee on Economy, Economic Planning Agency (keizai shingikai keizai kōzō chōsei tokubetsu bukai). The committee publicized the Maekawa Report and the New Maekawa Report in 1986 and 1987, and proposed to reduce annual working hours to the level of other industrialized countries. The plan was to expand domestic consumption by reducing working time, leading to the reduction in the trade surplus that was the target of international criticism (MOL 1988: 393–5). Following the initiative, the LSA was revised in 1987,6 which introduced the 40-hours-per-week principle. Since the change was expected to be too radical, transitional measures were adopted to gradually introduce the new principle. Tables 4.1 and 4.2 are examples of the transitional treatment of two industries, manufacturing and commerce. The gradual implementation of the new principle was differentiated by industry and firm size. Large firms were expected to implement the new principle by 1994, but small firms in, for instance, the commercial sector were still allowed to set scheduled working time at 46-hours-per-week even ten years after the revision.7 The shortening of the scheduled working time obviously put pressure on companies to reduce the overall working hours because of the increasing payment of the overtime premium if workers work as long

Table 4.1 Gradual implementation of 40-hours-per-week (manufacturing) Firm size

1988

1991

1993

1994

1995

1997

2001

301– 101– 300 31–100 10– 30 1–9

46 46 48 48 48

44 44 46 46 46

44 44 46 46 46

40 44 44 44 46

40 44 44 44 44

40 40 40 40 40

40 40 40 40 40

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100


Table 4.2 Gradual implementation of 40-hours-per-week (commerce) Firm size

1988

1991

1993

1994

1995

1997

2001

301– 101– 300 31–100 10– 30 1–9

46 46 48 48 48

44 44 46 46 48

44 44 46 46 48

40 44 44 44 46

40 44 44 44 46

40 40 40 40 46

40 40 40 40 44

as before. Thus the revised LSA introduced some new working time systems that enabled firms to allocate scheduled working time more flexibly, depending upon the business conjuncture. These measures included the Irregular Working Hour System (henkei rōdōjikan-sei: hereafter, IWHS), the Flextime system, and the Discretionary Work System (hereafter, DWS). The IWHS includes several types such as IWHS- One Week, One Month, and One Year, which enables firms to allocate scheduled working hour more flexibly within a week, a month or a year.8 For instance, in the case of IWHS- One Year, it allows firms to extend scheduled working hours with a regular wage rate for longer during the busy season, but then requires those firms to allocate a shorter scheduled working time during the slack season. The Flextime system encourages the discretionary setting of starting and ending times (for mostly white- collar workers) as long as they work a negotiated amount of scheduled working hours per week. Firms could use these measures upon agreement with labor unions following the convention in the case of overtime work. IWHS- One Month does not even require agreement. The DWS was qualitatively very different from other measures of working time. While other measures offered flexible coordination of scheduled working time, the DWS was a measure that annuls the concepts of scheduled working time and overtime work (therefore, cancelling the concept of ‘overtime premium’), and thus disconnects the relationship between working time and wages.9 The establishment of this exceptional measure was based on the recognition on the changing nature of work “because of the industrial structural transformation toward the service economy driven by technological advancement” (MOL 1991b: 108). It was designed for jobs and occupations “that require a certain amount of discretion to complete their tasks and does not fit the normal line of command” (MOL 1991b: 108–9). Thus the application of the system was strictly limited to workers involved with research and

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development, editing and reporting, information systems design, and film and broadcasting production.10 This original DWS, established in 1987, is called the DWS for professional occupations (senmon gyōmu-gata sairyō-rōdō-sei). With these efforts at regulative reforms, the national campaign to reduce working time became, in a way, successful. Given the tight labor market during the bubble economy, employers tried to present the shorter working hours as a sign of a good workplace in order to attract job seekers (MOL 1991a: 65; 1991b), and labor unions took this as a good opportunity to improve working conditions11 (OISR 1989, 1990; Rengo 1991). The labor ministry facilitated the campaign by publishing the White Paper of Working Time in 1992 that evaluated and encouraged further efforts to reduce working time by the cooperation between employers and labor unions.12 The combined efforts by policy coordinators, employers and labor unions achieved a significant reduction of ‘scheduled working hour.’ Figure 4.4 shows the reduction in scheduled working hours, from which it is clear that the numbers decline in all segments of firm size especially after the revision of the LSA in 1987. In the large firm sector, where the effect of the reduction of official scheduled working time was immediate (see Table 4.1 and 4.2), firms

180

500–

175

100–499

30–99

170

Hours

165 160 155 150 145 140 135

Figure 4.4 month)

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1988

1986

1984

1982

1980

1978

1976

1974

1972

1970

130

The amount of scheduled working hours by firm size (hours per

Source: Monthly Labour Survey: MHLW 2008c.

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102


45 40

Firms larger than 1,000

35

Irregular Working Hour System – One Month Irregular Working Hour System – One Year Flextime System

30 25 20 15

DWS for Sales Workers 10 DWS for Professional Occupations

5

Figure 4.5

2007

2005

2003

2001

1998

1996

1994

1992

1990

1988

0

Expanding use of various working hour systems (large firms: %)

Source: General Survey on Wages and Working Hours System: MOL 1989, 1990b, 1991c, 1992, 1993c, 1994b, 1995b, 1996b, 1997, 1998c, 1999e, 2000c; General Survey on Working Conditions: MHLW 2001c, 2002b, 2003, 2004c, 2005c, 2006c, 2007b, 2008a, 2009b.* * The data are drawn from the General Survey on Wages and Working Hours System (chingin rōdō jikan seido-tō sōgō chōsa) and the succeeding General Survey on Working Conditions (shūgyō jōken sōgō chōsa). These are basically the same survey, conducted annually, by the labor ministry, focusing on different aspects of employment such as wage systems, working time practices, conditions of welfare facility and retirement allowance. Subjects (about 5,300 to 6,200 companies) are selected from all firms employing more than 30 workers from thirteen major industries except for public and a few other service industries. Response rates vary from about 70–80 percent. In 2008, the ministry sent 5,937 questionnaires, and response rate was 68.2 percent (4,047 responses) (In 2006, it was 82.7 percent: 4,416/5,341).

began to use these flexible measures right after the revision, especially IWHS- One Month and Flextime system. Figure 4.5 shows the uses of flexible time measures at the firms larger than 1,000 employees. The use of Flextime is characteristic in this company sector, corresponding with the fact that white- collar workers were increasing, which will be discussed in the following section. The effect of transitional measures including the state subsidy to compensate the reduction of schedule working time13 is clear if including all sizes of firm. The reduction began at the same time as large firms, but the uses of the new measures increased after the burst of the bubble economy that forced firms to allocate scheduled working hours more flexibly to cut labor costs14 (see Figure 4.6).

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103

45 40

All firms

35

Irregular Working Hour System – One Month Irregular Working Hour System – One Year Flextime System

30 25 20 15

DWS for Sales Workers

10

DWS for Professional Occupations

5 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002 2003 2004 2005 2006 2007 2008

0

Figure 4.6

Expanding use of various working hour systems (all firms: %)

Source: General Survey on Wages and Working Hours System: MOL 1989, 1990b, 1991c, 1992, 1993c, 1994b, 1995b, 1996b, 1997, 1998c, 1999e, 2000c; General Survey on Working Conditions: MHLW 2001c, 2002b, 2003, 2004c, 2005c, 2006c, 2007b, 2008a, 2009b.

Although ‘scheduled working hour’ declined, it did not mean the reduction of the amount of overtime work and unpaid overtime. Rather, it was a mandatory reduction of scheduled working time when there was no indication of the decreasing amount of work or the loosening of effort control. The trend of overtime in Figure 4.1 actually shows that overtime slightly increased until the end of the bubble economy, suggesting that there was enough work to be done at Japanese companies. In addition, the high level of unpaid overtime shown in Figure 4.3 tells that a part of the increasing cost caused by the reduction of scheduled working hour was absorbed by the ‘ability to be flexible’ demonstrated by workers. The movement to reduce working time, which realized the reduction of scheduled working time complemented with flexible measures, pushed up the labor cost. This put pressure on employers to reorganize the relationship between working time regulation and effort-bargain: costs increased as workers could not work as long as before due to the reduction of scheduled working hours. As I will discuss in the next section, this was especially the case with regard to the white- collar workforce that was increasing in the large firm

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sector. Thus, employers needed to require more effort from workers, first, within the limit of scheduled working hours and/or second, by turning working time into the result of workeffort rather than the prerequisite of it. In both cases, it is necessary to rely on, but rearrange, company citizenship. Shifted aim of the reform of working time regulation The burst of the bubble economy became an opportunity for Japanese employers to review the cost structure of the firm, and they started to recognize redundancy in white- collar personnel. This recognition led them to shape renewed interest in the expansion of the DWS as they needed to carry the burden of the mandatory reduction of scheduled working time in the midst of the economic downturn.15 Figure 4.7 shows that they see redundancy of personnel in managerial and clerical jobs. In the period between April 1992 and February 1993, the percentage of firms that reported the redundancy of managers grew from about 11 percent to 15 percent, in which the majority claimed that less than 5 percent or 5–10 percent of their managerial workforce were redundant. The recognition of the redundancy

(%)

(Apr. 1992, Feb. 1993) 18 16 14 12 10 8 6 4 2 0

20%* 10–20% 5–10%

5%

Managerial Professional/ Clerical technical

Sales

Blue-collar

Skilled

Unskilled

Figure 4.7 Changes in the proportion of firms reporting excessive labor by occupation and firm size from 1992 to 1993 (manufacturing) Source: Survey on Labor Economy Trend** (MOL 1993a: 35) * The percentage of firms that recognize “more than 20% of managerial workers are redundant.” ** Survey on Labor Economy Trend (rōdō keizai dōkō chōsa) is conducted four times a year by the labor ministry to capture the influences of business conjuncture on the various aspects of employment including recruitment, working time and wage. Subjects are chosen from all industries with more than 30 employees.

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of unskilled workers exceeded other categories of work, but it was constant. Redundancy was strongly recognized at large firms. The White Paper on Labor (1993) reports that clerical and managerial workers consisted of about 60 percent of the workforce in the firms that employ more than 500 employees while it was just above 40 percent at the smaller firms (MOL 1993a: 39). Redundancy of white- collar workers and the concern over their ‘productivity’ became the major issues of the New Age Japanese Management; it mentions that blue- collar workers in Japan are very ‘productive’ (cost- effective), but white- collar workers are not (Nikkeiren 1995: 42). The report proposes comprehensive countermeasures to the problem while it reaffirms that maintaining long- term employment is still crucial for Japanese firms. The proposed countermeasures include the following: 1) diversification of the career track,16 2) strict control of total personnel costs, 3) introduction of the results- oriented evaluation and wage system, and 4) coordination of working time flexibility (Nikkeiren ibid.: 35–43). All of these measures associate with each other deeply, but the motivation behind these measures is rooted in employers’ frustration over the low responsiveness of working time control on white- collar productivity. White- collar productivity varies depending upon the variance of individual workers’ competency. Work results are not in proportion to the length of working time [compared to blue- collar workers] (Nikkeiren ibid.: 91). In the case of blue- collar work, control over working time is one of the major elements that directly affect the productivity of a manufacturing line as well as the quality of production facilities and workers’ skills. In other words, given a set of production facilities and a certain level of workers’ skills, working time decides the amount of work that results. This extract, however, points out the difficulty to do the same for whitecollar workers, and the rising concern over white- collar productivity led employers to claim that “[for white- collar workers] working time does not decide work results, therefore it is not an appropriate base of wage determination” (Nikkeiren ibid.: 92). This is the point that pushes employers to look beyond the working time flexibility that could be

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achieved by the Flextime system. In Flextime, it is still necessary to pay an overtime premium once working hours became more than the scheduled working hours. The DWS ends the concepts of scheduled working time and overtime work altogether, and therefore the calculation of personnel costs can be completely detached from the concept of working time. Further, ending the concepts of scheduled working time and overtime work altogether justifies unpaid overtime. By coupling the introduction of the DWS with the results- oriented labor management system, which is associated with the stronger direction of workeffort and the individualized performance measurement, working time becomes the consequence of workeffort rather than the prerequisite of it. The DWS in this sense is the institutional base for employers to effectively claim that the wage is the consequence of the workeffort regardless of the length of working time workers spend at workplaces. Thus the demand for the DWS was usually coupled with the intention to introduce a results- oriented labor management system. Figure 4.8 shows the list of reasons why employers want to introduce the DWS, drawn from the survey conducted by Rengo (2000).17 Figure 4.8 shows that there are three major reasons: 1) to introduce a results- oriented labor management system, 2) to facilitate creative works, and 3) to respond to workers’ demand towards resultsorientation. The figure also enables a comparison between the DWS for professional occupations and the DWS for white- collar workers, which highlights the specific motivations for employers to use different types of the DWS. Comparing the two systems, expectation for the expansion of the DWS to white- collar workers is clear: to introduce resultsoriented labor management practices. It is the top reason in terms of the DWS for white- collar workers with more than 90 percent, while it is ‘to facilitate creative works’ in the case of the DWS for professional occupations. Based on motivation, the employers’ strategy was to extend the existing system of the DWS for professional occupations to cover white-collar jobs. They tried to argue that white- collar jobs started to contain similar elements as professional jobs in conjuncture with the industrial structural changes to knowledge/service economy. They emphasized the planning and decision making as the major elements of white-collar jobs, and claimed that the following categories of white- collar work are especially suitable to the expanded DWS;

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73.2

79.4

4.8

8.7 1.6

3.2

Others

4.1

DWS for white-collar workers

DWS for professional occupations

To reduce working Because competitors time (and overtime also introduce premium)

13.8

Employers’ reasons to introduce the DWS (multiple answers: %)

Workers’ request towards resultsorientation

28.6

36.5

Source: The Special Survey on the Discretionary Work System: Rengo 2000, created by the author.

Figure 4.8

To introduce results- To facilitate creative oriented labor works management

72.1

93.7

108 Transformation of Japanese Employment Relations ●

●

●

Tasks such as planning, policy-making, and research and analysis, which belong to the divisions located in the headquarters and important business places. Sales and negotiation, in which workers can make independent decisions. Tasks such as legal affairs, tax accounting, financial affairs, accounting, patent practice, public relations, investment management and real estate, which require highly professional knowledge. (Nikkeiren 1995: 92)

Combined with their employment diversification strategy, diversifying their employees into long-term employment, professional (including workers both from internal and external labor markets), and flexible employment groups, employers claimed the necessity to introduce the DWS for the first two groups (Nikkeiren ibid.) (see Table 4.3). Nikkeiren also argues that the coverage of the new DWS should be discussed at labor-management committees at each company – conventional arrangement of the negotiation with regard to the working time regulation.

Table 4.3 Nikkeiren’s strategy for the application of the DWS Category in employment diversification strategy Long-term employment group

Professional group

Flexible employment group

Details

Types of the DWS

Career-track managerial (limited numbers of core long-term employees) Career-track professional (e.g. workers in R&D section) Employed in limited-term from external labor market Employed in limited-term from external labor market

A part of the workers in this track is applicable to the DWS for white- collar workers DWS for professional occupations DWS for professional occupations Not applicable

Source: The table is assembled by author based on Nikkeiren 1995.

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Labor union representatives were opposed to the idea of the expansion of the DWS for white- collar jobs, suspecting that the employers’ true goal was to reduce the personnel costs of white- collar workers. Rengo argued that “the new system is just simply not necessary, and practically, the current Flextime system is enough to encourage discretionary work” (Rengo 1997e). Rengo also listed the following reasons for their opposition, emphasizing that the expansion would fundamentally ruin workers’ rights and that it does not contribute to reduce working time at Japanese companies; ●

●

●

●

There is a danger that the DWS would merely legitimate unpaid overtime work, and we cannot deny the possibility that intensified labor without proper working time management would lead to karōshi (death from overwork). We do not admit the argument that all the nonroutine work has discretion. It is just too vague to use it as the standard for the coverage of the DWS. In Japanese corporate organizations, tasks are done on a group basis without any individualized and clearly defined assignment. Under these circumstances, the DWS can be only applicable to the exceptional cases (Rengo 1995a).

The first concerns the labor intensification without rewards. The second concerns the coverage, and the third points to the nonexistence of individualized discretion at Japanese workplaces. Labor union representatives insist on the necessity of strong social regulations, especially on the coverage and the method of coverage determination to protect workers from the possible abuses of the system, even when the DWS was expanded to white- collar workers. The labor ministry claimed the necessity of the DWS for whitecollar workers, emphasizing the changing nature of work. In 1995 the Preliminary Discussion Committee for the DWS (sairyō-rōdō-sei ni kansuru kenkyū-kai)18 in the labor ministry, which was expected to submit a preliminary report about the possible expansion of the system, made a report to the Director of Labor Standards (rōdō kijun kyokuchō) of the ministry. The report concludes that there is a broad-based expectation regarding the expansion of the system for white- collar workers, reflecting environmental changes, such as industrial structural transformation, the redesign of the work process, and a change in workers’ values (Rengo 1997a: 80–2). The report suggests that the DWS is

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110 Transformation of Japanese Employment Relations Table 4.4 Summary of opinions on the expansion of the DWS by related actors: early stage Major points Public of discussion representatives Necessity of the system Coverage

Level of regulation

Effortbargain (and view on worker discretion)

Labor unions

Employers

Necessary

Unnecessary

Necessary

Due to the industrial structural changes, there are increasing number of white- collar workers who are applicable to the system. Mix of social and organizational levels (new labormanagement council and strong supervision by Labor Standards Supervision Office). Some white- collar workers have discretion. Since some workers become responsible for their working time, their consent is necessary.

There may be some workers who may be applicable to the system. But even for them, current Flextime system is enough.

Most of the white- collar workers do non-routine jobs.

Social-level regulation is absolutely necessary (considering the current organization rate of the labor unions, labor-management council is not enough).

Organizationallevel regulation is desirable (supporting the current arrangement of labormanagement committee).

It is doubtful if Japanese workers have discretion considering the existence of long and flexible overtime and karōshi (death by overwork). It is not possible for workers to have complete discretion since Japanese workplaces emphasize teamwork.

Many whitecollar workers have discretion like independent contractors. It is necessary to measure their work effort based on results, not based on working time.

Source: Rengo 1997b, rearranged by the author.

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necessary for white- collar workers especially those who have highly specialized skills and creativity that could be comparable with independent contractors (Rengo 1995b). As introduced above, related parties have already publicized their ideas on the possible expansion of the DWS for white-collar workers in the first half of the 1990s. This issue however was not a central issue at tripartite bargaining sessions at advisory council until 1997 as there were other issues such as the implementation of the 40-hour-per-week system. Employer-led deregulation committees pushed+ to make the issue at the forefront of the reforms of employment relations. Table 4.4 summarizes the opinions by major actors based on the conceptual framework that stressed three points including coverage, level of regulation and effort-bargain.

The political dynamics of the working time deregulation Marginalization of labor in the politics of deregulation From 1997, the discussion on the expansion of the DWS for white-collar workers was fueled by pressure from the deregulation committee. The process is the same as that characterizing the reforms of the labor market regulations. The increasing influence of the deregulation committee, particularly the second public announcement from the Special Committee on Deregulation (kisei kanwa shō iinkai) in December 1996, had a strong influence on the process of tripartite bargaining at the advisory council.19 After the public announcement, the topic of the DWS immediately appeared on the agenda of the advisory council in February 1997. The labor ministry also requested the council to have a midterm report on the issue of the DWS by July 1997. Under such pressure, advisory council started to discuss the expansion of the DWS intensively. Having had difficulty in reaching any compromise, the labor ministry made a draft proposal in July 1997 to facilitate building consensus on the discussion on the possible expansion of the system. This was considered as a sign of the strong influence from the deregulation committee as the labor ministry had never made such a proposal to facilitate a discussion at advisory council (Nakamura 2001).20 The proposal suggested the expansion of the DWS for some white-collar workers. The draft proposal by the labor ministry suggested the establishment of the new DWS for white- collar workers in addition to that for professional occupations in the LSA. The contents of the draft proposal are much closer to that of employers than the labor unions especially in terms of the coverage21 (Nakamura 2001). The draft proposes that the new system covers those who are assigned to the work of planning,

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policy-making, research and analysis at headquarters and related branches, and the jobs to which managers are not able to give concrete directions in terms of the methods and the allocation of time to execute the tasks. The proposal that mandated the establishment of the new labor-management council was also closer to employers in terms of the regulation of the new system. Although it was designed to facilitate more labor participation than the conventional arrangement of a labormanagement committee, it allows the organizational-level regulation of the coverage of the new system at each firm.22 In addition, the role of the new council was restricted by the report of the Study Group23 that pre- examined the possibility of the expansion of the DWS to whitecollar workers. Employers agreed with the draft proposal prepared by the labor ministry. Rengo was against it, but they failed to form a strong collective front. This was due to internal dispute within the labor unions. Two major industrial level factions within Rengo, Japanese Electrical Electronic and Information Union (Denki Rengo) and the Confederation of Japan Automobile Workers’ Unions (JAW, Jidosha Soren),24 were actually positive about the expansion of the DWS, while many other member organizations were against (Nikkei 1998c; Mainichi Shimbun 2003). Since an increasing proportion of white- collar workers have relatively high levels of autonomy due to the changing nature of work in these industries, the DWS was not considered by many as radically unjust. Suzuki,25 the chairman of the Electrical Workers Union, once said in a conference that “we should look at the positive side [of the DWS]. To work with discretion should be the basic right of workers” (Suzuki 2000). Thus, despite a request to repeal the bill, Rengo had to negotiate a ‘realistic’ compromise with the labor ministry and employers even during the discussion at advisory council right before the Parliament sessions in 1998 (Interview with Rengo official, 22 February 2001). The following tripartite bargaining at advisory council was not favorable to labor because of the increasing influence from the deregulation committee. Nakamura describes the negotiation at this stage as “public representatives and employers vs. labor” (Nakamura 2001: 477). With this political juxtaposition, the expansion of the DWS to white- collar workers became unavoidable. The discussion on the revision of the draft proposal by the labor ministry was mainly focused on the actual design of the expanded DWS, especially the clarification of the coverage and the process of coverage determination. Having failed to reach any compromise, the proposal by the advisory council was sent to the Parliament session with notes on the conflicting opinions on coverage,

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who will be the decision-making body, and other items such as the necessity of workers’ consent.26 While the declining power of labor was clear within institutional politics, the revision of the LSA caught the public attention, and that helped labor to fight back at the Parliament sessions. As radical as the change was supposed to be, social discussion on the revision of the LSA picked up steam in early 1998. It concerned negative impacts of the DWS, including longer working hours and physical and mental health. Various symposiums were organized by lawyers and scholars, and Rengo organized the first successful May day (labor day) in the 1990s (Nakamura 2001: 487). The media also started to cover the issues and concerns related to the revision of the LSA. For instance, Nikkei, the newspaper for business and economic issues, reported on a court case that recognized the death of one system engineer who worked under the conditions of the DWS as karōshi (death by overwork) due to the lack of working time management (Nikkei, 1998a). Nikkei also introduced one study showing that workers who work under the DWS have less time with family, and suggests careful implementation of the system (Nikkei, 1998b). From spring 1998, the Parliament session started to discuss the revision of the LSA. As Rengo could not repeal the bill at tripartite bargaining of the advisory council, they tried to increase restrictions on it by using their ties with opposition parties, such as the Democratic Party and the Social Democratic Party. Backed up by strong mass appeal, such as May day, this strategic move of Rengo was relatively successful (Nakamura 2001: 487). The loss of the ruling Liberal Democratic Party at the upper house election in August 1998 further helped the opposition to add more restrictions. The restrictions were there to discourage employers to actually use the system, which, for instance, included: a mandatory confidence-vote (once a year) to choose the members of the new labor-management council, and unanimous agreement at labormanagement council on the issues that will specify the conditions and practices of the new act.27 All these needed to be recorded and submitted to the Labor Standards Supervision Office. The revised LSA was passed in the Parliament session in September 1998. As a sign of the relatively successful opposition efforts, the enactment of the expanded DWS was postponed until April 2000. Due to the onerous restrictions, the use of the new system stayed at quite a low level after the enactment of the revised LSA. According to the General Survey of Employment Conditions, only 1.9 percent of firms larger than 1,000 employees used the new DWS in 2004,

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whereas about 7.3 percent used the one for professional occupations. The procedure to establish new labor-management councils and the necessity for a unanimous agreement about the various items for every year seemed to be especially demanding. Another survey showed that, among the 63 companies that used the new system, a significant majority expressed frustration regarding items such as the “necessity of agreement once every year” (82.5 percent), “necessity to get consent from individual worker” (60.3 percent), “setting measures for health and welfare” (60.3 percent), “unanimous vote at the council” (58.7 percent) and other such topics (MHLW 2002c). 28 Employers associations claimed that all these restrictions should be lifted (Keidanren 2001; JBF 2002, 2003, 2004). Although the formal system of the DWS has been underutilized, the aspiration among the employers to adopt the system has been continuously high. To avoid the complexity of the new DWS, Japanese firms started to approximate the DWS by the use of the Flextime system coupled with the results- oriented labor management system. Major electronics companies, such as NEC, Toshiba, Fujitsu, and Hitachi, established such systems, in order to decouple working time from wage determination. 29 They set a fixed length of overtime work, and paid only the fixed overtime premium regardless of the actual working time. The fixed length of overtime is typically set around about 20 hours per month (Yomiuri Shimbun 2000). Such practices are criticized as a quasi-DWS (nise sairyō-rōdō-sei). As long as actual working time is shorter than the fixed length of overtime work, the practice is legal. However, in many cases, it ends up with an underpayment for workers. Triggered by complaints made by a group of workers who organized an alternative labor movement, 30 the Labor Standards Inspection Office has investigated some cases and ordered companies to pay the actual amount of overtime premium for the workers (see Akahata 2002). Following a labor ministry’s analysis of the underused DWS and the illegal practices spreading within firms, a number of the burdensome complexities of the DWS were relaxed by the most recent revision effective in 2004. The major points of relaxation were as follows: 1. A condition about the coverage that limits applicability to those who work at workplaces where ‘important decisions are made’ is lifted. 2. The report of the establishment of the labor-management council to the Labor Standards Supervision Office is not necessary (and it is not necessary anymore to report if they really meet).

