Tsutsui W.M. A Companion to japanese histоry

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productivity. Finally, high growth helped resolve socioeconomic tensions by stimu-

lating job creation and forcing up wages. Long-term job security was institutionalized

from the early 1950s. By then, many workplaces had forced left-wing activists out,

and labor shortages during the high growth era induced managers to make further

accommodations, notably wage increases for young workers. Considerable activism

by the courts was also crucial.

Labor law itself provides little protection for jobs, but

court decisions (hanrei) in the early 1950s essentially mandated job protection.

Consequently, job security for regular workers is strong, yet remains informal and

conditional (depending especially on a firm’s stability). In theory firms must justify

lay-offs, especially if they are large and resource-rich, but many smaller fir ms bend

such rules. Furthermore, women and activists have often been denied equal protec-

tion. In the early postwar years, laborers and other marginal workers often lacked job

and income security since benefits were largely firm-based. Rapid economic growth

and labor shortages enabled nearly all men to land good jobs by the 1960s, greatly

easing social tensions.

When disputes occurred, they often followed the earlier To

shiba pattern in which

cooperative second unions emerged. One of the most important disputes was the

1953 Nissan strike, in which managers helped white collar workers to establish a new

union that displaced the original, left-wing, union. The dispute severely damaged

prospects for establishing strong industrial unionism in Japan. Today’s industrial

unions serve primarily to coordinate the activities of affiliates under the guidance of

their most prestigious members (for exam ple, Toyota Union plays the lead role in the

Auto Workers’ Federation).

Large firms, influenced by enterprise union-driven egalitarian principles as well as

the desire to raise productivity, drastically redesigned labor management practices in

the 1950s and 1960s. They ultimately created personnel systems that formally unified

blue and white collar personnel systems (though in reality, education level still tends

to determine promotion possibilities). The rationalization (and standardization) of

promotion, pay, and other personnel practices o ften helped strengthen the sense of

fairness, but also facilitated the efficient deployment of workers – making it easier, for

instance, to transfer people between jobs or factories as massive investment quickly

transformed workplaces. An important step in this reorganization was the great

strengthening of shop-floor supervisio n. Not only did companies improve training

for supervisors (notably the ‘‘new’’ foremen of the steel industry), but they clarified

the criteria for promotion, thereby encouraging their most talented and ambitious

workers to channel their energies toward seeking promotion (and away from, say,

unionism). The well-trained supervisors put an end to the old problems of favoritism

and inept shop-floor supervision. In addition, they were integrated into centralized

managerial structures, enabling top managers to tighten their control over decision-

making, and partially displace d unions as worker representatives. Japanese manufac-

turing workplaces utilize large numbers of supervisors, creating opportunities for

promotion, and strengthening monitoring capabilities as well.

Rapid technological upgrading and fast rising education levels supported the

efforts of employers to rapidly transform workplaces and em ployment practices.

Massive investment quickly raised the level of automation in production, and in-

creased the need for education-based skill while reducing the importance of experi-

ence-based skill. Many firms achieved the decade s-long goal of controlling the skill

500 CHARLES WEATHERS

development process as they replace d experienced skilled workers with newly trained

foremen and systematized on-the-job training (OJT). Prewar firms frequently faced

the dilemma of whether to provide greater rewards to skill or loyalty; postwar firms

resolved the dilemma in part by refining enterprise-based training, thereby making

skills relatively non-portable.

While steel and shipbuilding firms tended to take the lead in introducing major

labor personnel innovations, the auto industry was a leader in developing production

technology and rationalizing assembly line work. Toyota, for example, redesigned

production to enable workers to perform multiple tasks simultaneously. Academics

have accordingly debated whether Japanese practices promote upskilling or simply

multi-tasking (performing numerous unskilled or semi-skilled jobs). Certainly, auto-

mation eliminated many of the most physical and dangerous manufacturing tasks, but

worsened work conditions in other ways, notably by making it easier for managers to

speed the pace of work and squeeze rest times. Productivity-raising activities in-

creased the fear among many workers that their jobs would be eliminated, though

these concerns reced ed considerably as economic growth accelerated. The rapid

transformation of production workplaces occurred in large part because Japanese

managers pursued productivity-raising more intensively than their Western counter-

parts. They were driven by the desire to reas sert managerial legitimacy following the

shocking loss of authority to unions immediately after the war, and to assert Japan’s

status as a major industrial nation. Further, they received important assistance from

the governmen t, and enjoyed the support of num erous labor leaders, including many

in So

hyo

Contributing greatly to productivity-raising was a network of non-profit scientific

management-related organizations, such as the Japanese Union of Scientists

and Engineers (JUSE).

