5TH EDITION
INTERNATIONAL
& COMPARATIVE
EMPLOYMENT RELATIONS
Globalisation and change
Edited by Greg J Bamber,
Russell D Lansbury and Nick Wailes
CHAPTER 10
Employment Relations in Japan
Hiromasa Suzuki and Katsuyuki Kubo
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Lecture outline
•
•
•
•
•
•
•
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Key themes
Context
The ‘Japanese’ model
Historical background
Union growth and decline
Lifetime employment
Enterprise unionism
Employers and their
associations
• Collective bargaining and
industrial disputes
• Current issues
– Labour market deregulation
– Long-term employment
– Growth of atypical
employment
– Economic inequality
– Restructuring of firms
– Performance-related pay
• Conclusions
Chapter 10:
2 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Key themes
• The Japanese model – ‘lifetime employment’, seniority and meritbased pay, and enterprise unionism – has been under pressure in
recent years.
• Key changes include the rise of non-standard employment, the
introduction of performance-related pay and modest deregulation.
• Contemporary Japanese employment relations are relatively stable,
and relations between labour and management are generally
cooperative (but the number of individual labour disputes is growing).
• Union membership is declining and a range of social, economic and
labour trends pose challenges to the future of unions.
• The growth of non-regular employment has been linked to increasing
inequality and poverty, and raises questions about how to protect the
employment and working conditions of atypical workers who are not
represented by trade unions.
Chapter 10:
3 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Employment relations context 1
• Japan is one of the largest economies in the world.
• After the burst of the ‘bubble’ economy in 1991, and
until 2002, there was a period of economic downturn
and low growth. This was followed by a slow growth
period in the 2000s.
• Japan has a labour force of 66 million and in 2007 it
had a labour force participation rate of 73%.
• The declining fertility rate and ageing population are
major issues for the future.
• Japan’s unemployment rates were among the lowest in
the world until the 1990s. The rate was 4% in 2008.
Chapter 10:
4 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Employment relations context 2
• A major feature of the post-WWII period has been a
reduction in working hours, but long working time is
still a major public concern.
• Politics are dominated by the conservative Liberal
Democratic Party (LDP).
• There was relative political stability under the prime
ministership of Junichiro Koizumi who shifted the
emphasis of the government to a market-oriented
approach.
• Unions are associated with various political parties but
have little influence on members’ voting decisions.
Chapter 10:
5 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
The ‘Japanese’ model
• Since the mid-1970s, Japan has stood out for its solid
economic performance and ‘cooperative’ approaches
to employment relations.
• Traditionally, Japan looked to Western countries for
model employment relations practices, but after the
1973 oil crisis these countries attempted to emulate
Japanese systems and practices (especially those
from the automotive industry) to foster success.
• However, there are questions about the
transferability of practices.
Chapter 10:
6 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Historical background
• The Meiji Restoration of 1868 meant the end of feudal era.
• Industrialisation began a decade later, spurred by state
development of factories.
• A few families bought the majority of state-owned factories
which became the basis of the powerful zaibatsu groups of
holding companies.
• The familial basis of industrialisation continued into the
20th century.
• The early system of learning skills through apprenticeship
was absorbed into internal training within enterprises as
industry rapidly developed after WWI.
• The reconstruction of employment relations after WWII
was strongly influenced by America.
Chapter 10:
7 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Union growth and decline
• The Japanese labour movement grew rapidly under the
Allied powers’ General Headquarters (GHQ) and was quickly
rebuilt after WWII. The peak density level was 56% in 1949.
• After the 1970s, membership and density stagnated then
steadily declined. Density in 2007 was 18%.
• The decline is attributed to:
– changes in the industrial sector, especially the shift towards the
service sector
– changing attitudes towards unionism and centralised wage fixing as
living standards have improved and pay rises in annual wage
negotiations have been relatively small
– a steady increase of atypical workers who are not typically
organised by Japanese unions
Chapter 10:
8 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Lifetime employment
• Increasing unemployment in the 1990s and protection for regular
employees has been to the detriment of non-regular employees.
• Regular employees have become more concerned about the competitive
position of the companies for which they work, and most seem to have a
high degree of commitment to the enterprise.
• This is reflective of the Japanese model of ‘lifetime employment’ and
seniority-based wages.