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3. The voting system at the labor-management council is less strict: instead of mandating an unanimous vote, now 4/5 of the total votes is acceptable. 4. The labor-management council does not need to report ‘complaints’ to the Labor Standards Supervision Office. Rengo opposed all the deregulations, but could not stop it (Rengo 2002, 2003). With this further deregulation, some well-known companies started or expanded their use of the system after April 2004 (for example, IBM Japan). 31 Figure 4.9 shows the increasing popularity of the DWS systems – both for professional occupations and white- collar works – after the loosening of restrictions. The data in Figure 4.9 include large companies that employ more than 1,000 employees in the manufacturing sector, thus the numbers are higher than the statistics that include all firms. Before the last deregulation, the DWS for white- collar jobs was barely used, while the DWS for professionals was relatively well- used. Although it still is just above 10 percent in 2009, the number of company that use

25

Manufacturing (larger than 1,000)

20 Companies that adopt DWS pro Companies that adopt DWS white Workers covered by DWS professional Workers covered by DWS white-collar

15

10

5

Figure 4.9

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1997

1996

1995

0

Increasing use of the DWS (large firms: %)

Source: General Survey on Wages and Working Hours System: MOL 1996b, 1997, 1998c, 1999e, 2000c; General Survey on Working Conditions: MHLW 2001c, 2002b, 2003, 2004c, 2005c, 2006c, 2007b, 2008a, 2009b.

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the DWS for white- collar workers however significantly increased after the deregulation. Decentralization of working time regulations The marginalization of labor in the policy process had two consequences. The one is the establishment of the new DWS for white- collar workers, and the other is the decentralized regulation of the new system. When the DWS for professional occupations was established in 1987, it was clear that the system is socially regulated as the coverage was limited to the list of socially recognized occupations that require official certificates and/or credentials. The new DWS for white- collar workers is however different under the complicated conditions in terms of coverage and procedure. In the advisory council sessions, Rengo kept arguing that the coverage should be socially regulated considering the current rate of organization of the trade unions (Rengo 1997b, 1997c). Employers argued that the coverage can be decided at the organizational level. Even the public representatives rejected labor’s opinion that “the corresponding organizational titles upon assignments are different from firm to firm, thus the coverage is better determined at the new [organizational-level] labor-management council” (Rengo 1997f). The new law shows the decentralization of working time regulation under its complicated surface that attempts to define ‘discretionary workers’ by the level of authority workers have and the difficulty of work contents. Article No. 38–4 of the LSA, newly added to expand the DWS to white- collar works, defines the coverage of the system as follows (see Appendix 4.2 for the details of the DWS both for professional occupations and white- collar workers); [W]orkers who work at the workplace where important decisions on the management are made, and who perform tasks of planning, drafting, researching and analyzing matters regarding business operations for which employer does not give concrete directives regarding such decisions as the means of accomplishment must be left largely to the discretion of the workers. The law further limits the range of covered employees as “workers who have knowledge and competency to adequately perform the assigned tasks,”32 however, ambiguity could not be avoided. In an effort to avoid confusion, the labor ministry released guidelines to clarify what the law means.33 The guidelines define the level of authority by the type

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of workplace that the “workplace where important decisions are made” refers to “headquarters and regional headquarters and branches where the authority to make important decisions are located.”34 One indicator that the guidelines suggest on “the authority to make important decisions” is the residency of the board member of the company.35 The guidelines also define ‘discretion’ by the contents of work by establishing four criteria. They include the following: 1) the tasks are related to management, 2) planning, policy-making, research and analysis are the main tasks, 3) the nature of the tasks requires a great deal of discretion for workers, and 4) the employer does not give any concrete directions on how to accomplish those tasks. These four criteria are not exclusive of each other, but the guidelines say that it is mandatory to meet all these four conditions.36 All these efforts only clarified that these complex conditions do not substitute social regulation. As employers and the ministry advocated, the new system essentially relies on the organizational-level regulation. The labor ministry limits its role in defining the coverage of the new DWS by only giving examples of the typical discretionary works in guidelines. In the Parliament sessions, the director of the labor ministry at that time37 explained about the guideline, and said that “the new DWS for the white- collar covers workers who want to take more self-initiative and take central roles at each companies” (Shūgiin 1998) that could only be defined at each workplace. Thus the guidelines state that “[the new] labor-management council has to set clear and concrete standards such as the length of service and the level of ranking and qualification”38 since the level of experience varies among the companies and types of work. 39 As a result, the new DWS regulations came to allow individual firms to make a range of decisions. After the further deregulation of the DWS in 2004, working time regulation for some parts of white-collar workers was significantly loosened and decentralized. Table 4.5 summarizes the transformation made by the deregulatory reforms. First of all, the establishment of the DWS segmented the workforce in terms of working time regulation. A selected number of white-collar workers were separated from the uniform social regulation of working time of the past: the eight-hours-per- day system and the negotiated amount of overtime work. Second, labor unions failed to gain a strong grip on the selection of the applicable workers at societal level, and the selection- decision was given to organizational-level labor relation, where cooperative enterprise unionism is still dominant.

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Table 4.5 Changing working time regulations for white- collar workers Legal regulation

Regulation of control and effort-bargain

LSA • Societal-level regulation • Eight hours per day • Coverage: all • Negotiated number • Effort-monitoring: scheduled working time of hours for (8-hours-per- day); overtime overtime work • Organizational, workplace-levels regulation • Effort-monitoring: labor-management committee (rōshi kyōgikai) negotiates with cooperative enterprise unions about the length of overtime work; management is responsible for working time management (to calculate overtime premium) • Effort-bargain: flexible overtime work, relatively organized practice of unpaid overtime work (rewards in the forms of overtime premium and positive evaluation) Revised LSA • Societal-level regulation • Discretionary Work • None System • Organizational, workplace-levels regulation • Coverage: labor-management council (rōshi iinkai) negotiates with cooperative enterprise unions, less obligation of reporting to the Labor Standards Supervision Office • Effort-monitoring: management’s responsibility was significantly loosened as they do not need to calculate overtime premium; ‘self-management’ • Effort-bargain: individualization of control – individuals become agents of self- control in conjuncture with the labor management reform, which alters working time a consequence of work effort; employers take the effort of unpaid overtime for granted

With regard to the monitoring of workeffort, two factors mentioned above effectively located the selected number of workers out of the realm of the social-level monitoring. In addition, management became less responsible for the working time management of the selected workers since they do not need to keep precise records of working time, especially overtime work.40 This loosening of working time management makes working time management a matter of self-management by workers, locating them out of the conventional management of workeffort at organizational level. Thus, the establishment of the DWS can be seen as an institutional foundation to emphasize ‘self-management’

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that has a central role in the reform of the labor management system that emphasizes resultsorientation. Under the new arrangement, the coupling of the DWS and the results- oriented labor management system, management now manages results, rather than working time, to control workeffort.

The DWS: a legal base for the renegotiation of effort-bargain The DWS was first established and introduced as a part of a series of measures to reduce the working time of Japanese workers; an initiative designed to improve quality of life. However, after the burst of the bubble economy, the DWS was recast in a different light. In the early 1990s, employers were under pressure to cope with the gradual implementation of a 40-hour-per-week system, and an increasing ratio of whitecollar workforce urged them to be aware of the relationship between their personnel costs and workeffort. While controlling working time is closely linked with the amount of workeffort by blue- collar workers, there was growing recognition that it was not the case for white- collar workers. It was in this context that employers started to be interested in the DWS that decouples working time and wage, in conjunction with the introduction of the new results- oriented labor management system. The process of the establishment of the DWS for white-collar workers was similar to that of the expansion of the external labor market. Employers initiated the reform, but labor was completely against it. The labor ministry was willing to establish the DWS from the start and there was increasing pressure from the deregulation committees. After 1997, due to this pressure, the tripartite advisory council had no choice other than to consider the realistic design of the new DWS. After heated social debates over the revision of the LSA, the new DWS for white-collar workers was made effective in 2000. In the first version of the new DWS, many restrictions were attached to the use of the system, as labor unions regained momentum backed up by popular support shown in media and in the election. These restrictions were to stop decentralization of working time regulation by not making the DWS user-friendly. However, these restrictions were significantly loosened by the revision in 2004, by which societal-level regulation of working time was lifted, and the regulation was effectively decentralized to organizational level. This employer-led deregulation of working time had significant impacts on the contract/effort aspect of employment relations. First,

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the politics of deregulation allowed the segmentation of the workforce through different working time contracts. At the societal regulatory level, working time regulation in Japan set up normal hours of work that covered all workers uniformly. However, the introduction of the DWS meant that there emerged selected numbers of white- collar workers who are separated from the societal-level regulation. In addition, it decentralized the coverage decision of the selected workforce to organizational level so that employers became able to decide to whom to apply the DWS. Labor unions demanded to regulate it at societal level, but it ended up with the same level of regulation as the conventional arrangement of overtime based on organizational-level agreement, where managerial prerogative is assumed with regard to the issues of labor management. Second, it significantly decentralized the level of working time monitoring, namely the level of work-effort monitoring. The DWS lifts the societal-level monitoring of workeffort by ending the concept of scheduled working time, which also acquits employers of their responsibility to manage working time at the organizational level. Thus the application of the DWS means placing selected white- collar workers out of societal and even organizational-level monitoring of workeffort through working time, and it essentially makes working time an issue of self-management. For workers, it is potentially an intensification of workeffort. In the workplaces before the deregulation, workers accepted flexible use of overtime and unpaid overtime, but they were also rewarded in the form of overtime premium and the recognition as a committed member of the company, mostly through positive evaluation. However, under the DWS, employers became able to take these efforts for granted. The introduction of the DWS changes the institutional foundation of workplace control for some segments of white- collar workers, which allows the renegotiation of effort given the different expectation shown by employers in conjunction with the new labor management system. This is the point where the detailed analysis of the linkage between the expansion of the DWS and the introduction of the results-oriented labor management practice becomes necessary. First, the decoupling of the wage determination and working time enabled employers to control workeffort based on work results rather than the length of working time. This also means the increasing importance of performance measurement within the system of labor management as that of working time declines. This raises the question of how to measure work results. As discussed in Chapter 2, the measurement of workeffort at Japanese

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firms has been highly subjective, thus the renegotiation about the criteria of measurement will be a major issue of contention between employers and workers. Second, the introduction of the DWS transferred the responsibility of working time management largely to the hands of individual workers, which potentially means the transfer of responsibility of work-effort control to individual workers. This emphasis of self-management may cause renegotiation of other aspects of employment relations in the attempts of labor management reforms. Japanese firms relied on the unclear demarcation of work responsibility and on the management prerogative on worker relocation, which were the sources of their competitive strength. However, the reforms pushed these practices on to the table for renegotiation, since workers may be frustrated about the selflessness about these issues even though they are under pressure to carry self-responsibility with regard to effort. These points imply that to fully understand the meaning of the DWS on Japanese employment relations, it is necessary to investigate the reform efforts at organizational and workplace level, executed as the introduction of the results- oriented labor management system. These are the issues that will be examined in the next chapter.

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5 Re-bargaining Effort: The Introduction of Results-Orientation at COMPUJ

Labor management reform and white-collar effort The legal regulative reforms examined in the last two chapters were strongly initiated by employers to cover the deregulation of the labor market and working time. Employers established their claims based on the actual needs of companies that had been undergoing significant reforms of labor management practices to cope with globalization and industrial structural change. This reform was to introduce resultsorientation in the labor management system, and employers demanded legal regulative reforms to fully achieve the purposes of the reform. This chapter focuses on this reform effort at organizational and workplace levels, which on the one hand was the seedbed for the regulative reforms and on the other hand was significantly facilitated by these legal reforms. The introduction of the results- oriented labor management system is an attempt by employers to transfer result responsibility to the hands of individual workers. The most visible aspect of the reform is the reorganization of the wage system for most white- collar workers. Employers tried to erode the seniority and/or age components of the life-stage adjusted wage system, and emphasized the performance element in wage determination. This change was associated with the change of the mode of control from unclear job demarcation coupled with long-term accumulation of subjective evaluation to clearly defined organizational roles with relatively short-term results- oriented personnel evaluation. The legal regulative reforms, especially the reforms of working time regulation, helped support the change by emphasizing ‘self-management.’ 122

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Re-bargaining Effort: Case Study at COMPUJ

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Labor market reforms preserved the institutional base of workplace control by not affecting the mobility aspect of employment relation of regular workers. This process of reform involved the renegotiation of effort for regular white- collar workers. Drawing evidence from the case study of a large electronics company, this chapter argues that the ‘self-management’ emphasized in the new labor management system actually strengthens the control by management due to the declining significance of labor unions in effort control at workplaces – it was through the stronger alignment of individual work effort with corporate goals, while eliminating a major part of the life-stage component from the wage system.

The movement of labor management reform: the case of COMPUJ Employers’ movement to introduce results- oriented labor management From the early 1990s, and especially in the mid-1990s, there was a significant expansion of interest in introducing a results- oriented labor management system among Japanese employers. The introduction of the new system primarily attempts to transfer result responsibility to individual workers through changes in how wages were determined as a core of the new system. Recognizing the rigidity of life-stage adjusted wages, the demand to introduce a more flexible wage system became stronger – in particular at large firms of some industries that faced harsher international competition and faster product/service changes. In fact, Sekizawa Tadashi, the president of Fujitsu, one of the giants in the industry of computer and electronics devices, is said to be the first to have claimed the necessity of the new system by announcing the “declaration of resultsorientation (seika-shugi sengen)” in 1994. Having dispatched the inquiry commission members to Silicon Valley counterparts, he tried to push the managerial reform movement forward. Figure 5.11 shows that Sekizawa was not alone. Rather, it looks as if it was almost inevitable in 1994 for someone to voice the necessity to transform the way the white- collars work and to change the legal regulation necessary to implement the reform. The publication of the New Age Japanese Management from Nikkeiren in 1995 was a part of this movement. At the start of the 1990s, there were already very few employers who expected to rely on a seniority- oriented system in the future. A significant majority, slightly more than 60 percent in 1990 believed

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124 Transformation of Japanese Employment Relations 100 90 80 70 60 50 40 30 20 10 0

unknown difficult to tell seniority and results results oriented seniority oriented

1990

1993

1996

1999

2002

Figure 5.1 Future principles of labor management (firms with more than 5,000 employees: %) Source: Survey on Employment Management*: MOL 1990a, 1993b, 1996a, 1999d; MHLW 2002d. * Survey on Employment Management (koyō kanri chōsa) is conducted every year by the labor ministry by sending questionnaires to a stratified sample of about 5,800 firms that employ more than 30 employees. The response rate was, in the case of 2002 survey, 73.9 percent

that the introduction of a results- oriented system was necessary. This figure jumped between 1993 and 1996, at the time of Sekizawa’s declaration and Nikkeiren’s publication, reaching nearly 80 percent in 2002, and was part of the society-wide movement to introduce resultsorientation. This increasing interest in the new principle of labor management by employers shared the background contexts with the establishment of the DWS for white- collar workers. As seen in the previous chapter, more than 60 percent of the workforce at large firms (more than 500 employees) were white- collar workers in 1990, while it was about 40 percent at smaller firms. This was due to the industrial structural changes to the knowledge/service economy and the increasing international division of labor during the last half of the 1980s. The increase in white- collar workers became a source of frustration for employers since it is generally more difficult to control the productivity of white- collar workers than that of blue- collar workers, as the length of working time is not in proportion to the amount of work results. Given the frustration, two factors further pushed employers to look for a solution to the situation in Japan. First is the reform of working time regulation from the late 1980s, that had been a source of rising personnel costs. Second is the

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economic downturn and the following recession from the early 1990s. These made employers strongly recognize the necessity to seek further provisions to achieve higher flexibility and productivity of the whitecollar workforce. As Figure 5.1 shows, the growing expectation to the ‘results orientation’ was clear, but there was no fixed ‘package’ of results-oriented labor management systems. It is rather a frame of management’s movement to reform labor management practices that targets white-collar workers, which has the common feature of transferring result responsibility to individual workers. Thus the introduction of the results-oriented labor management practices inevitably involves the politics at organizational and workplace levels with regard to the design, contents and implementation of the system between management and workers. To understand the impacts of the reform on the employment relations of core regular white-collar workers, it is necessary to examine the process of the movement. The analysis of this chapter, therefore, will be based on a case study of one electronics company, which is given the name of COMPUJ as a pseudonym. COMPUJ in context COMPUJ is one of the largest electronics manufacturing companies in Japan, leading the industry domestically and internationally. It was founded about a hundred years ago, and soon emerged as the largest provider of telephone equipment for Japan’s communication ministry and affiliated to one of Zaibatsu corporate groups. After the Second World War, it maintained its status as a major supplier for Nippon Telegraph and Telephone (NTT), and in the 1950s and 1960s NTT related business represented over 50 percent of the sales of COMPUJ (Hoovers 2005: 3). Communication technologies became their firm technological foundation including broadcasting equipment for radio, TV and satellite systems. Transistor technology became integrated circuits and computers, inevitably related to their leading roles in the field of semiconductors and microprocessors (Fransman 1995: 260). Based on these technological foundations, the businesses of COMPUJ grew significantly from the period of rapid economic growth to the end of the 1980s. The amount of capital was 20 thousand million yen (approximately 200 million US dollars) in 1950, and expanded more than ten times in 1990. The sales exceeded 1,000 hundred million yen (1 billion dollars) for the first time in 1964, but it surpassed 40,000 hundred million yen (40 billion dollars) in 1990. At the end of the 1980s, COMPUJ had three broad areas of business. One was the ‘communications systems and equipment’ area that includes digital switching

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systems, fiber optic and radio transmission systems, and mobile communication systems. The second was the ‘computers and industrial electronic systems’ that included mainframe computers, PCs, and VAN (value-added network). The third was ‘electron devices’ that included VLSI (very large scale integration) memories, microcomputers, and other conductors. These three main businesses respectively had about 30 percent, 45 percent, and 17 percent of the total sales according to the corporate report. At the time of the first round of our research in 1995–6, it was operating in the computer industry that was faced with international competition and developments such as the shift from hardware to software. Due to the harsher international competition and especially facilitated by the high appreciation of the yen by the end of the 1980s, COMPUJ, like many other Japanese manufacturers, transferred its production sites overseas, having established more than 60 production sites abroad by April 1994. In addition, due to the shift of focus within in the industry, COMPUJ hired many new employees in the early 1990s to cover the expansion of the software markets (the increase pushed down the average age of employees by three years). In 1992 and 1993, the number of employees at COMPUJ recorded a historical high; it has been gradually declining since then.

(80% of the domestic employees are white-collars) 100

80 managers

(%)

60

clerical worker engineers

40

technicians 20

0 1985

1990

1995

1997

Figure 5.2 The growing proportion of white- collar workforce at COMPUJ Source: COMPUJ 2000: 18 (internal document).

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These moves led to significant changes in the domestic composition of employees.2 The former contributed to the decline in the number of blue- collar workers, and the latter expanded the number of white-collar workers. Figure 5.2 shows the consequences. Figure 5.2, made by the personnel department of COMPUJ, shows that the ratio of white- collar workers, including managers, clerical workers and engineers, goes up from about 65 percent in 1985 to nearly 80 percent in 1995 and 1997 (in other documents, it is counted as more than 90 percent, for example, COMPUJ 2000). Under the circumstances, it became clear that the main target of labor management is shifted from blue- collar workers to white- collar workers. The internal document of COMPUJ rightly pointed out the necessity of this shift, and COMPUJ became one of the forerunners of the reform movement of labor management practices aimed at white- collar workers. To improve the ‘productivity’ of white- collar workers, COMPUJ took two strategic initiatives: 1. the establishment of semi-autonomous product/service divisions responsible for sales/profit in a specific segment of market, with the authority for labor management to cope with market environmental changes, and 2. the establishment of policy and concrete measures that supported the ‘self-management’ by white- collar workers, in which the main process was the implementation of management by objectives (hereafter, MBO) and a new personnel evaluation system (COMPUJ 2000). The organizational reform had two meanings. First, it was to cope with market environmental change, which emphasizes ‘customer orientation’ that was seen as the future direction of the industry and the company. It is beyond the scope of this chapter to go deeper into the details of the design of the organizational reform, which was quite frequent throughout the 1990s. It is summarized in Figure 5.3. For the purpose of this chapter, more important was its intention that the success (and failure) of units in the respective markets should be directly reflected in the wage, thereby the results-responsibility should be transferred to the units and individuals. This is why the organizational reforms were coupled with wage system reforms (see Table 5.1 about the history of labour management reforms at COMPUJ). The organizational restructuring in 1990 was coupled with a ‘group bonus

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Vision In 1977, Matsuyama, the president of COMPUJ at that time, presented the corporate slogan, which soon became famous in the electronics industry. This slogan represents a long-term vision of the gradual convergence of the technologies of computers and communication systems. The slogan was renewed in the 1980s, which represents an important recognition by the COMPUJ top managers that all technological convergences will seek the ‘user friendliness’ that will (and should) require significant customization of products and services. This recognition led to the strategic re-organization of the firm from a ‘product-oriented’ one to a ‘customer’ or ‘end-user-oriented’ one. Throughout the 1980s and well into the 1990s, COMPUJ continuously sought to implement this vision. Outcomes COMPUJ started a series of organizational restructurings from 1990. The first round of reform was to abandon divisions and departments based on the lines of products/services, and to establish them on the lines of customer/market segments. In addition to shifting the organizational principle toward a customer/ market orientation, the organizational restructuring turned the major divisions into semi-autonomous units, responsible for their own profit performance. In 1993, COMPUJ executed another round of restructuring to enhance the market-orientation and profit responsibility of each semi-autonomous business unit. They restructured the organization into eleven divisions (with ‘Infrastructure,’ ‘Corporate System,’ and ‘Personal Computing’ as main divisions) and five marketing support groups. The Organizational Chart as of July, 1994 (see Appendix A5.2) The figure describes eleven groups and five marketing groups as independent. But other documents and interviews suggest that they are integrated and should function as a ‘matrix organization.’ In a ‘matrix organization,’ each of the eleven groups has four focuses on customer segments; NTT, public sector, domestic firms, and international, into which lower ends of the four marketing sections are integrated. In the late 1990s, these semi-autonomous business units became firm internal ‘kanpanī’ (company). Kanpanī is not a legal entity despite of the clear reference to ‘company.’ The purpose of the reference is to emphasize the responsibility of each of the business units on sales/profit as if they were independent business enterprises. The kanpanī system continued until 2003. Figure 5.3 Organizational restructuring at COMPUJ

system’ that distributed the funds for bonuses in proportion to the performance of each semiautonomous business unit, although the distribution principle within the business units was not changed. The organizational reform in 1993 was coupled with a ‘new wage system for managers’ that transferred results-responsibility finally to individual workers, even though it only applied to managers. With this reform, managers’ wage was divided into two parts: ‘basic annual salary’ and ‘performance.’ The basic annual salary is determined by the ranking

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Results- Orientation Fairness of evaluation Self management

1988 1989 1990

--------------------------

Year

--------------------------

Table 5.1 The chronology of the labor management reforms at COMPUJ

Group bonus system

Opportunity announcement Flextime system

Reorganization of ranking/qualification (introduction of ‘wage band’ system)

Revision of the promotion standards ---------------------

Revision of the wage component for shunin 1996

1997

Career development system for managers

Revision of the training system for prospectus managers

A Style (quasi DWS for white- collars) for shunin in staff and sales

1998

A Style for all shunin workers Reorganization of ranking/qualification

----

1994 1995

DWS for professional occupations New wage system for managers ----------------------------

1993

-------

MBO evaluation and skill/career development system 1992

2000

New system of evaluation (konpitenshī manejimento)

2002

DWS for white- collar works Role Grade System (managers)

Source: Internal material of COMPUJ.

that reflects mid-to long-term comprehensive evaluation. The performance part reflects short-term performance results of the individuals. These reforms of the wage system were implemented in close association with the introduction and elaboration of the MBO and a new personnel evaluation system. However it is immediately clear that it is difficult to evaluate the ‘results’ and ‘productivity’ of white-collar workers as they are essentially ambiguous. Thus the strategy was to give workers clear ideas about their responsibilities and to mobilize consent and effort from workers more strongly towards the responsibilities under the circumstances of the gradual change of the wage determination system. This line of reform was officially launched in 1990, named as ‘management renovation movement’ (keiei kakushin undō) called ‘Best COMPUJ’.3 These efforts at labor management reforms started without any struggle as the labor union supported them. The labor union at COMPUJ, a traditional labor union in the manufacturing industry,4

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had a clear policy on the management of blue- collar workers; it should be based on seniority, and the results of personnel evaluation among workers should not be too wide. However, a full- time union official at COMPUJ insisted that it is not appropriate to apply the same labor management system to white- collar workers as it is ‘lukewarm.’ The official admits that making more of a difference in wage and promotion is completely ‘rational,’ and further claims that it is even desirable in order to achieve ‘fairness’ at COMPUJ. He said; Until recently, labor union movements emphasized the necessity of ‘stability’ of workers’ lives, like, represented in the demands of various types of fringe benefits. It is still important, but we neglected the aspect of ‘fairness’ to reward more to high achievers. ... We still need to maintain ‘stability,’ but are trying to make a shift to expand ‘fairness.’ I think the implementation of the MBO is a right direction in this sense, but necessary to improve openness and objectivity [of labor management system] (interview: full-time union official, 16 June 1995). Thus it is clear that there was no serious contention between management and labor unions at organizational level. In the following sections, the analysis will focus on the contents of the new systems and the workers’ response to them that shaped the future direction of the labor management reform.