JUSE led the development of quality control circles

(QCCs),

the most important of the ‘‘small group activities’’ that encouraged

ordinary production workers to participate actively in planning and designing pro-

duction. Participation was not always voluntary, as managers insisted, but it helped to

bolster morale against the increasingly routinized tedium of factory work. Small

group activities epitomized Japan’s capacity for applying extensive redesign and

innovation to techniques originally borrowed from the West to create distinctive

Japanese practices. Their effectiveness also indicated one way in which scientific

management has exerted a stronger impact in Japan than in any country bar, possibly,

the United States. The Japan Productivity Center (JPC) led a high profile product-

ivity campaign after its founding in 1955, but its importance has been exaggerated.

While Japan’s large firms function as de facto economic leaders in many respects

(by setting labor standards, and in economic policy-making), most salaried workers

are still employed in smaller firms. In the late 1980s, about 70 percent of all

employees (and about 75 percent of manufacturing sector workers) were in firms of

fewer than 100 worker s. Many smaller firms are subcontractors, notably in manufac-

turing and construction, but functions and capabilities vary greatly, from fronting

low-cost labor operations for large fir ms to conducting technologically advanced

production. Compensation, job security, social status, and safety standards are gen-

erally inferior to those at larger firms. Managers can behave arbitrarily, and some

sources allege that problems like illegal dismissals and sexual harassment are common

in small firms. The differentials are partly justified as reflectin g merit (for example,

BUSINESS AND LABOR 501

people who perform better in school get the better jobs in large firms), though in

reality lifestyle choices or entrepreneurial ambitions are important to many small-firm

workers. They are much more job-mobile (voluntarily or otherwise) than their large-

firm counterparts. Many small-firm workers perceive advantages such as relative

informality and flexibility in socialization and work. Small firms thus present a

‘‘combination of enablement and restraint.’’

In contrast to the private sector, labor relations in the public sector remained

contentious into the 1980s, partly because of constant political interference. The

tension led to an unusual intervention from the ILO, which admonished both sides in

the late 1960s, though to little effect. The disputes were especially bitter in the

National Railways, where postwar management suffered perhaps its one major defeat

when a campaign to bust the left-wing unions backfired disastrously around 1970.

Japan’s shift from coal-based to oil-based energy brought severe dislocation in the

mining sector, culminating in the 1960 strike at Mitsui’s Miike coal mine. The union

responded to the company’s plan to slash the workforce with a tenacious 313-day

strike in which large-scale bloodshed was barely averted. Nonetheless, managers won

a total victory in what was Japan’s last truly major private sector strike, and dealt a

severe setback to So

hyo

The Firm-Based Accord

High growth, massive investment, and the well-executed redesign of labor manage-

ment created a virtuous circle for manufacturing fir ms. Companies could hire new

graduates very cheaply under the age-based wage system, and expect to recover the

cost of their training through long years of service since turnover was relatively low.

Worker loyalty (or commitment) was strong because skills were non- portable be-

tween large firms, and small firms paid less. The system encouraged teamwork and

acceptance of new technology since older workers could acc ept new technology and

train younger workers at no risk (in theory) to their own job security. Certainly,

Japanese managers faced rigidities, notably providing job security and automatic

nenko

wage increases even for the less productive, but in return they enjoyed

very high flexibility in deploying workers, deciding work hours, hiring non-regular

workers, and adjusting pay levels (for example, reducing overtime and bonuses in

response to business slumps). While the uniqueness of Japanese practices is often

exaggerated, average tenure is long by OECD standards, and the age-based wage

curve is very steep.

The company enjoys high prestige in Japan, a nd on this foundation an impressively

seamless interaction developed amongst job, family, education, and gender.

Em-

ployment prospects for men depended primarily on educational attainment, creating

an enviably effective school-to-workplace linkage; the implicit linkage of security (job,

income, and family) reinforced managers’ espousal of cooperation and loyalty to the

company; and housew ives provided support for hard-working husbands while push-

ing male children to study in order to land good jobs. Housewives, whose role was

extolled, were expected to ‘‘supplement’’ family incomes by accepting low-paid part-

time jobs, if they worked at all. Even individuals’ social lives (regular socializing with

fellow employees) and marriage patterns (strong propensity to marry co-workers)

502 CHARLES WEATHERS

reflected the cent ral role of company and work in society. The mutual dependence of

employees and managers within the firm was exp ressed in the phrase ‘‘community of

fate.’’

The employment system functioned impressively from the mid 1950s until rela-

tively recently, although critics emphasized problems, including the overdependence

of workers on firms, and personnel practices such as long work hours and sudden

transfers to new locations. In addition, numerous welfare and tax policies were

designed to strengthen ties of employees to employers, but the government’s sub-

sidization of enterprise-based benefits (like health insurance and recreational facil-

ities) disproportionately benefited large-firm employees, and indirectly entailed

neglect of public services.

