JAPANESE LABOR MARKETS
• What is the relationship between the modern labor system
and the prewar one?
–
–
–
–
Commitment made at end of High school
training carried out by firm
pay based on age
Were these practices traditional?
• Characteristics of prewar markets
– Employment was short term
– tenure rates were very low
– Role of women
• Comparing Japan and India
1
Development of wage system
• In 1950’s began to see the development of a lifetime commitment
– Commitment made at end of High school
– Training carried out by firm
– Pay based on age
• Generally argued that these relations arose from traditional Japanese
society
– Social relations, fictive family community
• Actuality was that prewar employment was short term
– Did have some indentures but this did not lead to wage labor or modern
practices
– Role of women
– In prewar Japanese tenure rates were very low
• In postwar, high growth sectors employed mostly male
• in prewar, they employed female
• What are reasons?
– Economists focus on technological reasons
2
1
Labor Economics
• How was training traditionally done?
– During the Tokugawa period there was an apprentice system
– This system eventually became the Oyakata system
• Employers would hire foreman who would hire and pay
workers
• Made hiring decisions and conducted training
• Companies would employ oyakata through competitive
bidding
• Coase
• Began to die out in 1900’s
3
Wage Payments
• Agriculture
– Labor was mostly employed by day or season
– Long-run agricultural relations that had existed died out during this
period
• Industrial wage labor was rare
– Used “putting out system” where work was done at piece rates
– Also used day rates after a one week testing period
– Similar system in construction (and this continues today)
• Factories employed workers on a very short term basis
– In heavy industries over 80% left within five years
– Sake: workers were employed by season and paid by the day
– During prewar period Japanese labor market was characterized by
a highly elastic supply of unskilled workers
– Little dedication to company
4
2
Percentage of Japanese with More than one
Job (Yamanashi Prefecture, Umemura)
Male (ag)
F (ag)
Total
1879
36
30
33
1920
74
51
67
M (Man.)
F (Man.)
Tot.
5
47
37
22
18
20
5
A little History
• Andrew Gordon’s work on Heavy industries
– In 1900 heavy industries employed less than 6% of factory workers
– Gov’t established naval shipyards at Yokosuka and Ishikawajima and
provided a lot of training for workers
– Big problem was lack of diligence
• Foreign advisors complained of lack of discipline and high absenteeism rates
• Used holidays as an excuse not to work. At Nagasaki plant people took off 3
months a year-->prob worked in ag.
• Job tenure rates were also extremely low
– Over 80% left before five years despite the fact that trainee terms were
usually 5-6 years
– Once skilled workers would often quit and open their own shop
• Tried to employ mechanisms to hold on to workers
– Companies offered bonus systems (20% of salary) to hold on to workers,
but these failed
– Also tried hierachical pay schemes
– Forced savings
– Generally were not succussful until late 30’s
6
3
An Example: Cotton Spinning
• Japanese textile ind tried to follow Lowell example
– Japanese read accounts of Lowell system written in the 1840’s and
adopted this pattern for Japan
– Used dormitories and farm girls in textile mills
• Problem was that Japanese workers were far more transient
– while less than 5% of J workers stayed for more than 5 years in 1897, 40%
of Lowell workers did.
– If you look at employers records of individual workers, find that 75% of
textile workers left before five years in 1927 and 80% in 1936.
– ave ten 2 years
– Similarly in US south over 30% of workers stayed for more than 5 years
• If explanation of J growth is perm emp. then must explain this
7
Cotton Spinning (Continued)
• Absentee rates were around 20%
–
–
–
–
Example Kanebo’s Hyogo Mill
Percent quitting in first 6 months: 1905, 64%; 1914, 56%
Surprising considering that Kanebo was one of the most humane
About 70% of these quit without company permission
• If Kanebo had wanted to improve security they could have
• Other Industries were similar
– Coal Mining
• In 1923, Mine owners agreed that no one could employ workers unless they
had a document showing that they had no debts and had been discharged from
other plant
• everyone ignored this
– Military Plants
• When MAC needed workers for an arsenal, the policy was to hire them away
from other plants without training them
– Somewhat different story for the large enterprises (e.g. Mitsui)
• Handled large amounts of money and needed trust
8
4
The Economics of Labor Turnover
• Efficiency Wages
– Shirking argument
• Julie Andrews v. Rebecca DeMornay
– Workers taken on as apprentices, carefully monitored
– Even so, had problems holding on to workers
• Economics of Quitting
– Draw MPL and w graph
– Why do workers quit?
9
Adoption of New Technology in Japan
10
5
Why were Japanese textile firms so uniform?