Initiating the results-oriented labor management Management by objectives The role of MBO is big and intense. But the vision of COMPUJ was clear; it was to tighten the association between organizational objectives and the direction of workers’ work effort. The philosophical concept created by the top management of COMPUJ about the reform asserts that the organization should be both a harmonic whole, and individual parts. It is the tight- coupling of organizational objectives and individual goals, which is believed to achieve the ‘coordinated autonomy’ of business organization. With this recognition, the introduction of the MBO and a new personnel evaluation system was central in their reform effort, which attempts to motivate workers towards clearly defined organizational objectives and evaluation that emphasizes achievement. Targeting

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the workers, the personnel department explained the purposes of the labor management reform as follows: ●

●

●

●

Emphasis on the communication between managers (supervisors) and workers: to improve consent on the results of personnel evaluation. Integration of the MBO with personnel evaluation: to make the evaluation standards open. Thorough management of objectives: to install resultsorientation based on the spirit of challenge and the high motivation towards selfdevelopment. Implementation of self- evaluation: to actively develop human resource through on-the-job training (internal document of COMPUJ).

The personnel evaluation sheet was revised to facilitate these ideas, and renamed as ‘Communication Sheet.’ This four-page sheet is subtitled ‘self-assessment / supervisors’ evaluation and development suggestion sheet’ (jiko shinkoku/hyōka ikusei shīto), and workers and supervisors are supposed to fill in their self-assessment and evaluation in terms of; 1) performance measures, 2) competency and ability, 3) career development, and 4) others. In terms of the procedure, workers fill in their assessment about each of these four areas first, and two supervisors evaluate them (see Table 5.2). It is important to note that the sheet is divided into three major categories through which management intends to control workers. First, it has an independent category that evaluates performance. In this category, workers list their assignments from the previous year (that is given by management in consultation with workers) and assess how much they have achieved. Supervisors evaluate the employees using a scale of one to five. Expansion of this category in wage determination means the increasing importance of this part of personnel evaluation. The competency and ability part lists the skills that management values, which is an attempt to direct and elicit workers’ effort to fill the organizational necessities of skills. Interestingly, this part also takes a form to evaluate the ‘results.’ Workers list the objectives of selfdevelopment from a year ago, and they evaluate to what extent they have been achieved. The space for the evaluators is quite detailed for this section. Largely it is divided into two parts; ‘basic knowledge’ and ‘management competency.’ The latter is further divided into four parts;

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Table 5.2 The MBO evaluation sheet at COMPUJ (translation of the performance measures by rank)

Performance measures

Competency and ability

Buchō

Kachō/Shunin

Tantō

I. Achievement of work ● Overall performance ● Strategic and innovative qualities of decisions made ● Achievement of target II. Strategic employment of subordinates’ abilities ● Assignments of appropriate tasks to subordinates ● Developing environment and opportunities that enhance subordinates’ abilities ● Degree of trust given by subordinates III. Employment of specialist qualities

●

Degree of achievement in the work responsible for Supervision of subordinates Degree of achievement of challenge targets

●

I. Planning ability ● Theoretical and effective business directions II. Organizational ability ● Flexible and realistic distribution of work III. Leadership ● Information gathering ● Prompt decision making ● Strong leadership IV. Specialist abilities ● Quality knowledge and skills in specific fields ● Creative R&D V. Coordination ability ● Liaison and communication VI. Suitability to the current position VII. Capability for more senior positions

●

Operational knowledge Ability to pinpoint the issues (problem setting) Planning ability Execution ability Leadership Ability to review the process and refocus on the new issues (ability of critical assessment)

●

●

●

●

●

●

● ●

●

●

●

● ● ● ●

Degree of achievement in the work responsible for Supervision of subordinates Degree of achievement of challenge targets

Operational knowledge Ability to pinpoint the issues Planning ability Execution ability Leadership Ability to review the process and refocus on the new issues

Continued

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Table 5.2 Continued Buchō ●

Career Development

●

[Called ‘Future Roles’ for Bucho, and limited to choices of line manager, sennin, senmon]

Kachō/Shunin

Tantō

●

●

●

●

●

●

Enthusiasm for current work Aptitude for current work Future direction of roles Aptitude for overseas posting Career planning for foreseeable future

●

●

●

●

●

●

Other

●

Personality traits, etc.

●

Enthusiasm for current work Aptitude for current work Future direction of roles Aptitude for overseas posting Career planning for the foreseeable future Work fields in which experience is necessary for his/her career development Work fields not suitable for him/ her Personality traits, etc.

Source: COMPUJ personnel evaluation sheet.

‘problem setting,’ ‘planning,’ ‘execution/negotiation/leadership,’ and ‘critical assessment.’ In this way, the evaluation sheet enables the evaluators to assess workers’ competency on the phases of typical workflow (see Table 5.3). Corresponding to each of these categories, two evaluators assess these items using five ranks and they also provide short written comments. Further, both of the evaluators are required to make summary comments on ‘competency and ability’ in the context of future skill formation and career development.5 Lastly, the career development part checks the matching of the personnel with the job, and provides a space for employees to show future career aspiration. This is a tricky part. As discussed in Chapter 2, to be able to adapt to whatever jobs workers

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Table 5.3 Required capabilities in workflow

Management cycle

Basic operational knowledge Ability to pinpoint the issues, problem setting Planning ability

Execution/negotiation/ leadership ability Ability of critical assessment

Basic and applied knowledge on the assignment Capability to find problems with strategic vision by gathering information Capability to design effective plan considering various environmental conditions Capability to organize related parties, and to make appropriate decision, and execute the plan by effective leadership Capability to critically assess situation, and to foresee future based on the assessment, and to set new problem

Source: COMPUJ personnel evaluation sheet.

are assigned to is the core competency that Japanese firms want from workers. On this basis, demonstrating that ‘I am fine with the current assignment’ is a norm at Japanese firms. At the same time, it is the only space that workers can show their aspirations. Thus the part requires a social skill to express the future career preferences while not seeming to complain about the current assignment. Old practice of rotation, old attitude of adaptation The implementation of the MBO and the new personnel evaluation system was instituted without formal opposition from the labor union. However, at the workplace level, it was not without conflict. In this section, drawing evidences from the workplace study at the newly formed F department6 in 1994, the area and the contents of the conflict will be specified to reveal the dynamics that currently influence the development of the new systems of workplace control. The forming of F department, and other integrated sales and systems departments within Corporate System No. 4 jigyō-bu (No. 4 business unit) were a part of the organizational reformation started in 1993. In the Corporate System group, one of the eleven products/ services groups, Corporate System No. 4 is established as one of 17 business units (jigyō-bu). And in Corporate System No. 4, departments were designed to be responsible for various types of customers, typically segmented in detail by industries. Department F was assigned

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Marketing Dept.

Dept.A: electronics companies

Dept.C nonferrous material industry

Seizo No. 1

Dept.F: nontransportation and heavy machinery industries

Corporate System No. 4 jigyō-bu, organizational chart

Planning Dept. Seizo No. 2

Seizo No. 3

Intelligent Bldg. Dept.

System Dvlp. no. 2

Source: Jigyō honbu soshiki taisei (organizational structure of business divisions), published by Keikaku-bu (Business Planning Division) in July, 1994.

Figure 5.4

Overseas Dept.

Corporate System No. 4

136


to the industries such as transportation and heavy machinery (see Figure 5.4). The establishment of F department was to deal with the market change that became evident in the early 1990s, characterized as a ‘down- open’ trend.7 The trend, combined with the declining sales at the end of the bubble economy, encouraged COMPUJ to add value through consulting activities and have more networking and software knowledge than the customer. This required COMPUJ to generate the necessary skills, resulting in F department being formed, by allocating engineers from the R&D section, working together with sales people. This new endeavor sought to establish a new type of worker, usually referred to as an SI- er (systems integrator), who is specialized in ‘value-adding’ skills: consultation and problem-solving for the specific demands of the customers.8 The creation of the concept of the SI- er, as well as the training of workers with these necessary skills, became the strategic focus of dealing with the customization trend of the market.9 The establishment of the F department was in 1994, a year after the radical restructuring of the work organization at COMPUJ. The formation of the new organization and the relocation of workers were carried in a top- down manner. The labor union was informed about the creation of the new organization and the subsequent move of workers a year before its actual establishment. The ultimate goal of the labor union was to fight against the plan to establish the new department as the change in work coordination for the staff appeared too radical. A realistic request, however, was to ask for adequate treatment of the workers who would not be necessary for the new department, which means to ask not to leave them in the old department to keep their motivation. A full-time union officer10 claimed that these objectives could not be fully met, although there were no layoffs. There was also no direct negotiation between managers and workers who were relocated to the new department. The manager of the business unit did not even recognize that negotiation was necessary for the relocation of workers. Before the actual relocation, a notice was sent to the workers, especially engineers, informing them that there would be a significant change in their jobs and that they would be relocated. However, it was a one-way notice that did not assume any challenge against it. There were a few workers who informally showed reluctance to move to their immediate bosses but they were also relocated to the new department despite their efforts. The department manager of the

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F department claimed that the practice was not specifically COMPUJ’s, and continued that; It is not difficult to control workers’ careers in Japanese companies. We do not see it is necessary for workers to be involved in this process of decision making of the relocation. Since it is about the strategic reform of the organization, it should not be announced to anyone until it is actually executed. (interview: department manager, 9 June 1995) These facts about the process of the creation of the new department confirm that COMPUJ implemented this strategic organizational reform relying on the conventional manner that is commonly used in Japanese companies. First, the organizational adaptation toward environmental changes was executed by the relocation of workers rather than hiring new employees from outside. Second, management basically understood that this kind of change is an area of management prerogative where they do not need to negotiate or ask for agreement from trade union and workers. Old norms were used to encourage workers to accept the relatively radical change of work content. The actual comments in the personnel evaluation sheets, filled in a year after the formation of F department, show ample evidence of the reliance on old norms. In literally all parts of the evaluation, workers show their achievements and the potential of development to emphasize their aspirations of selfdevelopment with forward-looking attitudes and desire to take on future challenges. Making efforts to achieve goals and take on challenges – all together, to demonstrate willingness to adapt to the new assignments – is shaped as the central message of workers’ contributions. Evaluators’ comments clearly encourage this attitude. The following lines are from evaluators’ comments. ●

●

●

He had positive will (maemuki na iyoku) and made every effort (doryoku) to achieve the goals including the process to call for assistance from member companies [subsidiary companies]. He has a difficulty in planning, but I’d rather evaluate his willingness (netsui) to meet objectives and the accuracy of his work operation highly. He had to have struggles to organize different divisions within COMPUJ, but he has never lost forward-looking attitude (maemuki na torikumi).

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138 ●

●

●

●


Although his assigned task was too difficult for him in terms of the technology level, he is diligent enough to meet the expectation (yoku doryoku shiteiru). He is very positive (sekkyoku-teki) to learn new fields of knowledge. The assignments of company Z was too difficult for him. But he still made every effort in his way (jibun nari ni doryoku shiteiru). He is very positive about taking on a challenge (sekkyoku-teki ni charenji suru) to the assignments given to him. He is very proactive (maemuki ni taiou) to the new change in the market. To do so, he is positive (maemuki) to improve himself. He is devoted to make effort (hitamuki) to achieve difficult tasks. (Translated and underlined by the author. Italicized words are from original comments).

The terms such as ‘make effort,’ ‘positive,’ ‘proactive,’ ‘having strong will,’ ‘forward-looking,’ are constantly used in various contexts, such as execution of the assignments, cooperation with coworkers, skill formation and career development. Corresponding with the workers’ entries, ‘making effort’ is proved to be a part of a regular contract, and an adaptation to new market environments and relying on this is a typical move for Japanese firms. However in conjuncture with the introduction of results- oriented labor management, there emerged some frictions at F department. Conflict Despite such encouragement based on old norms, the pressure to take a new focus on results was gradually undermining the effectiveness of this encouragement. Especially for workers having an engineering background, the pressure toward ‘results’ in a ‘sales department’ (in their words) resulted in some sporadic protests and grievances against the organizational restructuring and their new role as SI- ers. The following case demonstrates how the pressure to achieve results created contention over evaluation criteria and over assignment allocation. Haraki is a young worker (tantō-sha) who was transferred from the engineering department, and who made a request to transfer back to the engineering department in his personnel evaluation sheet (in the ‘career development’ section). It is rare for Japanese workers to clearly state such a transfer request as it might be understood as an obvious complaint against one’s immediate supervisors. Haraki was not happy with the transfer to the F department, as his new assignment contained a sales role. He wished to transfer back to the engineering division

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saying, “I am really concerned that in a sales department [although the new organization is supposed to be a combined development of sales and engineering departments, he uses the term ‘sales department’ to describe F department] the role of a system engineer cannot be properly evaluated.” Although he assesses himself as having ‘no aptitude’ for the current assignment, his managers’ evaluation suggests that he is competent and should be able to assume these new responsibilities. Especially, as far as his knowledge of the assignment is concerned, two of the evaluators mentioned that “he is very willing to develop credibility and efficiency” and “in the aspect of learning of the necessary knowledge, he achieved enough. He is also very willing to learn about application technology.” As the standard expectation towards tantō-sha is just ‘learn and grow,’ the evaluations Haraki earned were more than satisfactory. Haraki’s immediate supervisor is embarrassed by his subordinate’s maladaptation. As such a request cannot be accepted, he is looking for the second best solution; have Haraki stay in F department but make a slight adjustment of his assignment. The immediate supervisor proposes to put him into a slightly revised role, which is a little closer to the engineering role, although it is still in the F department. However, the department manager, buchō, the second evaluator, seems not to believe such a consideration is really necessary. Buchō’s complementary comment: From the assignment change of last December, it seems he had a bit of struggle, especially about the sales role he was newly assigned. But after that, as a core member of IT, he started to have clear objectives, and I believe he has a good background to take an active role in this department. Buchō’s overall comment: He has a problem in orientation. It is necessary to reinforce the instruction through the immediate supervisor. This last comment reflects the expectation that workers should submissively accept assignment change and fulfill new job requirements as best they can. It is a statement suggesting a corrective sanction on any negative attitude that emerges out of the installation of the new labor management system. After a year of resistance, Haraki was transferred to a different role in the department as his immediate supervisor originally proposed. He could not move to the engineering department, but he partially fought for his career back. Thus, his public protest against the new evaluation system and rotation practice was half successful. Although his case is

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clearly considered as exceptional, many employees simply did not make their grievances public. They just expressed their concerns in informal conversations with their immediate supervisors. Rising concerns over the new system Haraki’s story demonstrates that the introduction of the resultsorientation evoked interest among workers on the practices of personnel evaluation. As with the labor union, workers at COMPUJ are not strongly opposed to the results-orientation per se, but have strong concerns over the evaluation criteria. Table 5.4 shows the results of a survey conducted at F department. The survey results show that employees are generally satisfied with the personnel evaluation, but a relatively high ‘neither/nor’ category implies there is still a great deal of ambiguity about the evaluation. It particularly signals that only less than 20 percent of the employees agree with the item that asks if evaluations were based on fact rather than management opinion. Labor union recognizes the concern and claims that the evaluation process should be more open, and the evaluation should be fairer based on objective criteria.

Table 5.4 Employees’ assessment of the personnel evaluation, F Department (%)* Q. Regarding the last time you were formally evaluated, how much do you agree or disagree with each of the following? The evaluation was conducted in an appropriate way The evaluation was based on fact rather than management opinion The criteria for evaluation were made clear to me well ahead of time (N=40)

agree strongly/ agree somewhat

disagree neither strongly/ agree disagree nor somewhat disagree

53.8

7.7

38.5

19.2

23.1

57.7

46.2

23.0

30.8

* The data is drawn from the questionnaire survey conducted at F department, COMPUJ (N=40). There are 33 regular employees (including 1 midterm hire) and 5 shukkō workers from regional subsidiary companies (2 missing). With regard to the career background (except for 5 shukkō workers), 15 are from the engineering department, 14 are from the sales department, and 2 have clerical backgrounds. With regard to the hierarchical rank, 7 occupy managerial positions (one buchō, one sen-nin buchō, and 5 kachō). Low end managerial (but still have union membership), shunin, counts 11, and there are 22 nonsupervising staff (tantō).

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Making an evaluation ‘objective’ does not mean for COMPUJ employees to simply rely on a ‘sales amount’ as evaluation criteria. Evaluators also claim difficulty, and express concern about the evaluation standards and criteria, saying that they generally downplayed the importance and relevance of sales targets in their evaluations, even though the corporate policy insists on the centrality of ‘results’ in evaluation. It is difficult to measure the performance of staff just by the amount of orders received, especially at my level. Apart from the results, I try to evaluate the process. (shunin) We could not simply give an evaluation based on figures. After all, we can only give a Japanese way of evaluation. (buchō) Among all the managers we interviewed, only one manager from the personnel department (who was responsible for establishing the new system) claimed that the personnel evaluation should be done purely based on results. In the actual evaluations, it was possible to observe the ambiguity managers express in the above citations. In some cases, evaluators tend to try to commend the effort a worker made even when the worker could not achieve the expected results. They see that some tasks take more time than others, and that some tasks are important regardless if they make profit. For example, maintaining good relationships with customers is often considered more important than profit. Therefore, managers tend to have a more process- oriented view on personnel evaluations than it is designed to be. However, at the same time, these ‘voluntary arrangements’ of evaluation by managers became the sources of employees’ concern that the evaluation is conducted based on ‘opinion rather than fact’ as shown in the survey. The case also demonstrates that the concern over evaluation criteria is subsequently associated with the concern over the appropriateness of the assignment. This increasing interest on the appropriateness of the assignment looks new, and it looks as if there is an emerging sense of independence among employees who want more control of their own career and development. Haraki’s case and other informal grievances about the rotation prove that it is partially the case – but it is only partial, and the sense of independence does not go beyond the walls of the firm organization. The same survey shows that an overwhelming majority of employees see their career prospects as best with COMPUJ (80.6 percent). Given this, the new labor management system was later developed in this respect to set up an additional

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system of internal job mobility, which improves job matching by mobilizing motivated individuals, in addition to the traditional practice of rotation.

Intensification of results-orientation Deliberation of the MBO and the diversification of career track In April 1995, COMPUJ dispatched an inquiry commission to investigate companies located at Silicon Valley in the USA, in connection with their work organization and labor management systems. The companies they interviewed included IT giants such as, Hewlett Packard and Quantum and also some IT venture companies. They mainly interviewed representatives from each companies regarding: 1) the way American workers work, 2) the wage system, and 3) the design and content of personnel evaluations. The first question included sub- questions: a) how long do engineers work? b) when and where they work? and c) what is the best strategy to satisfy employees and to improve the turnover rate? The third question specifically asks about a) how to allocate assignments, b) what and how they evaluate workers, c) what kind of efforts and measures are implemented to successfully manage personnel evaluation, and d) how they consider time and results in proportional relation for engineers and sales personnel. Among other things, the inquiry mission seemed to repeatedly ask about the importance of the MBO in the labor management system. One CEO of an IT venture company was a little annoyed by the question. COMPUJ: [Responding to the answer saying his workers work 50 to 60 hours per week] How can you make them work so hard (even without paying overtime premium)? CEO: Are you talking about motivation [management] strategy? It is clear. We manage for employees to involve with the organizational objectives. It is important to give them clear individual missions, and let them achieve high objectives. This is it. ... COMPUJ: So, you say, at the moment, the most important motivator for employees is stock options? CEO: No! Don’t ask me the same question again and again. The important thing is to let employees believe in the mission

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and the success of the firm, and give them clearly defined missions. We also need to make them believe that it is fair to measure their achievement against goals. (Internal document of COMPUJ, translated and arranged by the author) In the report, there are no specific comments about what the COMPUJ investigator learned from the interviews or indicators of what they were going to adopt from the policies of their American counterparts. However, judging from their initial interest and the summary of the reports, it is clear that they wanted to find tips to improve the results-oriented labor management system that had not yet fully filtered down at COMPUJ. Since then, the reform movement has entered a new phase in terms of the implementation of the MBO. The clarification of assignments/responsible areas of tasks and evaluation criteria are the two major issues in the improvement of the new system. The clarification of the assignments resulted in clear and detailed descriptions of organizational roles for the individual workers, which started to intersect with the employment diversification strategy. For the workers in the managerial ranks, COMPUJ expanded ‘expert’ track in addition to the conventional managerial track and specialist track. For the workers below managerial level, four career tracks were formalized with different prospects of wage and promotion. Managerial rank For the management of COMPUJ, the expansion of ‘expert’ track had two meanings. One is to reduce the number of core management positions, and the other is to put a part of mid-career to senior employees into ‘expert’ roles, in which it is easier to introduce results-orientation. The following Table 5.5 summarizes the diversification of career tracks for the workers in managerial ranks. They are divided into line management, expert, and specialist, in each of which specific roles are defined as follows. These tracks already existed in the mid-1990s, but the plan was to significantly expand the ‘expert’ track. The labor union was not entirely satisfied with the strategy, but passively admitted that the expansion is unavoidable under the current business circumstances. From 2002 onwards, the ranking system was completely abandoned for managers. Instead, the ‘role grade system’ was introduced, by which managerial roles are stratified into seven levels by organizational importance. Managers in the same grade earn the same salary alongside the results-sensitive bonus that theoretically makes up the 100 percent difference between the highest and lowest achievers. In wage determination,

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seniority is not designed to play any role. The retirement benefit was also changed to make the new system effective. The amount of the retirement benefit was detached from the length of service and the wage at the time of retirement. Instead, it came to be determined by the contribution points that workers accumulated by the grade of roles they occupied and the results they achieved in those roles. Each role grade is defined by the combination of the ‘resultsresponsibility’ and the ‘necessary competency,’ which was written down in detail and publicized on an intra- organizational network. Figure 5.5

Table 5.5 Three types of role in managerial rank Line management

As a manager of a team and organization, line managers are expected to take leadership in pursuing organizational goals, and to perform appropriate coaching for their subordinates.

Expert

Experts are those who have highly specialized knowledge of the specific field.

Specialist

Specialists are those who have highly specialized knowledge of the specific field and may have a reputation outside the company.


WHAT: Results responsibility Organizational Role

Scopes of responsibility expected to worker in: • Strategy • Performance • Coaching

HOW: Practice Behavioral traits, skill and knowledge to perform assigned organizational role Figure 5.5

An overview of the organizational role

Source: Jinzai Kyōiku 2001: 24.

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shows that the concept is defined by ‘responsibility’ (‘what’ managers should do) and ‘competency’11 (‘how’ to do them). The former consists of one’s responsibility on organizational objective and strategy, performance, and coaching of young subordinates. The latter includes skills and knowledge to perform one’s assigned organizational role, and behavioral traits (competency). Another notable point of the role grade system is that it was introduced with the expanded position announcement system called, ‘position entry system,’ and the intent was to encourage managers to take the roles that fit their aspirations. ‘Role openings’ are listed on the intra- organizational network, and workers can apply for them. Managers can also publicize their resumés on the net, and they can wait for contact from an internal ‘personnel scout’ from other departments. Workers below managerial rank Typical for a Japanese firm, there was officially only one career track set in the ranking and qualification system at COMPUJ, treating all workers as a single entity of ‘employees.’ In this system, there are generally six rankings, which determine the level of wages.12 In the radical reform of ranking and qualification system enacted in 2001, COMPUJ set four types of career track for the workers below managerial level, which are defined in Table 5.6. The most significant aspect of this reform is the official division of career track between whitecollar and blue-collar workers, and white-collar workers are formally differentiated between ‘main’ and ‘support’ track, which mostly overlap with the conventional division between ‘career’ and ‘clerical’ tracks. Most of the ‘career’ white-collar workers are included in group A. Eventually the white-collar workers need to choose to be one of the three types of role in the managerial rank listed in Table 5.5. This differentiation of employee category was meant to officially launch four different sets of wage and promotion prospects. For the workers in group A, the ranking was streamlined into three while it was kept as six or seven in other groups. This was to reduce the relevance of age and seniority in both wage determination and promotion speed within this group and thus expand the difference between high and low achievers (see Figures 5.6 and 5.7 about the design of the expanded difference in wage and promotion for group A).13 The formal differentiation of workforce with differentiated labor management is the basis to further diffuse the resultsorientation at workplace level. To implement thorough MBO to cover the differentiated workforce, it was necessary to set clear evaluation criteria in terms

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Table 5.6 New categorization and definition of workforce

Definition A

B

C

D

Workers in this group are supposed to create new value for customers in the fields of planning, customer solutions, R&D, and production, by their creative inspiration and method based on highly discretionary decision making on the work process. Workers in this group are expected to achieve efficiency and quality improvement in the fields of planning, customer solutions, R&D, and production. Workers in this group are expected to achieve efficiency and quality improvement in the fields of production and inspection by using specialized skills. Workers in this group are expected to achieve efficiency and quality improvement in the fields that require particularly specialized skills such as security.