The Union Movement and Wage-Setting

After plunging from its 1949 peak of 55.8 percent, the organization rate soon leveled

off at around 35 percent until the mid 1970s. Although So

hyo

was the largest labor

federation throughout its existence (1950–89), it began losing influence practically

from the moment of its inception. By the mid 1960s it was a primarily public-sector-

based federation. So

hyo

and the cooperative Do

mei were less important than com-

monly assumed; more influential than the conventional labor centers was the Inter-

national Metalworkers Federat ion – Japan Council (IMF-JC). Though establishe d in

1964 as a Japanese affiliate of the International Metalworkers Federation, the IMF-

JC’s real concer n has been domestic labor affairs. As with Nikkeiren, the nature of the

IMF-JC’s activities and its degree of influence defy easy understanding. Its tangible

activities have been limited to matters such as coordinating union policy-making, but

the federation has functioned more importantly as a platform for promot ing close

enterprise-centered cooperation. The leading IMF-JC unions and many other co-

operative unions scorn strikes, though that is the belief that dares not speak its name.

In 1955, eight left-leaning private sector industrial unions launched shunto

(the

spring offensive). So

hyo

leaders intended to use wage struggles to stimulate the

workers’ class consciousness and create a stronger labor movement (as well as a

foundation for future political and class struggle). The majority of workers were

too moderate to fulfill their Marxist-tinged aspirations, but as a means of coordinat-

ing wage-setting shunto

proved useful to companies and unions alike. The shunto

settlements of leading enterprises soon came to serve as authoritative guidelines for

wage raises nationwide. The so-calle d shunto

average raises reached double digits

every year but one from 1961 to 1974, although it was high growth, a shortage of

young workers, and high inflation that accounted for nearly all the wage increases.

There were shunto

strikes, to be sure, but they were largely for show.

The victory of managers in the 1957 and 1959 steel industry wage disputes ended

organized labor’s last good chance to establish me aningful industrial unionism. The

workers enjoyed a potentially strong position in 1957, but were too moderate to

conduct an assertive strike. They accordingly lost, undermining the left-wing leader-

ship and allowing cooperative leaders to take control of the steel unions. (Unlike most

other major unions, the steelworker unions are mostly original unions, not second

unions created with management support.) The cooperative unionists were led by

BUSINESS AND LABOR 503

Miyata Yoshiji, who was probably Japan’s most influential labor leader. He was

certainly the most important advocate of close labor–management cooperation on

the labor side.

Japan’s cooperative unions are easy targets for criticism, but it should be noted that

there is rather little social support for greater activism. As demonstrated in the 1957

and 1959 steel strikes, workers probably desired somewhat stronger unions, but

enterprise consciousness consistently trumped efforts to instill worker solidarity

across enterprises. Further, the government and the legal system seek to promote

cooperative relations by emphasiz ing compromise and administrative guidance (in-

ducements or pressures toward voluntary compliance) rather than compulsory laws

and authoritative rulings. There are no authoritative European-style labor courts, and

the regular courts are slow and conservatively inclined. Few but committ ed activists

or the morally outraged bother to pursue lawsuits. Finally, culture or social values

seem to discourage activism. The poin t should not be overstated, since Japan cer-

tainly has a tradition of protest, and lawsuits are crucial to establishing or expanding

employee rights such as job security and greater gender equality. Nonetheless, many

individuals are ambivalent about demanding rights, and those who file complaints

often find themselves censured by co-workers, even when they seemingly have

just cause.

The Steady Growth Era

The 1973 ‘‘oil shock’’ brought an abrupt end to high economic growth, but also

stimulated new efforts to increase productivity and reduce costs; these initiatives

helped turn Japan into the world’s pre-eminent manufacturing-exporting nation by

the early 1980s. Leading manufacturers and cooperative unions quickl y transformed

shunto

into probably the tightest instrument of wage restraint among industrial

democracies, though it also continued to help raise the pay of low -end earners and

maintain a sense of economic fairness. The most prestigious metalworking fir ms

(notably Toyota, Hitachi, To

shiba, Nippon Steel, and Mitsubishi Heavy Industries)

and their unions systematized their leadership over labor affairs, especially wage-

setting. This prestige-based leadership cont inues today, though in less clear-cut

fashion, thanks to the continued pre-emine nce of the auto and electronics industries.

After the oil shock, cooperative unions elected to emphasize participation in labor-

related policy-making rather than demand high wage increases. They reasoned that

improving real living standards required continued shop-floor cooperation plus sup-

port for appropriate public policies (for example, tax reductions, employment support

programs) instead of high wage increases, which risked undermining international

economic competitiveness. The outcome is controversial. The unions have exerted

influence, but it is hard to say how much, and the aims of left and right are still

frequently opposed. Further, national labor bureaucrats rather than unions have often

taken the lead in reformist policy-making.