• Companies tend to employ new school leavers or graduates and train them
with the expectation that they will conform to the company’s norms and
remain committed to the enterprise.
• Performance management practices encourage long-term employment in
one firm.
• Lifetime employment generally applies to males not females.
• Employees are expected to stay in the same company until their mandatory
retirement age (usually 60 years, but 2005 legislation stipulates that workers
be offered employment up to 65 years).
Chapter 10:
9 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Enterprise unionism 1
• Enterprise-based unionism – unions consist solely of regular employees of
a single company regardless of their occupational status, up to the lower
levels of management. If you leave the firm then you leave the union.
• The primary core of regular employees (in the public sector and large
enterprises) constitute only about one-third of all employees. The other
two-thirds work for SMEs or on a temporary or part-time basis and are
often not union members (they are usually not allowed to join).
• As most part-time workers are women, union density among women is
lower then among men.
• There are about 58 000 enterprise unions and most enterprise unions in
the same industry join a federation of unions.
• Rengo is the largest confederation and has pursued cooperative labourmanagement relations. However, it has found it difficult to represent the
interests of union members at the grass-roots level and has suffered in
poor economic periods.
Chapter 10:
10 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Enterprise unionism 2
• Most union activities occur at the enterprise level, and
enterprise unions are financially independent.
• The relationship between unions and management is based on
trust and mutual benefit and employees support management
initiatives to enhance the competitiveness of the firm.
• Pay differentials between managers and lower-rank staff are
small and senior staff are promoted internally from the ranks,
encouraging employee identification with the enterprise.
• The advantage of enterprise unionism is that policies are
adapted to each enterprise rather than the sector or an ideology.
• Critics of enterprise unionism suggest that by only focusing on
core workers of large firms it discriminates against non-core
workers who are often more vulnerable (and likely to be
women).
Chapter 10:
11 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Employers and their organisations 1
• Many violent labour disputes occurred immediately after
WWII caused by economic hardship and the shortage of
material necessities.
• In response, employers organised regional and industrial
associations but were weak in the face of union pressure.
• To restore managerial authority, Nikkeiren (the Japan
Federation of Employers’ Associations) was founded in
1948.
• Nikkeiren had important functions until the 1990s, and it
merged with another large organisation Keidanren in
2002 to form Nihon Keidanren (Japan Business
Organisation).
Chapter 10:
12 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Employers and their organisations 2
• Nihon Keidanren coordinates and publicises employers’
opinions on labour problems, selects representatives to
government commissions and ILO delegations, and
provides services to member organisations.
• Each year at the time of Shunto (the Spring Labour
Offensive), Nihon Keidanren assists employers in dealing
with union demands during collective bargaining.
• Three factors influence the magnitude of Shunto:
1. demand and supply conditions in the labour markets,
2. consumer price levels, and
3. business conditions
• Employers have increased their control over employees in
recent years.
Chapter 10:
13 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Collective bargaining and industrial disputes
• Distinguishing features of collective bargaining in Japan are:
1. Collective bargaining takes place at the level of the enterprise only
2. In most unionised enterprises, there are elaborate joint consultation
mechanisms in which unions participate.
3. Collective bargaining focuses on pay issues, particularly during the
Shunto spring wage round
4. Pay agreements may be concluded separately from agreements on
other issues
• Contemporary Japanese employment relations are relatively
stable and generally cooperative.
• Grievances are often settled informally and formal procedures
are rarely used.
• Disputes are usually settled directly between the parties
concerned but sometimes a third party conciliates, facilitated
by central and local labour relations commissions.
Chapter 10:
14 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Current issues
• After the long recession of the 1990s, a slow economic recovery
has been driven mainly by exports in the manufacturing sector.
• Most large Japanese firms invested in overseas subsidiaries so
that many of them became multinational enterprises with their
headquarters in Japan, for example, Toyota.
• The international context surrounding Japan has changed since
the 1980s: Korea and Taiwan have become strong competitors
in many hi-tech industries.
• Long-term problems in Japan’s social and economic context are
associated with domestic trends, including the ageing
population and declining fertility rates, and the challenges of
immigration and increased female participation in the labour
force.
Chapter 10:
15 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Labour market deregulation
• Successive governments have subscribed to the
ideologies of free markets and deregulation, and have
deregulated the labour market.