In the old system of classification, they were:

Wage system

Planning, Customer Merihari solutions (SE, (make clear SI), Research, differences Technology between development, high Production and low technology, Logistics achievers)

Clerical, Support Odayaka for customer (moderate solution (SE, SI), differences) Technological support, Production support Production, Inspection Odayaka

Security, Key puncher, Typing, Driver, Pharmaceutical technician, Nursing, etc.

Odayaka

Source: Adapted and translated from internal material of COMPUJ.

of the performance and selfdevelopment. The introduction of the new idea of personnel evaluation – competency management – appeared in this context to cope with the demand on the ‘objectiveness’ of evaluation criteria that is considered to achieve ‘fairness’ in labor management practices. Formalization of evaluation criteria: ‘competency’ management COMPUJ adopted the new idea of personnel evaluation, called ‘konpitenshi manejimento’ (literally, competency management: hereafter, ‘competency’) as a key to solve the problem. The idea of ‘competency’

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Monthly salary (Ranking) (grade 1) (grade 1) (grade 2)

(grade 1)

(grade 2)

(grade 2)

(grade 3) (grade3)

(grade 3)

(grade 4)

(grade 4)

(grade 5)

(grade 5)

(grade 6)

(grade 6) (grade 7)

(Salary band)

(Group A) Figure 5.6

(Group B)

(Group C)

An overview of the ‘salary band’ for workers in groups A, B, and C


management

fast track normal track Rank

1 shunin

2 slow track

3 0

2

4

6

8

10

12

14

length of service Figure 5.7

An overview of promotion by tracks within group A


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became popular among Japanese companies starting in the late 1990s, and again, COMPUJ became one of the first to tailor it for its labor management. It is a new idea as it defines ‘results’ by listing the detailed behavioral traits that describe high performance in a particular work context. These behavioral traits are called ‘competency,’ which is a collection of the ‘best practices’ of the most successful workers of the organization in the past. In most cases, the personnel department interviews managers about the behavioral attributes of their high performers, and then interviews those workers about their involvement and commitment to the work processes; their preparation, their ways of thinking, and networking. The personnel department then extracts the common elements of their behavior, and sets them as the evaluation standards. COMPUJ established their ‘competency’ system as a two-tier structure: basic competency and role-specific competency. Basic competency is applied to all groups of workers, and role-specific competency is set based on the specificity of assignments of workers. The relationship between the two is set out in Figure 5.8. ‘Basic competency’ is the general trait that fits well with the corporate philosophy including corporate ethic, profit orientation, customer orientation, self- management, coworker relation, attitude of challenge, and commitment. The personnel department interviewed department and division managers to set the criteria as seen in Table 5.7. A different approach was employed to set ‘role-specific’ competency. The personnel department provided information they collected from Updated knowledge Role specific competency

Skill, know-how

Basic competency

Behavior Value, belief

Character, personality Figure 5.8

The structure of ‘competency’

Source: Internal document of COMPUJ.

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Table 5.7 Basic competency at COMPUJ Items

Definition

Moral

Comply with the Fully understand the moral standards of moral standards set by COMPUJ,– use them in actual situations, COMPUJ and give advice to subordinates based on them.

Profit orientation

Always put priority on Pursue the following to improve behavior to maximize profitability: 1) concentrate resources on profit and reduce cost carefully selected projects, 2) conduct necessary follow-ups, 3) negotiate with customers with necessary concerns about the profitability.

Customer orientation

Construct trust with customers and behave to maximize customer’s profit

SelfMake effort on management selfdevelopment, voluntarily set goals and schedule

Contents for the level 1 workers

To earn trust from customers, respond quickly and follow-up carefully on their demands by coordinating with related departments. To maximize customers’ profit, fully understand what benefits customers, and make a proposal beyond customers’ expectations. Set objectives, make an adequate schedule and manage projects by him/herself by fully understanding the organizational objectives and future vision. Constantly develop him/herself and design career by analyzing his/her skills.

Coworker relations

Respect for each other, Communicate with team members and try to maximize and managers adequately to pursue team achievement assigned projects smoothly. Make an effort to coordinate his/her teams. Make necessary advice for subordinate team members to develop their skills. Share his/her resources, such as personnel relations, with team members.

Attitude of challenge

Set higher goals for him/herself

Set difficult goals which cannot be solved by the conventional framework by coordinating with related departments. Not set any limit on his/her areas of work, and try to expand them.

Sense of Have strong will to responsibility solve problems by him/herself

Take responsibility in any cases of difficulty. Take leadership to solve problems by adequately coordinating the related departments.

Source: Internal material of COMPUJ, translated by the author.

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150 Transformation of Japanese Employment Relations Table 5.8 Excerpts from the role-specific competency (system engineers) Items

Sub-items


Sales promotion

Marketing

Have information about the competitors, and have better plans. Have information about the international market environment.

Planning

Fully understand the corporate-level strategy, and plan his/her own sales promotion. Use various measures effectively. Plan promotion based on the full understanding about customers’ needs. Know about legal restrictions.

Execution

Make an effort to attract repeaters. Choose appropriate channel of promotion with appropriate plans. Clarify target consumers, and plan to stimulate their buying inclination. Make a clear explanation of the technology while making sure customers to understand its superiority. Know about the services which are taken care of by other departments and sections.

Planning, Consultation

Information Try to be the center of the information flow gathering inside and outside the company. Effectively use information to visualize the indefinable needs of the customers. Problem setting

Set new and creative solution theme, and customize the theme depending upon the situations of the customers.

Analysis

Analyze the strength and weakness of the competitors, and try to offer our strength to the customer. Understand various sources of information and express opinion in his/her own words. Understand the policies of the top management, and analyze the challenges from a wider perspective.

Planning

Set concrete objectives in numbers. Respond to customers’ request using ‘yes, but’ principle. And offer back appropriate plan considering out profitability. Understand the market situation, and locate one’s strategy in a broader situation.

Proposal

Always make efforts to realize profit while bringing satisfaction to the customer. Continued

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Table 5.8 Continued Items

Sub-items


Presentation Negotiation, Always taking initiative. Clarify risks, and plan Execution necessary actions, and execute them in the best timings. Try to develop consensus among related departments and sections. Development, Implementation Customer support

Quality control

Others

Make a better plan from the analysis of customer claims. Report to supervisors when s/he appropriately judges that the claim is important. Make a strategic plan to improve customer satisfaction with positive efforts with necessary consensus building with related departments and sections. Provide effective feedback. SE qualification, TOEIC 470, etc.

Source: Internal material of COMPUJ, translated by the author.

the interviews to each division and department. At each division and department, entry-level managers discussed the characteristics of the high performers among their subordinates and set the criteria in terms of the expected behaviors, required OffJT, official qualification, and English competency. Table 5.8 summarizes the results of the discussion in the case of the workers with system engineering role. This new system of evaluation has a distinctive character. It intends to clarify the expectations in greater detail on the behavioral level while the overall criteria largely remain the same as in the old system. In Table 5.8, for instance, the excerpts from the role-specific competency, especially the ‘items,’ is equivalent to the one cited from the old evaluation sheet introduced earlier in this chapter (see Table 5.2). The expansion is clear. The new system specifies detailed behaviors for each item of evaluation. For each different role-specific competency (there are about 250 kinds), there are, on average, 15 items to check ability, compared with only 5 in 1995. It is also notable that the ‘competency’ system focuses on ‘behavior.’ For instance, the section, ‘challenge objectives’ in the past evaluation

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form, is now called ‘competency improvement plan,’ and workers are required to report it in the following fashion: ●

●

●

●

The objectives of improvement should refer to the appropriate behaviors that are based on the expected level for the worker’s ranking. The objectives should be written in words indicating concrete behavior rather than the expected contents of achievement. The objectives should be written in the words indicating concrete behavior for the concrete contexts of work process, such as assignments and projects. The objectives should mention the specific timing of training programs and the acquisition of qualifications. (internal material of COMPUJ).

What is emphasized here is the constant reference to ‘concrete behaviors.’ For both the basic and role-specific competency, workers are also required to assess themselves on each item on the basis of “if you are able to execute constantly” or “if you are able to use what you learned.” The instruction emphasizes that the self- evaluation should be done not on the basis of “if you have potential” or “if you may be able to use what you learned,” but should be done “if you actually execute or executed”.14 This focus on behavior is actually the core new idea introduced to measure ‘results’ in this evaluation method. As the anxieties and complaints showed at the F department, the idea to measure ‘results,’ only by using sales and other numbers or based on the subjective judgment by evaluators, faced strong resistance from workers, regardless of their positions. In the new system, every desirable behavior in the work process is listed on the evaluation sheet. This behavior-based evaluation is increasingly considered as an ‘objective’ and ‘fair’ measure of ‘results’ at Japanese workplaces. Self-management under control: job announcement and the DWS The motivation control was considered to be the key to the success of the reform movement, and it was designed to be set in the provisions that emphasize ‘self-management.’ There were two lines of provisions that encourage self-management at COMPUJ: the one is the firminternal job announcement system that concerns mobility prospects for workers, and the other is the introduction of the DWS to reform working time.

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Mobility Thorough implementation of the MBO and the clarification of the evaluation criteria always occupied the central position in the reform movement at COMPUJ. However, observations in the previous section indicated that attention should be paid to the reform of the mobility arrangement as concern over the evaluation criteria among workers evoked the interest in the appropriateness of their assignments. The firm-internal job announcement system has a long history at COMPUJ, started in 1988 for workers who wanted to be assigned to the newly established departments or sections15 (see Table 5.1). The reform movement after the 1990s included the improvement of the job announcement system too.16 At the latest renewal in 2000, a manager from the personnel department said; [W]ithout securing the system to support voluntary change of assignment by workers, it is not possible to fully let a results-based personnel system work. It is unavoidable to set the career system in which workers can choose their careers with a voluntary and challenging mind. (Jinzai Kyōiku 2001: 25) It is however questionable to see this as a sign of the changing attitude of COMPUJ towards career formation where management prerogative on one hand and passive attitude among workers on the other is so prevalent. As the union representative once worried in a 1995 interview, being responsible for one’s own development would be too hard for most of the workers except for a very few “strong individuals” (interview: fulltime union official). Thus, on the surface, the improvement of the job announcement system seems to allow workers to have more discretion regarding their career formation. However, given the fact that external labor mobility is still not realistic for most of the workers, it is reasonable to understand that the renewal of the system is a part of the labor management reform to give responsibility for results and self-development to individual workers. It makes it easier to acquire consent from workers about the consequences of performance evaluation because workers chose the current assignment themselves. In addition, mobilization of the “strong” workers who have high motivation to take new assignments satisfies the purpose of the labor management reform. Working time The diffusion of the principle of self-management was also sought by the reform of the working time regulation. The basic idea about the

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relation between working time regulation and the development of selfmanagement can be seen in the COMPUJ’s policy to abandon the timecard system made effective in April 1995. A full-time union official explained that the reason was to facilitate self-management. Yes, management proposed it, and we agreed upon it. ... Since the system automatically calculates working time, workers tend to lack selfmanagement. The basis of self-management is the self-management of working time. So, this was the first step to facilitate self-management among white- collar workers. Based on such recognition, the second step was the introduction of the DWS or the working time system that has a similar effect as the DWS. The union official continues that; Abandoning the system of timecard is not enough at all. We still measure the amount of work by working time, and the overtime work is rewarded in the form of overtime premium. It is not right, and it should be fixed. We should not assume that working time will be rewarded. The major characteristic of the DWS (and the system that has a similar effect) is the decoupling of wage determination and working time. According to the remark by the union official, the introduction of the DWS helps terminate the wrong association between working time and work results that was still commonly assumed by workers, therefore helping to raise consciousness on self-management and results-responsibility. This is why a series of reforms to introduce resultsorientation after 1995 at COMPUJ were implemented together with the introduction of the working time reforms (as shown in the chronology of reform, see Table 5.1). The introduction of the DWS coupled with the introduction of the results- oriented labor management effectively shifts the measurement of effort from working time to results that is increasingly captured by the detailed behavioral traits and organizational objectives. The DWS is coupled with the system of wage determination in the following way, and it is clear from the example that the DWS also helps firms to improve financial predictability. At COMPUJ, the DWS for professional occupations was introduced in 1993 for about 300 workers in R&D sections. At the same time, the wage system for these workers was changed together with the implementation of the individual performance evaluation to make a greater difference in bonus payment between

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Monthly salary

Extra amount based on individual performance

Bonus in June

Special allowance for the DWS

Extra amount based on individual performance

Dependent allowance, night-shift, and work on a regular day off overtime

Bonus Bonus in December

Basic monthly salary

155

Figure 5.9 The composition of salary of the discretionary workers at COMPUJ Source: Internal material of COMPUJ.

high achievers and low achievers. Due to the reform, the components of the monthly wage and bonus were changed as shown in Figure 5.9. There were two highlights in this reform. One is the expansion of ‘performance’ element that is reflected in the ‘extra’ bonus. The other is the introduction of the ‘DWS special allowance’ that replaced the regular overtime premium. These changes are beneficial for firms in two ways. First, the bonus payment is increasingly relying on the shortterm performance of the company. Second, the system enables firms to avoid the overtime premium that may increase regardless of corporate performance. In other words, it set a fixed cap on the payment for overtime work. Thus, overall, the introduction of the DWS helps COMPUJ in three ways. It helps diffuse the principle of self-management, helps fix the overtime premium, and helps introduce a marketized wage system. It is no surprise that the COMPUJ was so eager to introduce it even when the DWS for white- collar workers was not legally established. To realize the same effect, COMPUJ invented a system called A-style. A-style system is the combination of the Flextime system and the fixed overtime premium system. In this system, employers still need to manage working time and to pay an extra overtime premium in cases where the working time exceeds the one equivalent for the fixed amount of the premium. However in reality, only the allowance called A-style allowance was paid as in the case of the ‘special allowance for the DWS’ for R&D workers. In April 1998, A-style was applied to about 7,000 shunin workers (90 percent of all shunin workers at COMPUJ).17 It was used

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until October 2002 when the company finally decided to replace it with legal DWS,18 which was partially due to the accusation by a part of COMPUJ workers19 who claimed the abusive use of the Flextime system.20 The analyses of the two provisions related to mobility and working time prove that the ‘self-management’ developed and encouraged in the reform of labor management is fully controlled by, and is beneficial for, COMPUJ management. The job announcement system was introduced under the circumstance of limited mobility beyond firm organization. Thus it is rather a measure to emphasize workers’ responsibility for selfdevelopment than the total transfer of control to workers over one’s career development. In addition, it successfully mobilizes motivated workers to challenging tasks. The introduction of the DWS supports and facilitates the introduction of the results- oriented labor management system. It releases firms from the burden of the overtime premium due to its core function to annul the idea of overtime and overtime premium, and it also has an effect on decentralizing labor management. At COMPUJ, the DWS and quasi-DWS system are effectively used to help the diffusion of the principle of self-management among the workforce.

Marketization, formalization and individualization of labor management The focus of this chapter was on the (re)negotiation of control and authority relations of a core white- collar workforce at the organizational and workplace levels, taking as an example, the introduction of the results- oriented labor management practices at a case company, COMPUJ. As white- collar became the majority of workforce after the late 1980s, directing and eliciting more effort from white- collar workers became the urgent managerial issue for the company. The introduction of the results- oriented labor management system has been facilitated since then. Coupled with the transfer of result responsibility to workers in terms of wage determination, the MBO and the new evaluation system were central measures in the re-bargaining process. Figure 5.10 summarizes the dynamics. Industrial structural change and globalization/international competition are the two major market environmental shifts that firms need to interact with. The endogenous necessity of labor management reform is rooted in the concern over the increasing proportion of the white- collar workforce. Focusing on the interactions between

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Globalization/International competition within firm organization White-collar increase

A Organizational reforms

Introduction of the results-oriented labor management B

Industrial structural change

Figure 5.10 reform

Diagram of the dynamics accompanied by the labor management

the business organization and market environmental changes, it is possible to distinguish two fields, in which specific issues of labor management emerge. They are shown in the diagram as A and B. A points to the issues of coping with the globalized market competition that urges firms to employ various global standards (such as accounting practice) and to increase financial flexibility. B represents the issues associated with the adaptation efforts by firms to industrial structural change. In these fields, issues of labor management are negotiated between management and workers at organizational and workplace levels, thus the characteristics of the outcomes, the actual labor management practices, are shaped by the power relations and the pattern of labor relations. In the process of the negotiation, we observed that there were two major characteristics at COMPUJ in this regard. First, the labor union at organizational level was very cooperative with the managerial efforts at reforms. The labor union representatives did not recognize any problem with the basic principles of the reforms. Rather, they were active collaborators to make pay and promotion differences larger than before as they believed that it promotes ‘fairness’ of labor management. What they were concerned with was the ‘openness’ and ‘objectiveness’ of the evaluation process that produce these differences. Second, workers were also largely concerted with the basic principle of making pay and promotion differentials, but have shown frustration at the related changes caused by the reforms. Under the new personnel evaluation that emphasizes results, old norms that encourage effort to take new assignments sometimes deadlocked when workers were not fully satisfied with the evaluation criteria and assigned tasks. Management recognized the necessity to secure ‘fairness’ in these matters when improving the new

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labor management system. The following are the major consequences of the dynamics. Consequences of the changes within COMPUJ Marketization of wage In the effort to cope with globalization (A), the COMPUJ management attempts to increase the linkage between corporate performance and wage through a new personnel evaluation that emphasizes the role of short-term performance in wage determination. The process can be characterized as marketization of wage. Since we did not examine the actual payment of wage under the new system, this statement is still a hypothesis. However, as far as we examine the changes in the design of the wage system and the ways labor union responded to the reform, it is certain that the element of short-term performance becomes more important in wage determination, and the difference between high achiever and low achiever will grow. Although the COMPUJ labor union was largely cooperative, wage determination is the issue where Japanese labor unions had relatively strong influence. It was the case at COMPUJ too. They were favorable to the principle of the reform, but it did not mean that they agreed with the complete elimination of ‘life-stage’ adjustments from wage determination. Thus the change was gradual, and the reform was always implemented for the workers in managerial ranks first. This is because COMPUJ adopts a closed-shop system with regard to union membership that includes all workers who are not in managerial ranks. Thus the promotion to manager usually means losing membership of the labor union. Marketization of wage occurred in the wage determination for managers, and it later started to trickle down to the wage for other workers. Workforce segmentation by career diversification More important for the purpose of this book is the change of control and authority relations at organizational and workplace levels. From the dynamics in an effort to cope with industrial change (B), the diversification of career track became clear. The career track at COMPUJ, which was at least nominally a single track system, was formally divided into four types of workforce with different prospects of career and wage. In addition, the managerial track was further divided into three, by which COMPUJ became able to reduce the number of managers and increase the numbers in expert and specialist tracks where it is easier

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to introduce results- oriented labor management. Within each of the four career tracks, different systems of wage and promotion were created. The most radical change was made for workers in the core career track that leads up to managerial positions. Under the principle of resultsorientation, this change was designed to make more of a difference between high and low achievers. It is notable that new employees became able to reach managerial track in three years in theory if s/he kept achieving the highest evaluation. The change introduced at COMPUJ could have historical significance as it formerly divided the workforce into plural categories with regard to wage and promotion prospects. It was the major feature of labor management at Japanese firms that they treat all workers as ‘employee’, to whom the same prospects of wage and promotion were, at least nominally, provided. The change at COMPUJ has an impact in that this could be the moment when Japanese firms start to leave the practice that treats all workers as a single entity of ‘employee’.21 Formalization of the MBO and evaluation criteria The introduction of the resultsorientation turned out to be a trigger for the formalization of ‘role’ description (instead of job description) by the thorough implementation of the MBO and the detailed evaluation criteria for individual workers. This is the result of the workplace political dynamics. When the resultsorientation started to be emphasized at COMPUJ, workers had shown that they were not fully satisfied with the evaluation criteria and assigned tasks. The labor union at COMPUJ also took up the problems, especially the evaluation criteria as the issue of ‘fairness’ of the labor management system, and demanded an objective and transparent system of personnel evaluation. Management understood that the thorough implementation of the MBO is crucial for the diffusion of resultsorientation, and took the issue of evaluation criteria seriously to develop a type of ‘competency’ management. The results were the formalization of a ‘role’ description, and the objectification of evaluation criteria that set the new idea on ‘results,’ focusing on the behavioral traits in the work process. Individualization of control Diversification of career track, the implementation of the MBO, and the detailed criteria of evaluation, in combination, facilitates the individualization of workplace control. It achieves the higher level of integration of workers’ effort to organizational objectives while giving

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individualized responsibility for results. The introduction of resultsorientation emphasizes self-management, and the self-management is institutionally supported by the reform of working time regulation. The introduction of the DWS (and quasi-DWS) was recognized as increasing the firm’s financial flexibility as well as facilitating the self-management of workers. By decoupling the connection between working time and wage determination, the DWS was used to emphasize the importance for workers to meet the evaluation criteria in order to become a high achiever. In this way, self-management is becoming a core of workplace control at Japanese firms. The control by self-management was also facilitated in the mobility aspect by the expansion of the job announcement system. On the surface, it looks like an increasing discretion for workers to choose assignments by themselves. This is also the first impression at COMPUJ as the expansion of the system was partially an answer to the grievances from workers with regard to the appropriateness of work assignments under the pressure of increased result responsibility. However, it was management that had sought to facilitate the self-management of career development from the late 1980s, making individual workers responsible for selfdevelopment. With this reform, management becomes able to mobilize motivated workers to challenging jobs, and to legitimatize the new labor management system by mobilizing consent to the assignment allocation. Thus, the new system is rather an effective mean of workplace control than the empowerment of workers’ mobility bargain since changing employer is still a risky choice for regular workers, and COMPUJ workers are not the exceptions.

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6 Conclusion: Changes and Future Directions of Japanese Employment Relations

Changing employment relations In this book, I have examined the transformation of Japanese employment relations realized by the reforms at various levels of regulation since the 1990s within the contexts of globalization and industrial structural change. The analyses were carried out from the sociological perspective that sees social institutions as political-cultural constructs. Thus the establishment of employment relations is seen as the political and cultural dynamic to set up various institutional arrangements that regulate the inherently political issues of unequal power relationships between buyer and seller in the labor market and the ‘indeterminacy’ of a labor contract. Historically, it is important to note that employment relations emerged as a part of the rise of citizenship in the context of industrialization and state formation. Labor market rules and labor standards were necessary in an attempt to allow individual workers to ‘freely’ dispose of themselves, and the arrangement of labor relations and collective bargaining became a major means for workers to negotiate the terms of the labor contract on an equal footing with employers. Labor management practices transform ‘labor power’ into ‘labor,’ and negotiations about these practices are the sites of workplace participation for workers. The historical development of politics in these domains shapes a pattern of employment relations specific to a society. In order to capture the complicated dynamisms of the employment relations, I have developed a conceptual framework that concerns the aspects and the levels of regulation of employment relations. First, I distinguished two major aspects of employment relations: contract/effort 161

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and mobility. Contract and effort point to different aspects, but are inseparable due to the ‘indeterminate’ nature of the labor contract. The aspect of contract refers to the formal terms of exchange of labor power, including the job assignment and wage agreement, but also to less formal ‘expectations’ attached to different forms of employment contracts. Effort points to the agreed intensity of work that completes the labor contract, which mainly concerns workplace control and consists of the core of workplace authority relations. The mobility aspect concerns movements between the internal/external labor markets, rotation, career formation and promotion, and represents how ‘freely’ workers can manage themselves in the labor markets. The patterns within each aspect show the characteristics of the institutions that regulate employment relations, and provide firsthand indicators for observers to understand how ‘equality’ and ‘freedom’ are organized in the institutional arrangement. Second, I see that employment relations are subject to multiple levels of regulation at the societal, organizational, and workplace levels, in which state, firm and labor are the major actors. At each level of negotiation, it is possible to list a couple of political domains that have arisen to shape employment relations. At the societal level, social negotiations are observed at the domains such as collective bargaining and labor standards and labor market regulations, and the focus was given to the latter in this book. The organizational level contains enterprise bargaining and labor management practices. In this book, the latter was the primary focus of analysis in relation to the dynamics that establish control and authority relations at the workplace level. All of these levels of social negotiation regulate employment relations by establishing rules, norms and taken-for-granted notions of contractual status, effort and career. Focusing on the levels of regulation and the politics at each level helps us to understand the dynamics of power relations emerged and maintained behind every institutional item specified by the analyses of the aspects of employment relations. Based on this framework, the book analyzed the deregulatory reforms of labor market and working time and also the organizational-level reform of the labor management system. Major findings about the changes of employment relations of core regular workers since the 1990s are summarized in Table 6.1. In the first section of the conclusion, I will briefly describe these changes in the employment relations for the core regular workers. Contract/effort Contract The reforms of the labor market regulations diversified the possible forms of employment contracts in the Japanese labor market. The firms

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Conclusion 163 Table 6.1 Changes in employment relations since the 1990s (core regular workers) Societal: collective bargaining, labor market and labor standard regulations



Contract

• Establishment and deregulation of non-regular employment • Deregulation of working time

• Increase of non-regular contracts • Introduction of resultsoriented wage • Diversification and formalization of organizational roles

• Organizational membership (company citizenship)

Effort

• Deregulation of working time (DWS)

• Decoupling of working time from wage determination • Integration of individual objectives with organizational goals • Intensified performance monitoring and evaluation by results

• Company citizenship, but shift in the mode of control from symbolic effort to results • Shift toward self- control

Mobility

• Expanding external labor market for temporary work

• Diversification of employment forms • Diversification of career tracks • Job announcement system

• Increasing selfresponsibility for career development

started to make use of them and non-regular employment expanded to more than 30 percent of total employees in 2007, segmented by specific skills and gender.1 Temporary dispatched work (haken) has expanded especially in the areas of relatively high-skill occupations. This employment form was dominated by young female clerical workers, but male workers significantly increased after the deregulation in 2004. Limited-term contracts (keiyaku/ shokutaku) also expanded in the wake of deregulation, an expansion which also occurred in skilled employment. In contrast to the temporary dispatched work, male workers comprise the majority of this status. This replacement of regular with non-regular employment has unfolded as a generational project. To adapt to the environmental changes while protecting the employment of regular workers, firms needed to freeze new hire and to locate young workers increasingly into the non-regular employment statuses.