• Industry was cartelized (Boren)
– Controlled 97% of industry spindleage and forced all new entrants to join
by controlling cotton importers.
– Boren also greatly enhanced communication between producers, and
looked into all technologies.
– Practices were uniform.
• Furthermore 87% of all spindles (1.8 million) was supplied by one
manufacturer, Platt Brothers.
– Many of the engineers were from this company
– First cotton spinning mill was designed by man from this company.
• Switches in technology were almost simultaneous
– In 1889, the entire Japanese industry switched technology together (to
hank realers)
– In 1906 only 11 of 97 mill orders did not include bundling presses.
11
Percentage of Female Factory Workers
Japan
1880
1900
1909
1920
1930
US
Textiles
in Japan
29
33
62
53
53
24
83
80
81
12
6
Why did Japanese Women Work so Much
(in factories)?
• Most J textile workers were unskilled
– Textile workers comprised 60% of all manufacturing employees
– Farm families earned less than other families
– lead to outmigration
• Supply price of farm workers is the opportunity cost of
moving
– farm earnings, cost of labor outflow to family, cost of closing a
farm, cost of information, cost of forgone income during retraining
and migration
• Two types of migration
– migration of farm heads from rural areas
– migration of income earners within the family
13
Explaining Labor Force Composition
• Very easy for young females to find factory jobs in cities
– 60% of female factory workers were under 24 in the 20’s
– Most delayed marriage while worked in mills
• Primogeniture and the Supply price of labor:
P1 = supply price of farm operators = real farm income - real
land income - expected non-farm earnings + house rent
P2 = Second sons’ supply price = male farm wages
P3 = Daughters supply price = female farm wages
14
7
Weekly-Wage Movements in Japan
Year
Farm
Male
Owner’s Farm
Income Wages
*23
44
24
30
34
25
39
41
30
50
8313
3010
Male
Mfg
wages
33
38
38
9417
Female Female
Farm textile
Wages wages
15
19
18
22
15
15
1836
3420
15
Skill levels in Japan compared with other countries
• Britain
– In Manchester in 1950 there were only 50 Col. Ed. textile workers
total
• India
– Japanese owners employed Japanese engineers or were engineers
• very close ties between managers and owners
– In India, owners were Indian but engineers were British
• Ability of owners to monitor tech progress was limited
• Failure of capital markets to supply capital to skilled Indians
– Quality of labor force (LF)
• Japanese LF was literate, Indian was not
• Virtually all mills in Japan contained 1 university trained engineer
who had specialized training in textiles
• In India, “the machines were the masters of the men” (quote from
contemporary observer)
• Also, one sees much more rapid shifts in output to labor ratios in
response to wage shifts in Japan than in India
16
8
Table 5:
Cotton-Spinning Firms with
Largest Number of University Graduates, 1914
A. University
B.
Graduates
Factory
Workers
A/B
Kanebo
269
24,323
.0111
Toyo
136
32,441
.0042
Fuji gas
87
10,172
.0042
Osaka godo
61
9,400
.0065
Amagasaki
48
9,525
.0050
Kurashiki
45
3,135
.0143
Settsu
33
10,176
.0032
Naigai
32
2,220
.0144
Source:
.
Shin’ichi Yonekawa, University Graduates in
Japanese Enterprises Before the Second World War, 26 Bus. Hist.
193, 195-99 (1984);
17
Number of University Trained or Technical School Trained
Engineers in Cotton Textile Mills
Engineers in Textiles
1400
1200
1000
800
600
400
200
0
1890
1895
1900
1905
1910
1915
1920
1925
1930
1935
18
9
Japan v. India
2000
1500
1000
Indian Net Exports
Japanese Net Exports
500
1900
1899
1898
1897
1896
1895
1894
1893
1892
1891
1890
1889
0
1888
Net Exports of Cotton Yarn in Millions of Pounds
2500
-500
-1000
19
Why the difference in performance?
• In Japan, Boren served as a technological clearing house
– no similar organization existed in India
– Japan had more intellectual property protection than
India
• Japanese patented a large share of process technology
• We see extremely close correlation between TFP movements
and patenting in Japan
• See similar relationship in India but much less patenting going
on.
• Indian productivity seems more dependent on foreign patents
• Overall, Japan was much more able to adjust to
shifting condintions and absorb new technologies
than India
20
10
Adoption of New Technology in India
100%
90%
80%
70%
60%
Mule
50%
Ring
40%
30%
20%
10%
0%
1880
1890
1900
1910
1920
1930
1940
1950
1960
21
Patenting and Productivity in Japan
22
11
Patenting and Productivity in India
23
12