• Several laws have facilitated the use of temporary agency
workers. These workers are mostly women and migrants
and they are paid much less than regular workers.
• Regulations concerning the maximum duration of fixed
term employment contracts have also been relaxed.
• Nevertheless, deregulation has been modest in Japan
because of the pre-existing flexibility in the Japanese
employment system.
Chapter 10:
16 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Long-term employment of regular workers 1
• Long-term employment is the cornerstone of human
resource management in large Japanese firms.
• These large firms annually recruit high school leavers and
university graduates without job experience. Traditionally,
these recruits remain with the firm for their entire career.
• The young employees are given lengthy development and
periodical transfers of assignment.
• The notion of the ‘firm as a community’ is deeply rooted in
Japan.
• Lifetime employment, seniority-based pay, internal
promotions, and the linking of directors’ pay levels to
employees’ pay levels are features of this traditional
employment model.
Chapter 10:
17 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Long-term employment of regular workers 2
• Directors that have been promoted after a long career
might be expected to place the interests of the enterprise
community ahead of shareholders’ interests.
• Long-term employment practices have been under
pressure since the 1990s downturn. Large firms have
reduced their intake of new recruits and transfers and have
increased recruitment of non-regular workers and
outsourcing.
• The average length of service of regular workers has not
been affected, however there has probably been a drop in
the number of people with long-term employment status.
Chapter 10:
18 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Growth of atypical employment
• In recent years, there has been an increase in atypical
employment, covering part-time workers, fixed-term
workers and temporary workers.
• In particular, the number of dispatched workers from
temporary agencies increased dramatically from 1987 to
2006.
• Non-regular workers typically do not have job security.
• Most firms are using non-regular workers to reduce
labour costs and to adjust to changes in the business
cycle.
• A serious issue with this practice is the lack of pathways
from atypical to regular employment.
Chapter 10:
19 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Economic inequality
• Economic inequality in Japan is widening as
measured by the Gini coefficient which shows the
degree of inequality among families.
• One important factor contributing to economic
inequality is the ageing society, as inequality among
older people is greater than among young people.
• Inequality within younger age groups may be
attributable to the growing proportion of non-regular
workers among younger people.
• Some scholars have linked these changes in
employment relations with increased poverty.
Chapter 10:
20 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Restructuring of firms
• In the late 1990s, many firms restructured themselves through
mergers and acquisitions.
• Legal changes make it easier for firms to reorganise
themselves.
• Some firms have moved to a pure holding company system
which do not conduct business operations, but rather hold
stock in other companies and can use different employment
conditions for their subsidiaries.
• Also, many companies have changed their boards.
• Since 2003, large companies can choose a US-type corporate
governance system, however few companies have adopted this
system and instead most have adopted executive officer
systems involving the separation of monitoring and managing
roles.
Chapter 10:
21 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Performance-related pay
• One of the biggest human resource management
issues has been the introduction of performancerelated pay systems.
• About 62 % of firms in a 2006 Japan Institute for
Labour Policy and Training survey reported that
performance has become more important in
determining wages.
• Attitudes towards performance-related pay are
mixed.
Chapter 10:
22 Japan
Copyright Allen & Unwin, 2011
International & Comparative
Employment Relations 5th edition
Edited by Greg J Bamber,
Russell D Lansbury & Nick Wailes
Conclusions
• Since the 1970s, employment relations have undergone a series of
considerable changes reflecting macro-economic developments as well as
developments in employment relations.
• China has emerged as a serious economic competitor.
• There has been a shift towards a service economy – the tertiary sector
accounts for two-thirds of all employment and wholesale, retail, and health
and welfare are also important sectors.
• The growth of atypical employment is also associated with the trend
towards a service economy.
• Solutions to the ageing population problem are yet to be developed, and
older workers have few quality employment opportunities.
• Young people are overworked as a result of recruitment cutbacks, yet on
the other hand many service sector companies are employing mainly parttime or fixed term workers.
• The social norm of lifetime employment is being eroded, and the decline of
unionism and therefore employee voice is also a source of concern.
© Allen & Unwin, 2011. These slides are support material for International and Comparative Employment Relations 5th edition. Lecturers using the
book as a set text may freely use these slides in class, and may distribute them to students in their course only. These slides may not be posted on
any university library sites, electronic learning platforms or other channels accessible to other courses, the university at large or the general public.