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The deregulatory reforms of the labor market did not bring about radical change with regard to the contractual status of regular workers. The main form of employment contract is an unlimited-term contract that is still the ‘regular’ form of employment, and there was no formal deregulation of employment security for regular employees.2 Their status as regular ‘member’ employees was still largely protected by the commitment by employers and labor unions to the existing rights of company citizenship.3 Employers recognized the importance of ‘long-term employment’ for regular workers in the New Age Japanese Management, and labor unions claimed to protect the employment security of regular workers throughout the process of deregulatory reforms. Due to the politics, which will be discussed in the following section, the deregulatory reforms of the labor market resulted in the growing gap between regular and non-regular contracts in employment security, wages, welfare coverage, and mobility. The working time deregulation and the labor management reform were closely associated with each other, and brought about some changes in the contracts of regular workers. The working time deregulation, the establishment of the DWS in particular, segmented the workforce by selecting some white-collar workers as ‘discretionary workers.’ Selected workers are located outside the conventional contract of working time, which is based on the concepts of scheduled working time and overtime. It is different from the situation in the past in which negotiated terms covered all workers, although long and flexible overtime was a part of the regular contract (as it was freely negotiated by cooperative enterprise unions). Further, it is important to note that the negotiation of the selection was decentralized to organizational-level. The coverage of the DWS for professional occupations, for instance, was based on the socially defined credentials or certificate. However, in the case of the DWS for white-collar workers, the selection is based on the criteria that are essentially firm specific. The introduction of the results-oriented labor management system– performance-based wage system and the MBO (direction and personnel evaluation) system – brought changes in wage determination and job demarcation. Due to the introduction of the performance-based wage system, the life-stage adjusted component of wages became lower than ever, and workers could no longer expect automatic increase of wages every year. Since wages are pegged more strongly to an individual’s organizational roles and his/her (and the firm’s) performance, the wage differences between high and low performers are meant to grow. Further, as wage calculation began to be based on short-term performance, responsiveness to market fluctuation was expected to be higher

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Conclusion 165

(for example, Ishida 2006). Some case studies started to report that these features are already in practice, showing a improved responsiveness to market fluctuation (Tsuru, Abe and Kubo 2005; Abe 2007). In response to the increased individual responsibility to results, there was a growing demand among workers to clarify the range of job assignments and achievement expectation. The formalization of management’s expectations is represented by the implementation of the practice of ‘management by objectives (MBO).’ This system made the details of tasks and expectations ‘formalized,’ departing from the historical nonexistence of a ‘job description’ in Japanese firms. To thoroughly implement the MBO, in which a detailed ‘role description’ is drawn from organizational objectives, it became necessary to divide the workforce into groups based on their organizational roles, within which different labor management practices became associated with each group. Such division, like white- collar career, clerical and bluecollar at COMPUJ, might be common in reality at Japanese firms, but the formalization of the division may have further impacts on the contractual division in the Japanese labor market. Effort The reforms intensified the effort-bargain by the increasing role of results in evaluation and wage, the stronger alignment of individual workeffort to organizational goals, and the emphasis of selfmanagement in effort- control and assignment/career decision. The introduction of the performance-based wage and the results- oriented evaluation triggered this intensification. Since wage and promotion are pegged more to the evaluation of workeffort than age and seniority, they became more competitive. The introduction of the DWS helps this process. Since the DWS decouples the association between working time and wage, it enabled employers to control workeffort by work results, making them easier to adopt a results- oriented labor management system. Further, since the DWS ends the concept of scheduled working time and overtime, employers became able to take the workeffort, shown in the forms of flexible overtime and unpaid overtime, for granted. The effort- bargain was also intensified due to the MBO system of effort direction and evaluation as it assisted the integration of workeffort to organizational objectives. The tight coupling of the workers’ effort and organizational objectives was the major goal of the MBO, and the increased opportunity of ‘communication’ between managers and workers was expected to achieve the goal. The case

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study in the book demonstrated that the negotiation of effort at the workplace resulted in facilitating the development of this tight coupling. In accepting the resultsorientation, workers and labor unions demanded ‘fairness’ and ‘transparency’ in the new labor management practices. The efforts to improve the system resulted in the clarification of organizational roles and the objectification of evaluation criteria, which are expected to help mobilize workers’ consent to the new labor management system. The term ‘self-management’ represents the mode of control emphasized in the new labor management system. The MBO is the basis of this control because it individually tailors the assignment and evaluation criteria. But ‘self-management’ means more in the context of the reform; it is to make the individuals the agents of self- control and the deregulation of working time helped facilitate this process. The introduction of the DWS was to transfer the responsibility of working time management to individuals by deregulating the societal and organizational monitoring of working time. This deregulation made individual workers responsible for the management of working time – therefore, workeffort – and subsequently work results under the new labor management system. This concept of ‘self-management’ was extended to the mobility aspect of employment relations. Due to the strengthened resultsorientation in the labor management system, workers started to question the appropriateness of the assignments. The MBO extended the reform to the rotation practice, giving individual workers responsibility to choose the ‘right’ assignment, which strengthens the workers’ commitment to the assignments and consent to the evaluation result. Mobility The deregulation of the labor market did not change the mobility aspect of employment relations for regular workers. However, in relation to the labor management reform, there is a sign of the changing climate of bargaining with regard to mobility at the firm organizational-level. As mentioned in the section about contracts, the status of regular employment was still relatively protected even after the deregulatory reforms. Labor market deregulation increased job mobility among non-regular workers but not among regular workers. This is the major issue of labor market segmentation, because it means that regular workers are still relying on the organized career paths within a firm, where resources of livelihood and prospects for

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Conclusion 167

skill acquisition and promotion are available. Instead, non-regular workers move in the external labor market, where resources and prospects are not available. Compared with societies where some actors (state, industrial trade union, or professional association) have an interest and influence on firm- external job mobility,4 it is a distinctive characteristic of Japan that no major actor has influence or active involvement over employment protection, skill formation and career, and therefore there is no institutional support, including the notion of career, for those who move outside the firms. The introduction of a results- oriented labor management system triggered the renegotiation of the mobility agreement within a firm. In the past, any mobility of regular workers – horizontal and vertical – was decided by management. Passively accepting the decision and showing full flexibility in adapting to the changes of assignment constitutes the notion of career for Japanese workers. The new labor management system made the promotion more results-based, competitive and less frequent than before. It is no longer quasi-automatic, fewer workers will be promoted, and as a result, the gap is widening between high and low performers. To mobilize consent about the promotion decision, management partially transferred career responsibility to individuals under the name of ‘self-management:’ workers are required to choose the ‘right’ assignments for themselves. As mentioned in the section about effort, it is rather part of the control than worker empowerment. One reason for this is that regular workers still do not have a way out to the external labor market, which is the foundation of the effective workplace control at Japanese firms. Given the increasingly visible gap between internal and external labor markets, changing employers would not be a realistic alternative anytime soon for regular workers. The declining presence of labor unions All the findings in this book can be explained and characterized by the declining significance of labor in all levels of social negotiation. Two points are clear: 1) labor was simply marginalized in the policy process of the deregulatory reforms, and 2) labor unions could not play a significant role, as they failed to establish alternative rules, norms and notions of employment relations, which, due to the employer-led reform efforts, were under pressure for change. In this section, I will summarize how these two characteristics of ‘declining significance of labor’ affected the changes of employment relations summarized in the last section.

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Marginalization of labor from policy process The changes in participation and influence of organized labor are decisive in shaping employment relations. It is clear that the influence of labor unions is declining at all levels of social negotiation, but is particularly evident at the societal level. At the societal level, the establishment and growing importance of the deregulation committees in the employment policy area marked a significant change in the influence and inclusion of labor unions, which can be characterized as the shift towards ‘reform without labor.’ Before 1995, when the first deregulation committee was set up as a special committee under the Administrative Reform Committee, a tripartite advisory council (shingikai) with labor participation set the agenda, deliberated the regulations, and negotiated the methods to implement the regulations together. These tripartite advisory councils had constituted the policy domain for labor and employment issues since the late 1970s, and were the main sites of policy deliberation that represented a Japanese version of ‘corporatism with labor.’ After 1995, however, the deregulation committees became the sites of employment policy initiatives and changes. The consecutive deregulation committees tended to have a strong commitment to liberalization and deregulation. They were dominated by employers and liberalization/deregulation advocates, with weak or no formal representation from labor. The employers’ representatives came from emerging industries and companies, with differing views to those of the employers representing the traditional industries and the established keiretsu networks who still had commitment, although to a lesser degree, to the traditional labor relations. Deregulation committees engaged in setting the policy agenda, and eventually their proposals, were sent on to the tripartite advisory councils, but leaving them little role to play. The fundamental policy changes in temporary dispatched work since the late 1990s, for instance, were realized by this shift. A similar marginalization of labor also occurred in the policy process to establish the new DWS. The labor ministry was influenced significantly by the emergence of the deregulation committees, and the change in their attitude towards employment and labor market issues helped undermine the power of organized labor in the policy process. In the case of the labor market deregulation, the ministry first maintained commitment to the traditional mechanisms of labor mobility, but after the emergence of the deregulation committees, they shifted attention to the expansion of

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Conclusion 169

the external labor market. In the case of working time deregulation, the ministry was even more cooperative with the deregulation committees. When the negotiation at the advisory council deadlocked due to the wide difference of opinion between employers and labor unions, the ministry made the draft proposal to facilitate the discussion. The contents of the draft proposal were much closer to the idea raised by the deregulation committee. No alternative against the employer-led reform initiatives The decline of the strength of labor at organizational and workplace levels is not as dramatic as that at societal level, but it is obvious. Enterprise unions in Japan traditionally had a stronger voice on the issues of employment protection and wage bargaining, but allowed management prerogative in matters of labor management. This basic structure of labor relations is largely maintained, but not without change. The analyses drawn from the case company proved that labor union was cooperative to the introduction of the results- oriented wage and labor management system. Since the analyses in this book do not contain the actual change of wage distribution after the radical reforms of the wage system, my conclusion is necessarily tentative. However, being cooperative in this area means the acceptance of the marketization of wage by labor unions, undermining the leverage of wage negotiation for themselves. Thus, one of the changes at the organizational-level labor relation is the withdrawal of labor union from enterprise bargaining, although this requires further investigation. With regard to other labor management issues, labor unions accepted management prerogatives and played a consultative role in meeting the labor management reforms. First, increasing non-regular workers meant the increasing acceptance of management’s control by enterprise unions on staffing at organizational-level. Although labor unions did not have a strong hold on this issue anyway, the acceptance of the management’s reliance more on the external labor market than on internal flexibility marks a clear break from the past. Second, labor unions played only a consultative role, even having a favorable attitude towards the reforms, even though they could result in division and competition among workers and intensify workplace control. The unions’ concerns were mainly focused on the ‘fairness’ of competition, which resulted in the formalization and objectification of the system of personnel evaluation. These labor union activities demonstrate the lack of their ability to produce alternative notions of employment relations, and help

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maintain the traditional notions rather than questioning them. For instance, when workers were transferred to a new section at the case company, the labor union expressed concern, not about the management prerogative on the rotation decision, but to ask management not to demoralize anyone who considered the assignment change as unfavorable treatment. When the new labor management system was introduced, and labor union demanded ‘fairness’ in order to keep workers’ morale and commitment to work, rather than standing against the increasing competition. In addition, most of the workers did not seem to question the traditional notions of employment relations even after the reforms, which helped facilitate the reproduction of the current arrangement of authority relations; regular employment is still a relatively privileged contractual status, thus ‘organizational membership’ is still an effective notion that legitimates their contract relation; the introduction of competition was not necessarily a problem for workers; despite the expansion of the external labor market, regular workers still believe that working for the current employer is the best choice.

Remaking employment relations: risks and opportunities for Japanese workers The changes of employment relations were produced by the declining significance of labor. In this final section, I will reassess the reforms of Japanese employment relations from the workers’ point of view, which enables us to evaluate the risks and opportunities embedded within the new institutional arrangement of employment relations. There are two points in this section. Essentially, the reforms at various levels of society in the last two decades produced the ‘deflation of employment’ in Japan. Further, considering the observations presented in the book, the strategy to fight back against the ‘deflation of employment’ cannot assume the rights of ‘company citizenship’ as an ideal. Labor union movements need to take an alternative strategy. ‘Deflation of employment’ in Japan Since employers and regular employees were still maintaining the commitment to the institutional foundations of company citizenship, the deregulatory reforms expanded the external labor market without considering the issues of equal treatment. Such asymmetric deregulation resulted in amplifying the economic and social gaps between

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Conclusion 171

regular and non-regular contracts. The cleavage in Japan, overlapping with the distinction between generations5 and sexes of workers, has become a source of social unrest and a focus of political discussion that may lead to a change of Japanese society in the future. The term ‘disparity society’ (kakusa shakai) has attracted society-wide attention, and ‘equal treatment’ became a serious concern due to the growing recognition about the cases where regular and non-regular workers are assigned to similar jobs with significantly different employment conditions. As I will discuss later, the revision of the Paato Law (tan-jikan rōdōsha no koyō kanri no kaizen-tō ni kansuru hōritsu: Part-Time Workers Law) enacted in 2008 was motivated by such recognition. This was a type of ‘inclusion’ strategy to cover non-regular workers with the same employment conditions as regular workers. However, the status of regular employment is not as privileged as it once was because of the erosion of various rights that regular workers had previously enjoyed. With regard to wages, the marketization of wage undermined the seniority- curve, and the introduction of the DWS completely cut the overtime payment. Employment security seems to be still protected, but there are growing numbers of indications that it has begun to be loosened. Moreover, the intensification of effort- control is clear. The introduction of the results- oriented labor management brought about the increasing importance of personnel evaluation in wage and promotion determination, which facilitates competition between workers. Employers were able to segment the workforce, giving them individualized goals that are trickled down from organizational objectives. The emphasis of self-management made each individual an agent of self- control with regard to effort, working time and career development. It seems that after the era of deregulation and the organizational reforms to introduce resultsorientation, Japanese firms became able to shift gear to further embrace the corporate warriorship. Above all, it is possible to say that there emerged the ‘deflation of employment’ in Japan after the decades of reform. There are visible gaps in employment, and are declines in resource and prospect that employment can provide for workers regardless of their contractual status. The consequence is devastating. Although the findings indicate that the reforms are almost exploitative, even against workers with regular contracts by the tightening of control, workers still tend to have an aspiration to stay with their current employers. Moreover, recent new employees are reported to be the most loyal to their employers according to the annual surveys since 1990 (JPC

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2009) showing a strong aspiration to stay with a firm throughout the career. It is reasonable to speculate that the stagnating economy and the recognition of the widening gap between regular and nonregular employment are strengthening the aspiration for job seekers to obtain regular contracts and for regular employees to stay in a firm. This motivation reaffirms the basis of workplace control specifically effective at Japanese firms. The limit of equality by ‘company citizenship’ Considering the disparity between regular and non-regular contracts and the resulting increase in concern over various social problems, it seems reasonable for the mainstream Japanese labor union movement and the new grassroots movements to form a strategic coalition for the reregulation of employment. New labor union movements such as the local general union (chiiki or ippan rōdō-kumiai6) represent the traditionally unorganized but increasing sector of non-regular employment. However, they do not have formal channels in which to be heard in the policy process. The national umbrella federation such as Rengo has such a channel, but suffers from declining membership. The alliance seems to be a natural and necessary consequence. In fact, the new general unions became eligible for membership of the federation, and have now started to have a voice. The election result of Rengo’s board of directors in 2005 reflected the shift within Rengo politics, when one supposedly fringe candidate from a general union won about one-third of the total votes.7 However, the organizational inclusion of non-regular workers by regular workers does not automatically solve the problems since the making of non-regular employment statuses clearly shows that they were shaped by the inherent limits of company citizenship. First, the malebreadwinner assumption is so strong in the institutional foundation of the company citizenship that women are effectively excluded from it, which clearly appeared in the disproportionate ratio of women in the non-regular employment sector. Second, the development of company citizenship shaped a unique and wide array of rights and duties specific to regular workers. Accepting various requirements of flexibility is the major criteria by which regular employees see themselves as committed and responsible for organizational requirements, constituting the full membership of a company. This notion of status is the foundation of the firm status-based segmentation. One advocate of the deregulation asserted in our interview that there are some workers who want to

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be free from the ‘duties,’ therefore it is natural that they are not entitled to the same rights as regular workers (interview with a scholar 18 November 2002). This is why seeking equal treatment of non-regular workers by an attempt to extend company citizenship does not achieve the goal, rather it only reassures the existing status division. The revision of the Paato Law in 2008 is the exemplary case. The revision was said to be about the equal treatment between regular and non- regular contracts, and the law set the prohibition of differential treatment of non- regular workers who fall in to the following categories: 1) whose areas of job and responsibility are comparable to regular workers, 2) whose term of contract is unlimited (or repetition of limited- term contract), and 3) whose job and assignment may change (or rotate) in the same scope with regular workers. The law clearly shows the inherent limit of company citizenship to achieve equal treatment. The third condition, for instance, pinpoints an exact condition that practically distinguishes regular from nonregular employees. The message of the law is clear; non-regular workers do not deserve the same treatment as regular workers as far as their responsibility (duty) does not meet the conditions of company citizenship. Right to a career without organizational membership Therefore, the strategy for allied labor union movements should not assume company citizenship as an ideal. The purpose should be to fight back against the ‘deflation of employment’ under which both regular and non-regular workers suffer. The basic principle is, if we want to change the situation of non-regular workers, it is necessary to change the situation of regular workers too. Non-regular workers need to have access to resources and prospects, and regular workers need to be free from the restrictions of control with shrinking resources and declining prospects. This point clarifies that the agenda for the labor union movement in Japan is to tackle the institutional foundations of company citizenship. First, labor unions need to focus on a broader set of political and social reforms. Social policies at present have a strong gender bias, and provide the political and legal foundations of the corporate- centered social setting, which create disincentives for the external labor market mobility of workers. The corporate- centered social setting does not allow regular workers to ‘exit’ from firms and locates non-regular

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workers in the social space without any resources or prospects. To make workers fully capable of controlling their careers, the social and material disadvantages for workers in job mobility have to be overcome. It is clearly necessary to provide equal employment and social security for all workers regardless of the organizational affiliation. Unions should seek to establish supports for workers in external labor markets in developing skills, making job transitions and guaranteeing social security, and, if necessary, they need to demand legal regulative reforms to realize the supports. A concept such as a ‘worker’s right to a career without organizational membership’ might play a role in such reform efforts. For regular employees, this kind of effort fundamentally strengthens their power in mobility bargain by giving them alternative choice – changing employers. Once ‘exit’ is established, all the reforms executed in the last two decades are not all negative to workers, which is another hint for the labor union movement. The formalization of personnel evaluation and the active role by workers in defining individuals’ objectives have increased the transparency of the personnel evaluation process. Workers now know how they are being evaluated, and have a chance to participate in this evaluation process. One effect is that workers are enabled to take a more active role in their career development, since they know what they should be achieving and can plan by themselves to improve the skills they need to meet these goals. These changes give Japanese workers a chance to say more in the evaluation and to repossess their careers, thus curbing the traditional management prerogative in control and mobility. Making the evaluation system more objective and shifting skill and career formation more to workers may also lay the ground for more job mobility in the external labor market. Therefore, the second agenda for the labor unions is to re-involve labor management issues. Labor unions need to start their own discussions on the issue of personnel evaluation at industrial and national center levels, perhaps by launching their own study groups with external experts. Rengo has not seen the need to pay attention to such issues because these have long been considered a matter for enterprise unions at the firm-level. Labor unions need to critically examine evaluation criteria. This effort will help individual workers who need to negotiate about individualized tasks and evaluation, and also help labor unions to re-participate in the issues of labor management at organizational level. This will also help unions to become involved in setting skill development possibilities and standards in various types and levels of

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careers, jobs and ranks, to support workers’ autonomous mobility. The opportunities for external job mobility would be encouraged by sectoral and societal level standards for evaluating workers regardless of the situations of individual firms. In this way, it may be possible to say good-bye to ‘company man.’

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Appendices

A1.1 List of interviewees Category

Name Full Function

Interview date

Scholars

S1

13/Nov./2002

S2 S3

S4

S5 Employers E1

E2

E3 E4 E5 E6 E7 E8 E9

Professor of Employment Policy, Chair of various advisory committees of the labor ministry Professor of Law, A member of the Council for Regulatory Reform Professor of Law, Chair of the Advisory Committee on Employment Security of the labor ministry Professor of Law, A member of the Advisory Committee on Labor Standards of the labor ministry Assistant Professor of Law Executive Director of a temporary help firm, an outside member of the Special Committee on Labor Market, Advisory Committee on Employment Security of the labor ministry President of a temporary help firm, A member of the Council for Regulatory Reform, Advisory Committee on Labor Conditions of the labor ministry An officer of a temporary help firm, Public Relations Office A manager of a temporary help firm, President Office A manager of a temporary help firm, Dept. of Management Planning A manager of a temporary help firm, Dept. of Management A manger of a temporary help firm, Dept. of Worker Dispatch A manager of a temporary help firm, Dept. of Worker Dispatch A manager of an employers association, a member of the Special Committee on Labor Market, Advisory Committee on Employment Security of the labor ministry

18/Nov./2002 19/Dec./2002

24/Feb./2003

18/Oct./2002 25/Dec. /2002

25/Dec./2002

28/Feb./2003 13/Oct./2004 30/Sep./2004 29/Sep./2004 6/Oct./2004 30/Sep./2004 23/Feb./2003

176

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Appendices

E10 E11 E12 E13 E14 E15

Industry I1 Association I2

I3

I4

Labor Unions

L1

L2 L3 L4 L5 L6

Public P1 Officials P2 and Politicians P3 P4

Executive Manager, Corporate System No. 4, COMPUJ (electronics company) Department Manager, F Department, COMPUJ Manager 1, Personnel Department, COMPUJ Manager 2, Personnel Department, COMPUJ A manager of a software development firm, Dept. of Public Relations A deputy manager of a software development firm, Dept. of Public Relations A manager of the industry association for temporary help industry, Dept. of General Affairs President of a temporary help firm, and the President of the industry association for temporary help industry A manager of the industry association for IT service industry, Research and Planning Department A manager of the national federation of medium and small-size firms, Dept. of Research A director of a national federation of labor unions, Labor Policy Coordination Division An officer of a national federation of labor unions, Dept. of Employment Policy Deputy Secretary General of a labor union for the dispatched workers A full-time union official, COMPUJ A member of the alternative labor union of electronics industry A member of the alternative labor union of electronics industry

177

7/Jun./1995 9/Jun./1995 10/May/1995 26/Feb./2001 7/Oct./2004

11/Sep./2002

1/Oct./2004

3/Jul./2003

17/Sep./2004

21/Nov./2002

22/Feb./2001 15/Nov./2002 16/Jun./1995 13/Feb./ 2003

A section manager, Section of Private 11/Dec./2002 Employment Service of the labor ministry An officer, Section of Private Employment Service of the labor ministry House of Councilors, Democratic Party 19/Dec./2002 of Japan House of Councilors, Social Democratic 19/Dec./2002 Party of Japan

Note: In addition to the interviewees listed above, workers at F Department, COMPUJ, were interviewed during the field research in 1995–6.

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A3.1 Major reforms of labor market regulations in the post-WWII period 1947

Employment Security Law Prohibition of the all private personnel business: all the private personnel business including job placement and temporary dispatching work is prohibited by Employment Security Law for the modernization of the labor market after the WW2. It only accepts public job placement, and private job placement for strictly limited occupations

1952

The revision of the Ministerial Ordinance of Employment Security Law Loosening of the condition for illegal dispatching: this revision made a part of illegal dispatching (kōnai ukeoi) legal.

1978

Admonition by the Administrative Management Agency Caution toward the expansion of the illegal situation of kōnai ukeoi: this admonition warned that there had been growing misuse of ESL by the lax regulation of the illegal dispatching.

1986

Temporary Dispatched Work Law Legalization of temporary agency dispatching of workers in 13 specific occupations (called the ‘positive list’).

1990

Revision of the Temporary Dispatched Work Law Extension of ‘positive list’ of occupations from 13 to 16; extension of the term of dispatch from nine months to one year.

1994

Revision of the Temporary Dispatched Work Law For elderly workers (older than 60 years of age) replacement of ‘positive list’ with a short ‘negative list’ of occupations, prohibiting temps only in a few occupations.

1996

Revision of the Temporary Dispatching Work Law Extension of ‘positive list’ of occupations from 16 to 26.

1997

Revision of the Employment Security Law Under the 1947 law, private placement had only been allowed in a ‘positive list’ of occupations. The revision replaced the ‘positive list’ with a ‘negative list’, loosened limitations on fees and regulations on the establishment of a private job placement service firm.

1999

Revision of the Labor Standards Act Fixed-term contracts which had been limited to short-term projectrelated work and limited to one-year duration since 1947, were declared legal for most forms of professional and knowledge-intensive work, with the allowable duration extended from one to three years.

1999

Revision of the Temporary Dispatched Work Law The reform of 1987 law replaced the ‘positive list’ with a ‘negative list’, set a one year limit on dispatching in newly allowable occupations, while extending the term to three years for the 26 occupations allowed in the 1996 revision to the law.

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179

1999

Revision of Employment Security Law Removed all but two occupations on the ‘negative list.’

2003

Revision of the Labor Standards Act Duration of Fixed-term contracts for all project-related work extended to three years, for professional and knowledge-intensive work, the limit was extended to five years.

2003

Revision of the Temporary Dispatched Work Law Partial removal of the ‘negative list’ system, especially the occupations related to medical services.

2003

Revision of the Employment Security Law Loosening of the conditions to start a private job placement service firm, placement limitations lifted for side-jobs in selected service industries, such as restaurants and hotels.

2004

Revision of the Temporary Dispatched Work Law Totally lifting the limit of the term for the 26 occupations, which were allowed for three years in the 1999 revision to the law. Extending the limit to three years for the rest of the occupations which was one year in the 1999 revision. Among the occupations listed in the negative list, manufacturing was removed from the list.

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A3.2 Revisions of the limited-term contract Limited-term contract

Contents

Labor Standards Act (1947)

Labor contracts, excluding those without a definite period, and excepting those providing that the period shall be the period necessary for completion of a specified project, shall not be concluded for a period longer than one year.

Revised Labor Standard Act (1998)

Labor contracts, excluding those without a definite period, and except those providing that the period shall bet he period necessary for completion of a specified project, shall not be concluded for a period longer than one year, or three years with respect to labor contracts that come under any of the following items. 1. Labor contracts concluded with workers who have the professional knowledge, skills and experience that are necessary for developing new products, services or technologies or for scientific research (hereafter referred to as “professional knowledge etc.” in this Article), and that come under the standard of possessing the advanced level of professional knowledge etc, prescribed by the Minister of Labor (limited to those workers who are newly appointed to work requiring the advanced level of professional knowledge at enterprises where there is a shortage of workers with that advanced level of professional knowledge) 2. Labor contracts concluded with workers who have the professional knowledge, skills and experience that are necessary for work to start up, convert, expand, downsize or close down an enterprise which is expected to be completed within a definite period, and that come under the standard of possessing the advanced level of professional knowledge etc. prescribed by the Minister of Labor (limited to those workers who are newly appointed to work and require the advanced level of professional knowledge at enterprises where there is a shortage of workers with that advanced level of professional knowledge)(excluding labor contracts stipulated in the preceding item). 3. Labor contracts concluded with workers aged 60 years or older (excluding labor contracts which stipulate the preceding two items). Announcement, the Ministry of Labor (Dec, 1998, Enacted in Apr. 1999)

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181

The workers with the standard of possessing the advanced level of professional knowledge, skills and experience can be specified as follows. 1. Workers with PhD degree. 2. Workers with Master’s degree and have three years of experience in the work assignments. 3. Workers with the following qualifications. • Certified public accountant • Medical doctor • Dentist • Veterinarian • Lawyer • First class authorized architect • Pharmaceutical chemist • Real estate appraiser • Patent attorney • Engineer • Public consultant on social and labor insurance (Items 4 and 5 are omitted by author) Revised Labor Standards Act (2003)

Labor contracts, excluding those without a definite period, and excepting those providing that the period shall bet he period necessary for completion of a specified project, shall not be concluded for a period longer than three years, or five years with respect to labor contracts that come under any of the following items. 1. Labor contracts concluded with workers who have the professional knowledge, skills and experience that come under the standards prescribed by the Minister of Labor. 2. Labor contracts concluded with workers aged 60 years or older. [author omitted the two terms: 1) responsibility of the Minister of Labor on the conflict resolution, 2) the advisory responsibility of the Ministry of Labor towards employers] Announcement Plan, the Ministry of Health, Labor, and Welfare (Enact in Jan. 2004) Workers possessing the advanced level of professional knowledge, skills and experience which are specified as follows. 1. Workers with PhD degree. 2. Workers with the following qualifications. • Certified public accountant • Medical doctor • Dentist • Veterinarian • Lawyer • First class authorized architect • Tax attorney • Pharmaceutical chemist

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Appendices

• Public consultant on social and labor insurance • Real estate appraiser • Engineer • Patent attorney 3. Workers who passed the examinations of system analyst and actuary. 4. [omitted] 5. Workers with an annual income exceeding 1,075 man yen (approximately $90,000) per year in the following work assignments with educational credentials and experience. • Research scientist, system engineer, and designer: 5 years of experience with Bachelor’s degree, 6 years of experience with Associate Bachelor’s degree, 7 years of experience with H.S. diploma. • System engineer, 5 years of experience. [last term is omitted by the author] Source: The table is assembled by the author from government records.

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183

A3.3 Labor market changes For Figure 3.8 Labor market changes by occupations (numbers in thousands)

technical and professional management clerical sales service security agriculture/ fishery transportation and communication manufacturing and construction* unclassified total

1987

1992

1997

2002

2007

5,642 12.2% 2,171 4.7% 10,322 22.4% 6,196 13.4% 2,936 6.4% 735 1.6% 428 0.9% 2,198 4.8%

6,873 13.1% 2,321 4.4% 12,261 23.3% 7,077 13.5% 3,485 6.6% 785 1.5% 420 0.8% 2,211 4.2%

7,467 13.6% 2,248 4.1% 12,865 23.4% 7,433 13.5% 4,040 7.3% 927 1.7% 407 0.7% 2,221 4.0%

7,905 14.4% 1,993 3.6% 12,201 22.3% 7,736 14.1% 4,976 9.1% 1,028 1.9% 409 0.7% 2,054 3.8%

8,555 14.9% 1,759 3.1% 12,992 22.7% 7,545 13.2% 5,641 9.8% 1,085 1.9% 635 1.1% 1,994 3.5%

15,419 33.4%

16,707 31.8%

16,883 30.7%

15,682 28.7%

15,416 26.9%

104 0.2% 46,153 100.00%

428 0.8% 52,575 100.00%

507 0.9% 54,997 100.00%

748 1,654 1.4% 2.9% 54,733 57,274 100.00% 100.00%

Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009. * Categories such as mining and day labor were separated in 1987. In this table, those are included in ‘manufacturing and construction’ since it includes those in later years.

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184

Appendices

For Figure 3.10

Haken workers by occupations (numbers in thousands) 1987

1992

1997

2002

2007

technical and professional management

18 20.7% 0 0.0%

21 12.9% 0 0.0%

30 11.7% 0 0.0%

44 6.1% 0 0.0%

76 4.7% 0 0.0%

clerical

39 44.8%

94 57.7%

180 70.0%

360 49.9%

588 36.6%

sales

0 0.0%

0 0.0%

4 1.6%

48 6.7%

91 5.7%

service

4 4.6%

10 6.1%

10 3.9%

43 6.0%

72 4.5%

security

0 0.0%

0 0.0%

0 0.0%

0 0.0%

0 0.0%

agriculture/ fishery transportation and communication manufacturing and construction unclassified

0 0.0% 2 2.3%

0 0.0% 6 3.7%

0 0.0% 4 1.6%

1 0.1% 11 1.5%

4 0.2% 31 1.9%

14 16.1%

27 16.6%

28 10.9%

192 26.6%

636 39.6%

10 11.5%

5 3.1%

0 0.0%

21 2.9%

110 6.8%

87 100.0%

163 100.0%

257 100.0%

721 100.0%

1,608 100.0%

total


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185

For Figure 3.11 Keiyaku/shokutaku workers by occupations (numbers in thousands)

technical and professional management clerical sales service security agriculture/ fishery transportation and communication manufacturing and construction* unclassified total

1987

1992

1997

2002

2007

139 19.0% 14 1.9% 200 27.4% 64 8.8% 52 7.1% 36 4.9% 8 1.1% 30 4.1%

150 17.0% 14 1.6% 252 28.6% 69 7.8% 79 9.0% 31 3.5% 9 1.0% 37 4.2%

175 18.1% 13 1.3% 283 29.3% 88 9.1% 88 9.1% 35 3.6% 10 1.0% 44 4.6%

378 15.3% 17 0.7% 655 26.4% 297 12.0% 260 10.5% 75 3.0% 15 0.6% 128 5.2%

482 14.5% 11 0.3% 876 26.4% 365 11.0% 356 10.7% 100 3.0% 22 0.7% 201 6.1%

120 16.4%

229 26.0%

224 23.2%

620 25.0%

798 24.1%

2 0.3% 730 100.0%

7 0.8% 880 100.0%

7 0.7% 966 100.0%

31 1.3% 2,477 100.0%

103 3.1% 3,313 100.0%


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186

Appendices

A4.1

Chronology of working time regulations

Year

Laws and policy initiatives

Contents

Objectives

Setting working time regulation for the first time in Japanese industrialization subjecting women and children under the age 15. It set 12 hours/ day limitation and the prohibition of night work from 10 p.m. to 4 a.m.

To affiliate the social concern regarding low wages and the long working hours of female and young workers, after the rise of industry due to the SinoJapanese War

1911 (1916)

The Establishment of the Factory Law

1923 (1926)

The revision of For women and children the Factory Law younger than 16, it set 11 hours/day limitation and the prohibition of night work from 10 p.m. to 5 a.m. The The introduction of the To modernize and Establishment 8-hour-per- day, 48-hourdemocratize of the Labor per-week principles Japanese Standards Act It did not set any limitation employment (LSA) on the amount of relations. Thus overtime work as far as the the LSA includes collective bargaining at the enterprises each enterprise reach the smaller than 10 agreement. employees that were not the subject of any regulation in the prewar period. Maekawa Report Realization of the annual Expansion of total working hours equal domestic to other industrialized consumption countries by shortening Realization of the two dayworking time off a week system New Maekawa Shortening the annual Expansion of Report working hours to less than the domestic 1,800 until year 2000 consumption Realization of the two dayby shortening off a week system in the working time public sector and banking industry

1947

1986

1987

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187

1987

Revision of the LSA

1988– 2001

Gradual implementation of the 40hour-per-week principle 5-year Temporary Government is responsible to To further facilitate Statute to set up the Implementation the reduction of Reduce Plan for Working Time working time Working Reduction to achieve 1,800 Hour (rōdō hours of annual working jikan tanshuku hours. sokushin rinji The law was extended twice sochi-hō: jitan until the end of the fiscal sokushin-hō) year of 2005-2006 (at the end of March, 2006). Revision of the The establishment of To provide advice jitan sokushin-hō the Support Center for and subsidized Shortening Working Hours funds for the The establishment of employers who subsidiary funds to try to shorten support shortening working hours working hours Revision of the The establishment of the LSA Discretionary Work System for white- collar workers Gradual 40-hour-per-week for almost implementation all the companies of the 40Exceptional treatment of hour-per-week 44-hour-per-week for principle the smallest category of company

1992– 2006

1993

1998

2001

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Adoption of the 40-hour“Working time per-week principle with reduction” as transitional measures national policy Introduction of the modified Modified working working schedule system schedule system Introduction of the deemed and deemed working time system, working time Discretionary Work system are System for Professional established as Occupations transitional measures

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188

Appendices

A4.2 Discretionary work regulations as of 2000 DWS DWS for professional occupations

DWS for white- collar works

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Item

Description

Coverage

Article 38-3...duties for which it is difficult for the employer to give concrete directives regarding such decisions as the means of accomplishment and allocation of time because the nature of the duties is such that the methods for accomplishment must be left largely to the discretion of the workers 1. Research and development 2. Information systems design 3. Editing and reporting 4. Designer 5. Film and broadcasting production 6. And other tasks the Minister specifies Under the condition 6) • Copy writer • Certified public accountant • Lawyer • First class architect • Real estate appraiser • Patent agent

Body of regulation

Labor-management committee discusses about the coverage and deemed working time

Coverage

Article 38- 4 ... workers who work at the workplace where important decisions on the management are made, and who perform tasks of planning, drafting, researching and analyzing matters regarding business operations for which the employer does not give concrete directives regarding such decisions as the means of accomplishment must be left largely to the discretion of the workers 1. The workplaces where important decisions are made are: • Headquarters • Regional headquarters and branches where function to make important decision was given 2. The duties that employer does not give concrete directives are: • The duties related to management of the enterprise • Planning, drafting, research, and analysis

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189

• The duties which, by their nature, employer needs to give discretion for workers to complete them • The duties which employer does not give concrete directives in terms of the methods of completion and the allocation of working time to complete them The guidelines for this law suggest concrete examples of the applicable assignments, such as, business administration, personnel management, financial research and planning, public relations management, sales planning, and production management (Guideline 3-1(2)-ro-(i)). Body of regulation

Labor-management council: It is mandatory to establish a new council by labor and management besides the usual procedure of labor-management agreement, and the council has to have unanimous agreement on the following issues. 1. Applicable duties 2. Applicable workers 3. Deemed working time 4. The concrete measures to secure health and welfare of the discretionary workers 5. The concrete measures to process complaints from the discretionary workers 6. The process to have assent from workers, and the prohibition of unfair treatment of rejected workers 7. Effective period 8. Preservation of records

Note: The table is assembled by the author from government records.

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A5.1 Future principles of labor management (all firms: %) 100 90 80 70

Unknown

60

Difficult to tell

50

Seniority and results

40

Results-oriented

30

Seniority-oriented

20 10 0 1990

1993

1996

1999

2002

Source: Survey on Employment Management: MOL 1990a, 1993b, 1996a, 1999d; MHLW 2002d.

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191

A5.2 The COMPUJ organizational chart as of July, 1994 Board of Directors Chairman of the Board President Executive Committee, Corporate Management Committee Corporate Staff: Corporate Planning, Government Relations, General Affairs, Public Relations, Legal and Administration, Human Resource Development, Industrial Relations, Controller and Internal Auditing, Treasury, Credit Control and Collection, Corporate Design, Engineering Planning and Coordination, Intellectual Property, Customer Satisfaction and Quality Management Promotion, Manufacturing Coordination, Environmental Management, Purchasing, etc. 5 Marketing Groups NTT Sales Government and Public Sector Sales Domestic Sales Group International Operations Group Advertising 11 Operating Groups Research and Development Group Software Development Group Production Engineering Development Group IT Infrastructure Group Corporate Systems Group Computers Group Personal Computing Group Semiconductor Group Electronic Component Group Home Electronics Group Special Projects Group

Source: COMPUJ CI DATA, published by Corporate Design Division, 19 October 1994, modified by the author.

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Notes 1 Sociological Theory of Employment Relations 1. The years around 1995 and 1996, especially 1996, may be exceptions. The relatively strong figures of economic performance for the year were seen as the signs of recovery from the post-bubble recession. The year 1997, however, marked a clear downfall again due to another round of financial crises. According to Kikkawa, economic growth rate was lower than western counterparts at least until 2002 (Kikkawa 2005). 2. The advocates of the argument include prominent economists such as Shimada, Nakatani, Takenaka, and Yashiro. They claimed that Japanese style management and supporting employment institutions, which once was the best practice in the world until the end of the 1980s, is now obsolete, and has to be changed. Further, they urged that all white- collar workers should stop relying on their employing organizations, rather they should become independent professionals able to choose their employing organizations throughout their careers (Shimada 1996; Nakatani and Takenaka 2000; Yashiro 1999). 3. By using the broad term of ‘regulation,’ I mean that formal and informal dimensions of contract/effort and mobility are negotiated in terms of the rules, norms and cognitive framework (meaning system) at the domains in all levels. 4. Streeck argues that “if the resources of the parties are distributed so asymmetrically that much more depends for one party than for the other upon the conclusion of a contract, then while contracts may be concluded, they are contracts only in form; in reality they are commands” (Streeck 1992: 41). 5. According to T.C. Smith, Japanese labor movements at that time claimed ‘the right to benevolence’ within each organization rather than the universal rights as workers that can be observed in western counterparts. They demanded better treatment and respect as ‘organizational members.’ In concrete terms, they required to make the boundaries between occupational/ educational groups less distinct, to open up avenues for promotion into higher occupational groups based on experience and regardless of educational qualification, and the rewarding of benefits based on service in a work community accepting the performance monitoring by management (Smith 1988). The process of labor dispute assembled ‘organizational membership’ as the notion of authority relations at Japanese workplaces (see Chapter 2 for the contemporary version of the formation of the same notion). 6. For the scholars of labor law, this is the very definition of ‘employee’ (Araki 1999). 7. It is important to note that there are societal, organizational and workplace levels of politics as they help generate, maintain and change the institution that cover rules, norms and cognitive frames (Scott 2008: 89; Sato and

192

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Notes 193

8.

9.

10.

11. 12.

13.

Yamada 2004). Fligstein argues that what the state-firm-labor politics create is the patterns of institutions that cover rules to local cognitive framework (culture) (Fligstein 2001). Particularly, he highlights that the politics shape a local cognitive framework that makes sense therefore legitimizing the structure of power relations and the pattern of stratification for those who participate in labor markets. The studies of neocorporatism are typical cases. They investigated the structure of resource mobilization of labor union movements as the sign of their strength to achieve favorable results for workers. The structures are largely categorized into pluralism and corporatism (and possibly other variants) reflecting the degree to which these regimes are able to reflect workers’ interests (Schmitter 1974; Inagami et al. 1995). Campbell and Lindberg argue that “[s]tate may manipulate property rights in different ways in different sectors of the economy, and this will influence governance regimes in these sectors accordingly” (Campbell and Lindberg 1990: 635). In this strand of thought, the market is not an automatic and completely autonomous system that regulates the transaction between the parties. Market transactions are enabled by a set of rules enforced by state authority under which related actors need to define ‘property rights’ and to set ‘rules of exchange’ in various markets through the negotiation with other actors. In general, ‘property rights’ refer to the right to claim profit in a capitalist society covering the rules that determine the conditions of ownership, control of the means of production, and social relations between owners and everyone else (Campbell and Lindberg ibid., also refer Fligstein 2001). Without this concept, a market cannot be organized. ‘Rules of exchange’ define the qualification of the parties of transaction, and standardize the conditions of product in addition to the settings of social technologies of exchange (common standards, monetary exchange and the enforcement of contracts) (Fligstein ibid.). These concepts are necessary to be defined and practiced under state authority, and then realized to secure an individual’s freedom “to conclude valid contracts, to acquire, and dispose of, property” (Bendix 1996 [1964]: 92). In most of the cases, exogenous states are discussed as only hindering market processes or, at best, setting incentives for actors in the markets. Ujihara had already in the 1980s, pointed out that the roles of labor standards and labor market regulations in defining contract relations are unreasonably downplayed by the scholars of social policy who only emphasize the importance of labor relations and collective bargaining (Ujihara 1989a: Chapter 1). This is again where ‘free contract’ and ‘free mobility’ matter. Given the disproportionate power relations in the labor markets, there are lurking risks for workers to lose their autonomy to move due to dominating employers, exploitative labor market intermediaries and all kinds of discrimination. Thus ‘free’ mobility requires regulation. The most fundamental one is the constitutional endorsement to secure free mobility of workers (freedom of choosing occupation) in any modern industrial society as a part of the universal rights of citizenship.

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194

Notes

14. In Japan, some of these regulations are summarized in a newly established Labor Contract Act (rōdō keiyaku-hō) from March 2008. 15. Labor sociologists who work on the topic of workplace authority relations and culture often downplay this association between the negotiation of labor-management practice and the establishment of authority relations. Clawson and Fantasia’s critique on Burawoy (1979) clarifies this point. Burawoy is concerned that the culture among workers, which is supposed to give autonomy for workers, actually ends up giving consent to a specific pattern of workplace authority relations (Burawoy 1979). Clawson and Fantasia argue that such culture appears only when workers agree on the working conditions negotiated at organizational level bargaining, and would be renegotiated once the conditions are changed (Clawson and Fantasia 1983). 16. In this book, I will use the term ‘labor ministry’ to mean the Ministry of Labour (MOL: 1947–2001) and the Ministry of Health, Labour and Welfare (MHLW: 2001–) unless the exact name is not necessary.

2


1. Nimura says “what looks exceptional that requires explanation seems to me the characteristic of labor movements of the western Europe and the US in which workers of same occupation unite instead of making unity among workers who work together at the same workplaces seeing with each other everyday” (Nimura 1987: 83). He speculates that the reasons for this ‘exceptional’ characteristic can be traced back to the occupational guild tradition and the very specific structure of medieval cities (Nimura 1987). 2. Kawanishi notes the fact that some industries still use the variation of this densan-gata chingin to show the strong influence of this wage system (Kawanishi 1999). 3. The integration was achieved in most sectors of the economy by the end of the 1960s (Hisamoto 1998). 4. The spring labor offensive started in 1955, and consisted of bargaining for so- called ‘bēsu appu’ (base-up) of average wage. Negotiations are done in every industry. The standard of base-up negotiations at shuntō in leading industries also affects other industries. The wage levels, even in public service and nonunion organizations, are decided with reference to these negotiations. 5. In terms of the practices of job transfer, a detailed analysis can be found in the works by Inagami (2003). Inagami argues that job transfer, shukkō, was first executed to dispatch workers with required skills, such as managers and technicians/engineers, to expanded areas of business, mostly done by subsidiary companies. Negative connotations of job transfer, which means labor force trimming, appeared after the oil shocks in the 1970s (Inagami 2003). 6. This policy was also shared by the labor ministry at that time. This was accompanied by the idea to abolish ‘lifetime’ employment and to establish external labor markets with stratified system of occupational training (Hamaguchi 2004).

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Notes 195 7. Externalization of some parts of organizational functions became common during this period, which was called ‘outsourcing.’ The maintenance of office buildings, data processing, some miscellaneous tasks of R&D, and some clerical jobs were outsourced (Ujihara 1989b; Takanashi 2001a). And since the workers in this outsourcing industry frequently needed to work at clients’ work sites, this form of employment became the base of haken (temporary dispatched) form of work, which was legalized in the late 1980s (see Chapter 3 for further details). 8. Kume evaluates it more positively as the highest achievement of labor in the postwar history (Kume 1998). Inagami et al. tried to determine if Japanese policy making in the field of labor is corporatist or not, and, if it is, what type of corporatist regulation it is. Even though their studies were carried out in the late 1980s to the early 1990s, right after the successful concentration of labor movements to the new national center, Rengo, they reserved the conclusion, although it is not “corporatism without labor” (Inagami et al. 1995). 9. In Japan, workers in the public sector are prohibited from striking. It was workers of Japan National Railway who claimed the right to strike in 1975. 10. Later, Nakasone, the former prime minister, stated in interviews with print and television journalists that the purpose of privatization was to achieve the collapse of labor movements within the public sector. “I wanted to smash down Sohyo. I was clearly aware that if Kokuro (the trade union of Japan National Railroad) was destroyed, it would automatically collapse Sohyo” (AERA 1997, January). 11. Dore found the preference structure of labor trimming among Japanese companies. That structure consists of reducing board members’ remuneration, cutting wages, cutting paid hours of work (chiefly overtime), freezing recruitment, the hiring of temporary and seasonal workers, reassignments and transfers, calls for voluntary retirement, and dismissal (Dore 1986). He describes that “of these the easiest institutionally to cut is paid employment in the form of overtime” (Dore ibid.: 91). 12. The graph demonstrates that the difference of overtime among firm sizes decline. One clear reason for this is that smaller companies were able to set longer scheduled working hours (shotei nai rōdō jikan) than large ones after the LSA revision in 1987. For instance, smaller companies have been treated as an exception from the 40-hour-per-week principle during most of the 1990s. Another reason is that large companies are more strongly bound by the norms of lifelong employment, under which companies need to maintain the practice of long-term employment. Subsequently, they need to adjust overtime to cope with business conjuncture rather than adjusting wages and employment. Smaller firms may find it slightly easier to adjust wages and employment than large firms (see Chapter 5 for further details). 13. Takanashi points out that paato started to expand at the end of the 1960s, but it became truly visible in the 1970s from the aftermath of oil shocks (Takanashi 1993: 103–4). 14. The number includes ‘director.’ The number that excludes the category is 74.9 percent.

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196

Notes

15. Without directors, the percentage is 88.2 percent. Larger firms tend to employ workers as regular employees more than the smaller ones, which indicates that lifelong employment practices (for regular workers) are more strongly maintained at the large firms. At medium and small size firms, the idea of lifelong employment is not entirely practiced, while it is considered as an ideal. Scholars found a dualistic structure in the Japanese labor market based on the size of the company. Wage and welfare programs are much better in the larger companies throughout the postwar history. The dualistic structure was strengthened in the 1960s and 1970s. It was slightly relaxed in the 1980s, but there is no significant sign of change after the burst of the bubble economy (Watanabe and Sato 1999; Hashimoto 1999). 16. The number is also from the Employment Status Survey in 1987. This year, the number of male employees was 29,154 thousands, and workers who are employed by private enterprises (eliminating the ones employed by public entities) that employ more than 1,000 workers counted 5,732 thousands. Among them, 5,612 thousands were regular employees (97.9 percent). This number includes directors. 17. Recently, the category of paato started to also cover young female workers. 18. Kisetsukō means seasonal workers and gaikokujin rōdōsha means foreign workers. The author classifies these categories of workers as employed from the labor market, which means that many of them are employed through intermediary agencies and/or networks that connect the foremen of small firms. Especially in the case of foreign workers, some researchers such as Tan-no point out the importance of the intermediary agencies and networks (Tan-no 1998, 1999). 19. There are two types of enterprise groups: horizontal keiretsu and vertical (hierarchical) keiretsu. The formation of the former type was more like a revival of prewar zaibatsu relations. In our context, the formation of the latter is more important. Vertical keiretsu was first formed in the midst of a wartime economy by a different name to coordinate production and price control. The occupation government and the new Japanese government failed to completely dissolve this wartime organization, rather starting to rely on it to establish Japan as an independent capitalist economy, especially after the outbreak of Korean War. After this period, the interfirm relation started to be called vertical keiretsu (Lincoln and Gerlach 2004). 20. To clarify this point, Shire notes the example of those young workers who favor leisure time and family life over working life are considered childlike and therefore selfish (Shire 1999). Kumazawa completely agrees with this point. He criticizes the surveys that ask workers to make a choice between a ‘date or overtime work’ since such a ‘choice’ simply does not exist in the reality of the Japanese workplace (Kumazawa 1997: 96). 21. Ota’s observation is consistent with the historical study of working time at Japanese workplaces by Smith, who argues the embeddedness of working time in social relations among Japanese workers (Smith 1988). 22. Changing employers was stigmatized in Japan. Some proverbs portray workers who change jobs lacking guts, seriousness, and a sense of responsibility. 23. The age distribution of women’s labor force participation assumes a stronger M-form in Japan. This is because large numbers of women temporarily leave the labor force and then return in their late thirties and forties mostly as

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Notes 197

24. 25.

26.

27.

paato workers (for further details, see for example, Brinton 1993). In Sugino and Yoneyama’s definition, the term ‘shufu-ka’ (becoming a housewife) is used to describe their withdrawal from the labor market to become full-time housewives. By this term, the authors mean those women who leave the labor market a year before or after marriage and stay out of the labor market for at least three years. To solicit scientific advice before deliberation, the advisory council sometimes creates study groups composed solely of scholars. The results of the last survey indicate a potential turnaround of the trend. As shown in the table, the total number of labor disputes marked a historical low in 2007. However, it shows the increase of the number of strike to 156 from 116 in 2006. The number of participants in the labor disputes also increased. It recorded its historical low in 2005 (27,295), but it marked 54,105 in 2007. Man- days lost to strikes also increased from 5,629 (2005) to 33,236 (2007). Iida Yotaro served as president, and then chairman of Mitsubishi Heavy Industry from 1985 to 1989. He also served as vice president of Nikkeiren from 1989 to 1991 and then as vice president of Keidanren from 1990 to 1994. He chaired the Administrative Reform Committee from 1994 to 1997. See the first public announcement by the committee in December 1995, called ‘the opinions on the deregulation: seeking to be a brightly shining country (kisei kanwa no suishin ni kansuru iken: hikari kagayaku kuni wo mezashite)’ by the Administrative Reform Committee for further detail.

3 Political Segmentation of the Labor Market: The Establishment and Expansion of New Employment Forms 1. Nikkeiren was one of the major management associations that specialized in labor-management issues. It merged with Keidanren, the top management association that makes economic and social policy proposal, in 2002. The new management association is called Nihon Keidanren, and its English name is Japan Business Federation (JBF). 2. The labor supply business was the most serious issue faced in modernizing and democratizing the postwar Japanese labor market. The dispatching of labor in the prewar era was common for the lowest rank of jobs in industries such as construction, mining, and transportation, in which labor bosses and laborers did not have a regular employment relation (Takanashi 2001a: 34; Goka 1999: 101). 3. The list of applicable occupations includes 29 occupations such as medical technician, house helper, hairdresser, cleaning technician, cook, bartender, interpreter, and model. This list first started as 11 occupations, and gradually expanded to 29 by 1990. For a detailed analysis of this gradual expansion, see Goka (1999: 136). 4. After the 1950s, especially following the rapid economic growth triggered by the Korean War, public job placement functioned largely to support allocating newly graduated students to the focused industries and industrialized regions (Kariya, Sugeyama, and Ishida 2000). After this period, however, the importance of public job placement began to decline. Workers started

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5.

6.

7. 8.

9.

10.

11.

12.

13.

Notes to use other routes to employment. New graduates from high schools and universities used the formal and informal networks of their schools. The placement of new labor market entrants by educational institutions became a widespread practice in the Japanese labor market and counted as one of the major characteristics of Japanese management (Yoroi, Wakita, and Goka 2001: 219). Thus, the role of the public job placement declined significantly after the rapid economic growth, and job placement in general became the issue of privatization during the 1990s. See Lincoln and Gerlach (2004) about the historical development of Japan’s network economy. According to Lincoln and Gerlach, there is historical continuity between before and after the Second World War in terms of the organization of the network economy in Japan. During the war, in addition to the horizontal network, small and medium size firms were organized under large firms for the purpose of war, which is now seen as the roots of vertical keiretsu. After the war, the occupation government wanted to dissolve all wartime economic structures but was incomplete due to the eruption of Korean War. Key components such as horizontal and vertical networks, as well as main bank and main trading company systems, were utilized to support rapid economic growth (Lincoln and Gerlach 2004). Ukeoi means subcontracting, and is the same as shitauke in that the term is more sensitive to the hierarchical nature of vertical keiretsu relations. Shagaikō is typical of company external labor being dispatched from subcontractors. For further details about the development of the regulations that tried to distinguish between regular kōnai ukeoi and illegal ones, see Imai (2004). In the context of the chaotic situation after the war in the 1950s, the mission of the labor ministry was full employment (in Japanese, it is called as kanzen koyō) besides modernization and democratization of the labor market. In an expanding economy, full employment was defined as no unemployment or precarious employment (Ujihara 1989b). The first eight companies established the industry organization as The Japanese Association of Clerical Service Contracting (nihon jimu-shori sa¯bisu kyōkai) in 1984 (JASSA 2002). One of the major clerical jobs at that time was telex operator. Due to the internationalization of commercial activities, there were increasing demands for telex operators working at irregular working times at, for instance, trading companies (Takanashi 2001a, 2001b). The law was made as the special law of the ESL, and was primarily a regulation that controls temporary dispatching work business. For the further details of the process of law making, see Imai (2004). It allowed the triangular employment relationship, unusual as an employment relationship because of the disconnection between employer and user of the labor, as the workers are employed by the dispatching companies and protected under the law. The 1988 White Paper on Labor (rōdō hakusho) published by the labor ministry, for instance, argued that structural changes in the service sector are best undertaken through business diversification and internal relocation of workers within diversified corporation (MOL 1988a).

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Notes 199 14. Although some occupations were added to the positive list by the requests from industrial associations (gyōkai), there were some occupational groups that either did not request or were declined to be added to the list. For instance, port labor is specifically excluded from the list because of the argument that this labor market system was already established by the Longshoring Employment Law (kōwan rōdō-hō). The Longshoring Employment Security Association (kōwan rōdō antei kyōkai), established in 1980, may have had an influence on this decision. The same can be said with respect to construction labor. It is excluded since relevant laws were already in place, which were designed to improve the employment relations in this industry. Therefore it was not considered appropriate to adopt a new system of temporary dispatching work. 15. These plans include Comprehensive Plan for Employment Activation (koyō kassei-ka sōgō puran) in 1998, Emergency Plan for Employment (kinkyū koyō taisaku) in 1999, Employment Measures in Economy Rebirth Plan (keizai shinsei taisaku ni motoduku koyō taisaku) in 1999, and Employment Measures to Dissolve Mismatches (misumacchi kaishō wo jūten to suru kinkyū koyō taisaku) in 2000. 16. ILO Convention no.181, which is called Private Employment Agencies Convention, generally accepts the activities of private employment agencies, including THAs, and facilitates worker protection as implied in the Recommendation no.188, called the Private Employment Agencies Recommendation, which is attached to the Convention. Japan ratified the Convention (and the Recommendation) in 1999. In this process, Rengo and the Japanese government voted for both the Convention and Recommendation while Nikkeiren only voted for the Convention (Rengo 1999:.132). It is said that the ratification of the Convention was the direct trigger to liberalize the temporary dispatching work system to the negative list system. 17. ILO Convention no.096 is called Free- Charging Employment Agencies Convention (Revised). 18. About these first two occupations, this limitation is applicable to only the tasks which can be done by new graduates having left school within the previous year. 19. Service occupations do not include housekeeper, hairdresser, cleaning technician, cook, bartender, and model. 20. It is said that this revision added ‘white- collar’ occupations to the original 29 occupations (Goka 1999: 151). 21. Koike Kazuo was a professor of labor economics at Hosei University, Tokyo. 22. Sugeno Kazuo was a professor of labor law at the University of Tokyo. 23. Suwa had been a chair for the Special Committee of Private Job Placement of the Advisory Committee on Employment Security at the Ministry of Labor, and was responsible for the revisions of the TDW Law in 1994, 1996, and 1999. 24. For the further details of the revision, see Imai (2004: 20) and Goka (1999: 151). 25. The ministry’s announcement specifies 11 occupations, such as medical doctor, lawyer, authorized architect, and pharmaceutical chemist. Most of them are professionals that have their own established labor markets already.

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200

26. 27.

28.

29.

30.

31.

32.

33.

Notes Workers with doctoral or master’s degrees were also chosen, although workers with master’s degrees were required to have three years’ experience. The LSA Article No. 14–2. The examples of the combination of these criteria are shown in the ministerial ordnance as “master’s degree with 3 years of experience,” “bachelor’s degree with 5 years, associate bachelor’s degree with 6 years, and high school diploma with 7 years of experience.” Except for engineers, earning a master’s degree is still uncommon in Japan. Thus, the revision was considered to expand the applicability of the limited-term contract to the regular white- collar workers. The trend looks to be independent from the deregulatory reforms. Rebick (2005) however reports that there has been trend of inflow to paato sector of employment from selfemployed and family employment sectors. This is partly due to the deregulatory reforms that lift the protective regulations for the selfemployed sector, which became the pressure for women to participate in employment leaving selfemployed or family employment. Thus, it is not completely independent from the deregulation. The problem is named furītā problem. The word ‘furītā’ does not have a clear definition, rather it broadly signifies a group of young workers who do not get on the standard track of employment. The White Paper of Labor (2000) defines it as young workers ages between 15 and 34 who work or wish to work as paato and/or arubaito (MOL 2000a). The White Paper of Lifestyle (2003) defines it a little more broadly including those who wish to work as paato, arubaito, and sei-shain but do not currently have a job (Cabinet Office 2003). In both definitions, students and housewives are excluded. It is considered as a problem since most of these workers are said to be characterized as not having ‘appropriate future prospects.’ The government started to subsidize funds to give young workers occupational training, and to reestablish the channels between education and work. 11.2 percent or 887,000 out of 7.9 million were IT (information technology) engineers in 2002. The number of IT engineers is only available from the 2002 survey. Therefore, the dynamics of this category cannot be discerned. Since deregulation, the types of industries demanding temporary workers have also shifted, from traditional areas of finance and insurance, to ICT (information and communication technology) and other high-valueadded service industries (haken rōdō ni kansuru jittai chōsa, reported by Imai 2004). Although the equal treatment of haken workers became an issue for the first time in 1999, which encouraged THAs to participate in employment insurance, it has never become a central issue until very recently. The TDW Law was established as a law to regulate business but was less to protect workers (see note 11 of this chapter). Important formal legal change that is not included in the discussion of this book but might have significant impacts on employment security and other labor conditions of regular workers is the revisions of the Commercial Code (shōhō). There were several waves of revision after the mid-1990s as a part of deregulatory reforms. The revisions include the one in 1997 that introduced the system of stock option and the one in 2000 that enabled a company

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Notes 201

34.

35. 36. 37.

38.

39.

40.

41.

to split to ensure smooth corporate restructuring. The latter linked closely with the issues of labor contracts and mobility as it allows a company split as well as the transfer of workers without their consent that may degrade the terms of contracts. Tokyo Metropolitan Government has conducted surveys four times on temporary agency work since the enactment of the TDW Law. The latest survey was carried out in 2006 subjecting all related actors including temporary agencies, client firms and registered-type temporary workers. In 2006, 2000 agencies, 2000 clients, and 2000 workers were chosen, and collection rates were 36.3 percent, 37.9 percent and 36.0 percent respectively. Results are published as Survey on Temporary Dispatching Agency Work 2006 (haken rōdō ni kansuru jittai chōsa 2006) (Tokyo Metropolitan Government 2007). The last survey was done in 2002 using the same research design and published in 2003. In Japanese, different vocabulary is used to mean ‘layoff’ for non-regular workers. In the case of a non-limited term contract, layoff is ‘kaiko.’ Labor Standards Act, Article No. 14, Item 2. MHLW Announcement No. 357. According to the Basic Survey on Wage Structure (chingin kōzō kihon tōkei chōsa) in 2009, non-regular workers typically earn 65 percent (men) or 70 percent (women) of regular employees on the basis of monthly wage (MHLW 2009c). Employment Diversification Survey in 2007 (shūgyō keitai no tayō-ka ni kansuru sōgō jittai chōsa: MHLW 2008b) was conducted by MHLW. It contains surveys for firms and individuals. In the 2007 survey, it was sent to 15,638 firms and 56,212 individuals working in these firms, and response rates were 69.0 percent and 51.2 percent respectively. This result is consistent with the conclusion shown by Lee and Shin using the newest SSM survey data that points out the high boundary between regular and non-regular employment in Japan compared to the equivalent in the South Korean labor market (Lee and Shin 2009). For further details of the increasing importance of THAs as the mediators of external labor market in Japan, please see Imai (2009) and Sato, Sano and Hotta (2010). We have not found a reliable source on the number of THAs in Japan. The enterprise count is based on the Business Report of the Temporary Help Industry.

4 The DWS: Deregulation of Working Time and Its Impact on the Effort–Bargain 1. In Japan, the restriction for women to work late at night was abandoned in 1999 as it was claimed ‘discriminatory.’ 2. Inspection by the Labor Standards Supervision Office was often seen as nominal, and it was just after 2001 that the number of correction orders (zesei kankoku) by the office was made public, given the increase in the abusive use of various flexible measures of working time especially the DWS.

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202

Notes

3. Japan does not ratify ILO Convention No. 1 that sets upper limits on the working hours per day and week. Japan actually does not ratify any of working time related ILO conventions. 4. The subjects of the Monthly Labor Survey (maitsuki kinrō tōkei chōsa) used in this figure are firms larger than 30 employees. The numbers are calculated by the following formula: average monthly working hours x 12. Before 1983, the numbers are simply the accumulation of monthly working hours. The numbers of overtime working hours are calculated from ‘annual working hours’ and ‘scheduled working hours.’ The survey shows relatively shorter hours of working time than the Labor Force Survey (see difference in Figure 2.4 in Chapter 2). 5. See Chapter 3 about the doctrine of abusive dismissal. 6. The revision was prepared at the Working Group of Labor Standards (rōdō kijun-hō kenkyū-kai) started in May 1982 as an informal advisory committee for the labor ministry. The group consists of 24 members divided into three sessions and was headed by Ishikawa Kichiuemon, Professor Emeritus at the University of Tokyo. The purposes of the group was to conduct research and make proposals on labor contract (session no. 1), working time (session no. 2), and wages (session no. 3) (OISR 1983: 302–3). They proposed the final report in December 1985 (OISR 1987: 479). 7. To facilitate the gradual implementation of the 40-hours-per-week system, the five-year statute of the Reduction of Working Time Law (jitan sokushinhō) was established in 1992, which offers state subsidy to encourage reducing working time. Its revision in 1993 established the Support Center for the Reduction of Working Time (rōdō jikan tanshuku shien sentā) to facilitate the funding especially for medium-small size companies. The law was extended twice until the end of the fiscal year of 2005–6 (at the end of March, 2006). 8. Originally, in the revision of the LSA in 1987, there was the IWHS for three months. The IWHS for a year appeared in the 1994 revision by the extension of the three months system. Under the system of the IWHS for a year, for instance, it is possible to let workers work up to 52 hours per week with a regular rate of wage. 9. In legal theory, the DWS is categorized as one of the ‘deemed working hours systems (minashi rōdō jikan sei),’ distinguished nominally from the ‘whitecollar exemption’ that completely annuls the concept of ‘working time.’ In ‘deemed working hours system,’ employers and workers negotiate about the ‘deemed working hours’ such as 9 hours a day, which consists of 8 hours of scheduled working hour and 1 hour of overtime. Regardless of the actual working hours, like 12 hours or 3 hours, the wage contains the overtime premium fixed at 1 hour. Thus, substantially, it is possible to say that it annuls the concept of working time, although it still contains the element. 10. Later, some occupations such as copy writer, certified public accountant, lawyer, first class architect, real estate appraiser, and patent agent were added to the list. 11. Labor unions set 1989 as the ‘new year’ of working time reduction (jitan gan-nen). 12. It, for instance, presented its own research on the relationship between productivity and working time reduction, and emphasized that it improves productivity rather than reduces productivity (MOL 1991b: 77–90).

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Notes 203 13. About the government subsidies that compensate for costs produced by the reform, see note 7 of this Chapter. 14. The table shows that the most used among the newly established working time systems was the IWHS- One Month, then replaced by the IWHS- One Year by 1996 after the IWHS-Three Month was revised to One Year in 1993. The effects of these two measures on cost reduction are similar (while some practitioners argue that the latter is slightly more cost effective than the former), but major industries in Japan such as manufacturing and construction prefer IWHS- One Year to One Month, but it is the opposite at transportation/communication and electricity, water and gas industries (Yoroi, Wakita and Goka 2001: 77–8). 15. Japanese firms tried to cope with the situation by 1) flexible allocation of overtime work, 2) stricter control of total personnel cost, and 3) using the government subsidies for employment adjustment (koyō chōsei-kin) (Nikkeiren 1995: 31). 16. The first one is to establish a ‘professional’ track for regular white- collar workers to reduce the number of workers in the ‘managerial’ track. This partially relates to the employment diversification strategy examined in Chapter 3. 17. The data is from The Special Survey on the Discretionary Work System (sairyō- rōdō-sei ni kansuru tokubetsu chōsa). The survey was conducted by Rengo in April 1999 for member trade unions. The questionnaire was distributed to the trade unions of those companies where the DWS (for professional occupations) was already introduced. 36 trade unions responded. 18. The Preliminary Discussion Committee for the DWS (sairyō-rōdō-sei ni kansuru kenkyū-kai) is an informal working group for the Director of the Division of Labor Standards in the labor ministry. It was headed by Sugeno Kazuo, the professor of law of the University of Tokyo. The committee commenced discussions in April 1994, and made the report in April 1995. 19. The Central Advisory Committee on Labor Standards, Section on Working Time (chūō rōdō kijun shingikai, rōdō jikan bukai) 20. Nakamura notes that the proposal by the labor ministry was rather unexpected (Nakamura 2001: 467). 21. One public representative of the tripartite advisory council reluctantly admits that the discussion was hastily driven by the interest on productivity skipping the discussion about how to locate the concept of ‘discretionary workers’ in the labor law. From the legal point of view, the question of whether white- collar discretionary workers are actually ‘employees’ in the legal definition should have attracted more attention. Under labor laws, ‘employees,’ by definition, do not have discretion, but are under someone’s direction. So he argues that this point should have been clarified before actually planning the structure of the DWS. He described the process of the discussion that “strong emphasis was on the effect of the system to decouple working time and wage reflecting the employers’ interest to activate corporate activities” (Araki 1999: 7). 22. Even when there was already a labor-management committee, it was necessary to establish a new labor-management council (Rengo 1997d; Araki 1999).

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Notes

23. The ‘Study Group’ is officially the Study Group on the Discretionary Work System (sairyō-rōdō-sei ni kansuru kenkyū-kai), established in 1994 under the division of labor standards at the labor ministry. The final report was made in April 1995. 24. These industrial unions organize about 700,000 members each. They represent two of the most influential industries in Japan, and have strong positions in Rengo. 25. Suzuki Katsutoshi was the chairman of the Central Executive Committee of Denki Rengo and the vice chairman of Rengo at that time. He started his career as an unionist when he worked at Komukai factory of Toshiba. He later became the chairman of the Toshiba union. He was considered one of the most outspoken union leaders. 26. This also proves the increasing influence from the deregulation committee. Traditionally, the tripartite advisory council discusses issues until they can come up with the compromise. However, this time, due to the time limit set by the deregulation committee, the advisory council needs to pass the unresolved proposal with notes on conflicting opinions on to the Parliament session. Miura sees it as an increasing role of the Parliament session as well as the deregulation committee (Miura 2002). 27. The issues include the coverage of the system in terms of the tasks and the types of workers; health and welfare measurements; complaint processing; workers’ consent; the prohibition of the unfair treatment to those who reject to be covered; and the preservation of records. 28. The data are from The Survey on the DWS (sairyō- rōdō- sei ni kansuru chōsa) conducted by the labor ministry in 2002 by sending questionnaires to all the companies that reported their use of the DWS for professional occupations and white- collar workers to the ministry during the fiscal year of 2001. It includes 1,693 companies and business sites. 684 companies responded (response rate is 40.4 percent). Among the 1,693 companies and business sites, 126 of them use the new discretionary system; 63 of them replied (response rate 50.0 percent). In the table, the N for professional occupations is 630, and the N for white- collar works is 63. 29. These systems are called, for instance, Vital-Work at NEC and SPIRIT at Fujitsu. 30. For further details of the alternative labor movement, please see footnote no. 19 in Chapter 5. 31. Employers started to see the introduction of the system of white- collar exemption (from working time regulations) as a realistic alternative (or extension) of the DWS (JBF 2002, 2003, 2004). 32. The LSA article no. 38–4–1–2 33. The guideline is based on the discussion at the Study Group on the Guideline of the DWS (sairyō-rōdō-sei no shishin no arikata ni kansuru kenkyū-kai) led by Koichiro Imano, a professor at Gakushuin University. The report was released in September, 1999 (MOL 1999c). 34. The guideline 2–2 to secure the appropriate working conditions for workers who work for the tasks which are set in the article no. 38–4–1–2 (MOL announcement no. 149, 1999) 35. MOL, 1999, op. cit. The guideline 2–1

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Notes 205 36. MOL, 1999, op. cit. The guideline 3–1–i. And it notes that the employer does not give any concrete directions only in terms of the methods of work and the allocation of time, but can give directions or make changes on the purpose and the objective of the tasks, the due date and the reporting coordination. 37. Mr. Itoh, the director of the section on working time regulations of the division of labor standards, at the Parliament session in April 1998 38. It says that the applicable workers have to have more than three to five years of experience (MOL, 1999, op. cit. The guideline 3–2–(2)). The internet home page of the labor ministry shows, for example, the range of “more than five years of experiences, and higher than shunin- class (e.g. rank XX in ranking and qualification: MHLW, ‘On the DWS for white- collar workers,’ http://www.mhlw.go.jp/general/seido/roudou/kikaku/#q2).” 39. MOL, 1999, op. cit. The guideline 3–2–(1) 40. There still remains the responsibility to keep records, if not precise, of working time, not in order to calculate the overtime premium, but in order to negotiate the appropriate length of the fixed nominal ‘deemed working hours’ necessary to use the DWS under the current regulation.

5 Re-bargaining Effort: The Introduction of Results- Orientation at COMPUJ 1. Figure 5.1 only includes firms with more than than 5,000 employees. See Appendix A5.1 for the figures that include all firms. The numbers are slightly lower than for the large firms, although the trend is similar. 2. With regard to the number of employees, it was less than 10,000 in 1950. It increased to about 20,000 in 1960, 30,000 in 1970, and reached 40,000 in the early 1990s. The majority of the workforce changed from blue- collar workers to white- collar workers in the mid 1960s. Since then, the proportion of blue- collar workforce has gradually declined. 3. This series of reforms is increasingly considered to be the best practice of its kind in the field of labor- management practices. Various management journals reported the new developments in this company as leading examples of the reform movement. Experts also recognized COMPUJ as an exemplary case. Kusuda Kyuu, the founding father of the ranking and qualification system at Japanese firms, praises the case of COMPUJ, as the model in the future of Japanese labor management (GRIPS 2003: 282). 4. As COMPUJ adopted union shop principles, employees who are eligible for union membership are all union members; the organization rate is 100 percent. However, the union official showed serious concern about the raison d’etre for the labor union as literally nobody cared about what the labor union does. 5. These comments were sent back to the workers, but all other parts – especially the parts where supervisors evaluate subordinates by grades (of five ranks) were not. They were kept confidential. 6. The demographic composition of the members of the new department is as follows. Total number of the worker is 57: 42 are regular employees, and shukkō workers from regional subsidiaries count 14 with one regular worker of midterm hire. Among 42 regular employees, 19 are from the engineering

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7.

8.

9.

10.

11. 12.

Notes department, 16 are from the sales department, 5 are from the marketing section, and 2 have clerical backgrounds. Among the total number of 57, 11 occupy managerial positions (one buchō, two sen-nin buchō, and 8 kachō). Low end managerial (but still have union membership), shunin, counts 15, and there are 31 nonsupervising staffs (tantō). It consists of three trends that summarize the technological and product situation of the company: 1) the growing importance of PC’s and networks over mainframe systems, 2) the importance of software over hardware, and 3) the ‘openness’ of systems, meaning the use of a number of different companies’ products. The creation of the new type of worker is not specific to COMPUJ, and is used commonly among Japanese electronics companies. The division manager of Corporate System No. 4, who later became the CEO of COMPUJ, explained that “the concept of SI- er emerged out of the developing openness of the market.” He said that “it [SI- er] is not a job to just coordinate various hardware and software available, but is a role to give customers a total solution.” The division manager believed that COMPUJ’s business had been passive in its sales style: just receiving orders. As there was no necessity for customization before, active marketing was not necessary. He wanted organizations and workers to be much more “proactive.” He expressed that the core of such capability is “teian-ryoku” (capability to make proposals), and he expected SI- ers to be able to learn and to use ability in the newly established department. After working full-time for the union for several years, union officers of COMPUJ tend to return to the work organization as managers. This interviewee implied that this job transition is different from union officers in other companies in the same industry. For further details of the term ‘competency,’ see the next section of this chapter. Interestingly, the ranking and qualification system at COMPUJ had its basis on occupational categories. This is because the system was established in the 1960s when employers in Japan had still not given up the introduction of the job-rate system. Although the system has an occupational basis that actually categorizes 112 occupations within four broad categories, the system at COMPUJ had already lost its initial intention and was used as a regular ranking and qualification system. Workers are assigned and rotated across these occupational categories, and most importantly, only six rankings, not the occupational category, matter in wage determination and promotion. The reform in 1995 finally abandoned the occupational category. The revision of the wage component for shunin in that year was to increase the performance component in their wage system, and it was necessary to officially abandon the category that in face value had a place in the wage system. Until this time, there were five components in wage of nonmanagerial workers: honkyū (main wage), kakyū (additional wage), shigotokyū (per assignment), shikakukyū (per ranking and qualification), and sho-teate (various allowances). The revision is to reorganize these components into two

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Notes 207

13.

14.

15.

16. 17.

18.

19.

categories, gekkyū (monthly salary) and sho-teate (allowances), in order to exclude the component of shigotokyū. The component was already nominal, and was unnecessary to direct workers’ effort to organizational goals. Although it was nominal, it was still necessary to officially eliminate this to strengthen resultsorientation and to increase and emphasize ‘performance’ component. One manager of the personnel department, who was responsible for the reforms of the labor management systems, emphasized that “we should not use the occupational classification here. This blurs our [company’s] expectations toward workers” (interview: a manager of the personnel department, 10 May 1995). The role of performance was expanded in wage determination and promotion for the workers in the group A. For workers in B and C, performance is less relevant, although their salary is pegged more to the role than to age. In theory, the fastest can promote to managerial rank in three years in group A. The evaluation process became a little more open than before partially reflecting the labor union’s request for ‘openness’ of the system. Following the workers’ self- evaluation, supervisors evaluate workers in six grades using the principle of relative evaluation. Workers are now able to access results of the evaluation on each item of competency on the intranet. However the overall evaluation results can be only known by the salary band where workers can find themselves. The table showing the relationship between wage increase (or decrease) and total evaluation points is accessible for workers on the intranet (Rōmu Gyōsei Kenkyūjo 2001, interview: alternative labor union member, 13 February 2003). In the earlier system of job announcement, workers were not allowed to move to existing departments or sections as it was seen as discontent against the immediate supervisors. It was implemented 16 times from its establishment in 1988 until 2001, but the system had been rarely used. The 10 percent who did not apply include; 1) shukkō workers, 2) those who have relatively little discretion in their work because of the nature of the work and the workers’ ability, 3) those who are assigned to time- consuming jobs, and 4) those who are assigned to the jobs that are suitable for time management. From item 2), we know that the “low achievers” are not included to the system. One board director who was responsible for the expansion of the DWS needed to frequently visit the labor ministry to explain that most of the white- collar workers were actually suitable to be included in the DWS (Nikkei 2002b). This group was formed in 1996 to hold study sessions and to conduct surveys on employment and labor-management issues in the hope of reflecting the results on the policies of main stream labor union at COMPUJ. They constructed ties with other alternative labor union movements at other companies in electronics industry, and the alliance is called ‘denki rōdōsha kondan-kai’ (the Association of Workers at Electronics Industry). This alliance was established in 1988 as a small group of labor union activists consciously criticizing the ‘cooperative’ policies by the main stream enterprise

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208 Notes unions that are members of Denki Rengo. The alliance is strongly backed up by Zenroren, the communist supported national center of labor unions (Nakayama 1999). 20. They claimed that the invention of the quasi-DWS was enabled by the abusive use of the Flextime system. They claimed that the quasi-DWS simply hides the unpaid overtime premium, and they visited the Labor Standards Supervision Office fifteen times after 2001. The result of this lobbying was the admonishment of the violation abatement by the reimbursement of the unpaid overtime premium (interview: alternative labor union member). 21. Another sign of this change can be seen in the policy shift decided by Denki Rengo. In 2002, Denki Rengo proposed setting different levels of wage demand for different types of job at Shuntō wage bargaining. The proposal assumes to use two categories ‘professional/35 years old’ and ‘technical worker/30 years old,’ and intends to expand the category to six including ‘clerical’ ‘SE’ and ‘sales’ by 2006 (Nikkei 2002a).

6 Conclusion: Changes and Future Directions of Japanese Employment Relations 1. The expansion of non-regular employment forms is a sign of the increasing reliance of companies on the external labor market. Non-regular workers are not considered firm members; they are often called ‘gaibu jinzai,’ literally ‘external personnel’. 2. This conclusion is only in terms of the deregulation of labor market. With regard to the formal side of employment security, the impacts of the revision of Commercial Code (see footnote no. 33 in Chapter 3), for instance, is the potential factor that erodes the employment security of regular workers. 3. The fact that tenseki practice began to be applied to younger workers is an important indication of the erosion of the employment security of regular employees in addition to more visible example of the increasing cases of ‘early retirement.’ 4. As Fligstein notes, in the case of managerialism where enterprise unionism is dominant, the distinction between the internal and external labor market tends to be the major cleavage of labor market segmentation. 5. Many Japanese scholars now see this as one of the most important social problems for the future, given the rapid ageing of the Japanese population and the decline in the labor force expected in relation to low birth rates. 6. They also attract workers in managerial levels who work increasingly under harsher pressure (kanri-shoku yunion). 7. In 2005, the election of the board directors of Rengo got a surprising voting result. It had been negotiated among leaders of Rengo to select Takagi, the president of the largest industrial member federation, Zensen Domei, as a next board director. Kamo, the president of Zenkoku Yunion (literally, national union), the newly founded federation for traditionally nonunionized sectors of workers such as part-timers and temporary dispatched workers expressed a sense of crisis and announced her candidacy right before the

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Notes 209 election day. As the vote is distributed to each industrial union in proportion to the number of membership, there was no doubt that Takagi would win with overwhelming majority. The result, however, caused astonishment. One third of the delegates voted for Kamo. This news was considered as the new move of Rengo to take the issue of declining organization rate seriously and to expand its reach to workers in non-regular forms of employment.

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Glossary Terms arubaito buchō

haken kachō keiretsu keiyaku kisei kanwa kōnai ukeoi seika-shugi shingikai shokutaku shukkō

shunin shuntō tantō-sha tenseki ukeoi paato

temporary workers who are mostly students name of a high rank managerial position (or the person who occupies the position); usually refers to the head of department temporary dispatched worker name of a middle rank managerial position (or the person who occupies the position); usually refers to the head of section horizontal and hierarchical networks of Japanese companies temporary workers deregulation a practice of labor lending in which the subcontractor dispatches workers to parent or client companies resultsorientation advisory council set up under ministries to deliberate policy issues temporary workers who are mostly rehired elderly by previous employers a practice of labor lending within Japanese company networks, referring labor mobility from parent company to subsidiaries without contract transfer name of an entry level managerial position (or the person who occupies the position); usually refers to the head of work group spring offensive, an institutionalized pattern of collective bargaining in Japan that has cross-sectional influence rank and file employee a practice of labor mobility with contract transfer within Japanese company networks subcontracting temporary workers who are predominantly middle-aged women

Proper names Denki Rengo Domei Jidosha Soren Keidanren Nikkeiren Rengo Sohyo

Japanese Electrical Electronic and Information Union Japan Confederation of Labour Confederation of Japan Automobile Workers’ Union Japan Federation of Economic Organizations Japan Federation of Employers’ Associations Japanese Trade Union Confederation General Council of Trade Unions of Japan

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Index Administrative Management Agency, 58, 178 Administrative Reform Committee, 46, 61, 64 advisory council, 43, 44, 62, 111, 112, 168 arubaito, 30 authority relation, 3, 6, 9, 11–12, 14, 40, 156, 162, 170 belt-tightening management, 22–7, 55 blue-collar workers, 19, 20, 105–6 Bretton Woods Regime, 50 bubble economy, 12, 50, 59, 104 business conjuncture, 25, 26, 96 career, 8 changes, 86 formation, 35–7 notion of, 7–8, 15, 167 right to, 173–5 track diversification, 142–6, 158–9 Central Labor Standards Council, 44 citizenship, 3 see also company citizenship civil rights, 10 clerical workers, 53, 58, 59, 61, 70–3, 75, 77, 86, 104, 105, 145, 163 collective bargaining, 4, 5, 9, 30–1 see also spring offensive company-based socialization, 32 company citizenship, 32–3, 41, 64, 81, 89, 93–8, 172–3 company man, 26, 97, 175 competency management, 146–52 competition, 33, 38–9 COMPUJ career track diversification at, 142–6 competency management at, 146–52 conflicts at, 138–42 consequences of changes within, 158–60 context of, 125–30 DWS and, 152–6

job announcement system, 152–6 labor management reform at, 123–30 labor unions and, 129–30 mobility at, 153 organizational chart, 135, 191 organizational restructuring at, 127–9, 134–7 organizational roles, 143–6 personnel evaluation system, 129–34, 138–42, 146–52 results-oriented labor management at, 123–5, 130–56 self-management at, 152–6 white-collar workforce at, 126–7 consumer culture, 21 contract/effort, 2, 4–6 contract relations, 3, 5, 7 contracts, 3–6, 15, 162 changes in, 162–5 effort and, 6 indeterminacy of, 4 inequalities between regular and non-regular, 77–82 limited-term contracts, 27, 30, 63–6, 77, 180–2 negotiation of, 9 non-limited term contracts, 27, 41 in postwar period, 27–32, 40 reconfiguration of, 89–91 termination of, 77–8 unions and, 4, 167–70 contract workers, 28, 77, 88–9 control, notion of, 6, 9, 11, 15 corporate-centered society, social structure, 20, 35, 40, 41, 173 corporate reform, 1–2 corporate restructuring, 51, 54–5 corporate welfare, 55, 81–2, 91 corporatism with labor, 24–5, 42–3, 46, 168 Council for Regulatory Reform, 49 deflation of employment, 170–3 democracy, 18

225

9780230_209084_12_ind.indd 225

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226 Index densan-gata chingin, 19 deregulation, 1, 46–9 of labor markets, 59–89, 90, 162, 164, 166–7 political climate and, 59–62, 111–19 radical, 62–4, 90 of working time, 92–121, 164 deregulation committees, 47–9, 61, 64, 168–9 Diffusion Index (DI), 73 discretionary workers, 116, 155 Discretionary Work System (DWS), 13, 100–4, 106–11, 188–9 at COMPUJ, 152–6 effort-bargain and, 119–21 increasing use of, 115 political dynamics of, 111–19 white-collar workers and, 106–11, 119–21 discrimination, against blue-collar workers, 20 disparity society, 171 doctrine of abusive dismissal, 94 Domei, 24, 25, 46 Dore, R., 53 Durkheim, E., 5 DWS, see Discretionary Work System (DWS) economic recession, 1, 50, 125 economy in 1970s, 22–3 in 1990s, 50 postwar, 20–1 Edwards, R., 6, 93. efficiency, 26 effort, 6, 15, 103–4, 106, 162 changes in, 165–6 in postwar period, 32–5, 40 white-collar workers, 122–3 effort-bargain, 97, 103, 119–21, 165–6 elderly workers, 61 employees, 20, 21 see also workers competition among, 33, 38–9 dismissal of, 55 mobility of, 35–40

9780230_209084_12_ind.indd 226

non-regular, 21–2, 30–1, 57, 65–72, 81–2, 90–1, 170–5 ranking and qualification system for, 22, 37 regular, 20, 21, 27, 28–30, 55, 57, 66, 70, 81–2, 170–2, 174 employer-led reform initiatives, 169–70 employer representatives, 44 employment adjustments, 26 employment adjustment subsidy, 24 employment contracts, see contracts employment diversification strategy, 52–3 employment insurance, 78–9 Employment Insurance Act, 24, 94 employment laws, 18 see also regulations employment relations, Japanese, 1–3 changes in, since 1990s, 161–70 future directions of, 161–75 negotiation of, 2 postwar Japan, 17–49 regulations of, 42–9 sociological theory of, 1–16 state-firm-labor negotiations, 8–12 structure and regulation of, 15 working time regulation and, 92–3 employment security, 2, 5, 18, 24, 55, 63, 77–9 see also job security Employment Security Law (ESL), 18, 54, 63, 178, 179 employment status, 65–9 access to rights of company citizenship and, 81 distribution of, 86 method of wage payments by, 80 mobility among, 82–9 employment structure, 28 employment systems, 7–8 Endo, K., 33 enterprise bargaining, 9, 15, 162, 169 enterprise unionism, 30–1, 46, 75, 90 ESL, see Employment Security Law exports, 23 external labor market expansion of, 57–9 restrictions of, 54–5

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Index female workers, 58, 75, 86 feudal labor practices, 54 firm-internal mobility, 37 first labor unions, 20 flexibility, 33–4, 41–2, 94, 96, 97, 103 flexible rigidities, 53–7, 89 Flextime system, 100, 106, 109, 156 Fligstein, N., 7 France, 7–8 full employment, 21 gender division of labor, 36 Germany, 8 globalization, 156–7 Gordon, A., 18, 19 haken, 30, 67, 71, 74, 77, 80–1 Iida, Yotaro, 46 illegal dispatching, 58 ILO Convention, 61–2 Income Doubling Plan, 21 indeterminacy of labor contract, 4 industrial citizenship, 5–6 industrialization, 3 industrial organizations, 1 industrial policies, 1 industrial structural changes, 72–7, 124, 156–7 institutions, 1–3, 10, 13, 18, 23, 32, 50, 161–2 international competition, 156–7 intra-firm employment adjustment, 26 Irregular Working Hour System (IWHS), 100 Japan postwar economic recovery, 17–18 recession in, 1 Japanese employment relations, 1–3 changes in, since 1990s, 161–70 characteristics of, 27–42 future directions of, 161–75 history of, 17–27 postwar, 17–49 Japanese employment structure, 28 Japanese management, 51 Japan Productivity Center, 20

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227

job announcement system, 152–6 job-rate wage system, 22, 97 job security, 19, 20, 29, 55, 63, 77–9. see also employment security Kawanishi, H, 19 Keidanren, 46 keiretsu, 31, 55, 57–8 keiyaku, 30, 67, 70, 71, 76, 80 Koike, K., 37 Koizumi administration, 64 ko¯ nai ukeoi, 56, 57 Korean War, 20, 32 Kumazawa, M., 22, 26, 33 labor, 4, 11 excess of, 52, 104–5 gender division of, 36 marginalization of, 111–16 labor adjustment, 55–6 labor bosses, 54 labor contracts, see contracts labor costs, 25 labor disputes, 45, 46 labor force adjustments, 26 Labor Force Survey, 35 labor intensification, 109 labor laws, 18 labor lending, 31–2, 55–6 labor management, 9 dynamics of reform, 157 future principles of, 124, 190 labor unions and, 174–5 marketization, formalization and individualization of, 156–60 practices, 6, 9, 11–12, 15, 40, 42, 52, 79–81, 93, 106, 122, 125, 127, 146, 156–7, 161–3 reform of, and white-collar effort, 122–3 results-oriented, 2, 106, 119, 122–61, 167 temporary workers and, 79 labor market regulations, 5, 9, 10, 41 see also regulations labor market, 2, 3 changes in, 64–77, 183–5 changes in occupational composition of, 72

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228 Index labor market – continued deregulation, 59–90, 162, 164, 166–7 employers’ initiative for reform, 50–3 expansion of external, 57–9 flexible rigidities in, 53–7 impacts of industrial structural changes on, 72–7 lack of mobility in, 35–40 legal framework, 7 political segmentation of, 50–91 power relations in, 3 regular/non-regular composition of, 57 role of new actors in, 88–9 segmentation, 18, 30, 53, 81–2, 166 social organization of, in postwar period, 53–9 societal construction of, 9–10 labor market structure, changes in, 65, 68–9 labor mobility, see mobility labor power, 4, 6, 11 labor standards, 5, 7, 9, 10 Labor Standards Act (LSA), 1, 13, 18, 54, 78, 93–8, 99, 113, 118, 178–82 labor union movements, 3–6, 24–5, 45 alternative, 14, 15, 114 grassroots, 172 labor unions, 20–2, 37, 173–5 COMPUJ and, 129–30 decline in, 167–70 disarmament of, 43 DWS and, 109 enterprise unionism, 30–1, 46 non-regular employees and, 30–1 principle of productivity and, 25 layoffs, 77–8 life course, 35 M-curve, 36 structured, 36, 41 lifelong employment practices, 29, 55 life-stage adjusted wage system, 20, 22, 29, 35–6, 41, 97, 122, 158 lifetime employment, 36 limited-term contracts, 27, 30, 63–4, 77, 180–2

9780230_209084_12_ind.indd 228

living standards, 24 long-term employment, 2, 105 lost decade, 50 low-interest policy, 23 LSA, see Labor Standards Act Maekawa, Haruo, 99 Maekawa report, 23, 99 male wage earners, 36 management authority, 20, 21, 22 management by objectives (MBO), 130–4, 142–6, 159, 164–5 management (managerial) prerogative, 8, 26–7, 33, 38, 40, 41, 89, 120–1, 137, 153, 169–70 management renovation movement, 129 managerialism, 7, 8 managerial rank, 143–6 Manpower Japan, 58 marketization of wage, 158, 171 market orientation, 2 Marx, K., 4 mass consumer culture, 21 merit-based pay, 97 micro electronics, 23 middle class, 21 midterm termination of contract, 77–8 Minimum Wage Law, 18 Miyauchi, Yoshihiko, 46 mobility, 2–4, 6–8, 15, 52, 162 changes in, 166–7 at COMPUJ, 153 between employment statuses, 82–9 facilitation of, 60 firm-internal, 37 increased, 86 within labor force, 83 in postwar period, 35–41 reconfiguration of, 89–91 between regular and non-regular statuses, 87 restricted external, 54–5 trends in, 83 vertical, 37 Murayama coalition administration, 46

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Index Nakamura, K., 112 New Age Japanese Management, 51–3 Nikkeiren, 20, 24, 26–7, 51, 52, 108 non-limited term contracts, 27, 41 non-regular contract, 77–82 non-regular employees, 21–2, 30–1, 57, 65–72, 81–2, 87, 90–1, 170–5 occupational composition, 72, 73, 74 oil crises, 22–3, 24, 46, 51, 54, 82, 97 older workers, 88–9 organizational level, 9, 11–12, 15 Osawa, M., 20, 29, 36 Ota, N., 33–5 outplacement services, 88–9 outsourcing, 23 overtime, 25, 26, 34–5, 42, 94, 96–8, 103, 106, 155 overwork, 109 paato, 30, 55, 66–7, 70, 75, 79 Paato Law, 173 part-time workers, 30 pensions, 29, 52, 81 corporate, 29, 81, 82 employee, 81, 82 performance-based wage system, 164–5 personnel evaluation system, 26–7, 32–4, 41, 129–34, 138–42, 146–52, 174 Plaza Accord, 23 policy environment, 59–62 postwar economic recovery, 17–18 postwar employment relations, 17–49 characteristics of, 27–42 effort, 32–5 labor struggle and consequences, 17–22 mobility and, 35–40 power relations, in labor market, 3 principle of productivity, 24, 25 priority production system, 17–8 policy of, 54 privatization, 23–4, 25 productivity, 24, 105, 127 productivity coalition, 31, 32–3, 41 productivity movement, 20 professionalism, 7–8

9780230_209084_12_ind.indd 229

229

profession/technical occupations, 75 public-interest representatives, 43, 44 Public Job Placement Agency, 54 quality of life issues, 98–9 radical deregulation, 62–4, 90 ranking and qualification system, 22, 37, 97 redistribution system, 21 redundant workers, 104–5 reform movements, 1–2 reform without labor, 16, 43–9, 168 regular contracts, 77–82 regular employees, 20, 21, 27–30, 55, 57, 66, 70, 81–2, 170–2, 174 mobility between non-regular and, 87 mobility change of, 82–6 regulations, 178–9 decentralization of working time, 116–19 discretionary work, 188–9 employment relations, 42–9 levels of, 9 LSA, 93–8 working time, 1, 6, 92–3, 186–7 Rengo, 25, 46, 106, 109, 112–13, 115, 116, 172, 174 restructuring services, 88–9 results-oriented labor management system, 2, 106, 119, 122–61, 167 at COMPUJ, 123–5, 130–56 conflicts in implementation of, 138–42 management by objectives and, 130–4, 142–6 retirement allowances, 81 reverse movement, 20 second labor unions, 20, 22 Sekizawa, Tadashi, 123 self-management, 118–19, 122–3, 152–6, 166 seniority-based wages (seniority wage system) , 1, 2, 18–20, 22 shagaiko¯, 31, 32 Shiina, Takeo, 46 shingikai, 43, 62

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230 Index Shire, K., 33 shokutaku, 30, 67, 76, 80 shukko¯, 31, 56, 59 shunin, 155 single mothers, 36 skilled workers, 59 skill formation, 36–7 social constructs, labor markets as, 9–10 social institutions, 2 socialization, 32, 33 social organization, of labor markets, 53–9 social pact, renegotiation of, 2 social relations, 3 societal level, 9, 12, 15 societal level regulations, 43 sociological theory, of employment relations, 1–16 Sohyo, 22, 24, 25 Special Committee on Deregulation, 46–8, 61 Special Committee on Economic Structural Adjustment, 99 Special Committee on Private Labor Market Intermediary System, 62 spring offensive, 21, 30–1, 41 state, welfare-employment policies and, 10–11 state-firm-labor negotiations, 8–12 state professionalism, 7–8 state subsidies, 55, 102 status, 5 notion of, 5, 15, 172 Streeck, W., 11 strikes, 24–5, 46 Structural Impediments Initiative, 23 Study Group for the Adjustment of the Economic Structure for International Cooperation, 23, 99 symbolic effort, 34–5, 42 Temporary Dispatched Work Law (TDW Law) , 58–9, 60–1, 178, 179 Temporary Help Agency (THA), 59, 88–9

9780230_209084_12_ind.indd 230

temporary help industry, 88–9 temporary workers, 21, 58–61, 63, 75, 79 tenseki, 31, 56, 59 THA, see Temporary Help Agency trade issues, 23 trade surplus, 23, 24, 50 Trade Union Law, 18 ukeoi workers, 55–6 unemployment rate, 59–60, 62, 77 unionization trends, 45 United States, 8, 23 unpaid overtime, 34–5, 42, 96–8, 103 vertical mobility, 37 vocationalism, 7, 8 wage bargaining, 5 wage payment methods, employment status and, 80 wages marketization of, 158, 171 merit-based, 97 seniority-based, 2, 18, 19–20, 22 of temporary workers, 79–81 wage security, 19–20 wage system job-rate wage system, 97 life-stage adjusted wage system, 20, 22, 29, 35–6, 41, 97, 122, 158 performance-based, 164–5 welfare-employment policies, 10–11 white-collar workers, 20, 103–4, 106, 109, 111 changing working time regulations for, 117–19 at COMPUJ, 126–7 DWS and, 106–11, 119–21 effort of, 122–3 productivity of, 105, 127 worker dismissal, 55 worker dispatch, 57–9 worker representatives, 44 workers see also employees blue-collar, 19, 20, 105–6

11/25/2010 3:39:28 PM

Index 231 workers – continued clerical, 53, 58, 59, 61, 70–3, 77, 104, 105, 145, 163 contract, 28, 77, 88–9 discretionary, 116, 155 elderly, 61 female, 58, 75 flexibility of, 33–4, 41–2, 94, 96, 103 mobility, 6–8, 35–40 number of, who changed jobs, 84–5 older, 88–9 part-time, 30 redundant, 104–5 skilled, 59 stratification of, 5 submissive, 26 temporary, 21, 58–61, 63, 75, 79 white-collar, 20, 103–4, 106, 109, 111, 118 work hours, 34, 35, 94, 96 by firm size, 101

9780230_209084_12_ind.indd 231

reduction in, 98–111 trends in, 95 working hour systems, 102, 103 working time, 1, 6, 25 chronology of regulations, 186–7 at COMPUJ, 153–6 decentralization of regulations, 116–19 deregulation, 164 deregulation of, 92–121 LSA regulation, 93–8 political dynamics of deregulation, 111–19 practices, 41–2 reduction in, 98–111 regulation of, 92–3 workplace control, 35, 159–60 workplace level, 9, 11–12, 15 yatoi-dome, 78 yen, 23, 52

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