Cooperative unions became more closely intertwined with management from the

1960s.

Officials in mainstream cooperative unions tend to rotate into supervisors or

managerial positions after serving terms of two to six years. Justified or not, close

cooperation has undoubtedly contributed to the decline of organized labor by

504 CHARLES WEATHERS

feeding the perception that unions have little influence, especially on wages. The

organization rate has fallen steadily since 1975, sinking below 20 percent by 2003.

The widespread perception of union ineffectiveness has aggravated the problem of

‘‘distancing from unions’’ (kumiai-banare), the loss of interest in union activities

even among union members. Many fir ms make effective use of informal employee

associations (perhaps reprising the prewar factory councils) to provide employees

with a voice but limited influence.

Despite those problems, cooperative unions steadily strengthened their influence in

organized labor as the left declined. This decline was hastened by the public sector

unions’ 1975 ‘‘strike for the right to strike,’’ in which they sought to restore their

strike rights, but succeeded mainly in angering the public. In the 1980s, So

hyo

was

further weakened by the government’s restructuring of the public sector. In 1987 the

cooperative unions formed a new national labor federation, Rengo

, which So

hyo

’s

public sector unions reluctantly entered in 1989. The consolidation of Rengo

, which

then account ed for nearly eight million workers, some 60 percent of the organized

workforce, represented a victory for the vision of cooperative unionism. However, the

longstanding ideological division, though greatly attenuated, continues to weaken

the union movement. Seeking to revitalize unionism, Rengo

has sought to better

represent women and non-regular workers, and to work with other social organiz a-

tions, especially the small (and invariably left-leaning) ‘‘community’’ unions. Such

initiatives, however, are hindered by the apathy or opposition of many enterprise

unions.

Contemporary Employment Issues

Following the oil crisis, employers intensified the rationalization of workplaces, partly

by increasing automation and reducing the numbers of full-time workers. Although

Japan has had enviably low levels of both unemployment and inflation, firms have

sometimes reduced core workforces, notably following the 1973 oil shock and the

1986 ‘‘high yen’’ recession, and during the extended post-bubble slump. In the

1970s, transfers to affiliates were the core means of reduction, but more important

recently has been so-called ‘‘voluntary early retirement,’’ aimed primarily at older

workers. Japan maintained high levels of manufacturing employment into the early

1990s, and avoided making fundamental changes in employment practices for longer

than its Wester n counterparts, partly because of the manufacturing sector’s strong

competitiveness.

Nevertheless, new forces began to undermine ‘‘traditional’’ practices and to erode

job security, especially after 1991. Japanese manufacturing firms, which once sought

to keep jobs and core technologies at home, began to expand foreign d irect invest-

ment significantly from the mid 1980s. Steady rationalization in the face of low-cost

Asian competitors is now eliminating or devaluing many of the remaining production

jobs. Japan’s large enterprises were once highly stable, but since the late 1990s even

prestigious firms, notably in finance and manufacturing, have faced retrenchment.

Construction and public works functioned as Japan’s Keynesian policy equivalent

during the postwar era, accounting for proportionately two to three times more jobs

than in other industrialized countries, and protectionist policies shielded jobs in many

BUSINESS AND LABOR 505

non-competitive sectors, like food processing. However, such costly policies have

become unsustainable, leading to painful shakeouts.

The pressure to reduce labor costs has brought about a steady erosion of many

practices that were never formally institutionalized, notably seniority-based pay in-

creases and job security. The intensification of competitive pressures has turned labor

cost-cutting into normal practice, rendering existing legal restraints on dismissal less

effective. The ‘‘wage raise shunto

’’ appears dead, and many or most regular employ-

ees, civil servants included, have suffered pay cuts since 1999. Certainly, long-term

employment remains important in princip le and practice. Employers continue to

recruit school-leavers and expect them to dedicate themselves to the firm. However,

they have steadily reduced the number of regular workers in favor of lower-paid non-

regular workers. Employers have also reduced the importance of nenko

-based raises

and other leveling practices in favor of merit- or performance-oriented promotion

and pay schemes.

The increased emphasis on merit has created better opportunities for the most

talented and ambitious, women included, but working conditions and pressures

appear to be worsening . This situation has strengthened the reform position in the

longstanding debate about whether quality of life has been sacrificed to economic

growth. Poor work conditions, especially long hours, are now regarded one of the

major barriers to equal opportunity for women and a source of serious health

problems. Death by overwork (karo

shi) became a major issue in the 1990s, and

activist pressure has brought a gradual easing of standards for proving it. In addition,

long work hours are believed to hold down new job creation.

Labor market condit ions have deteriorated since the late 1990s. The peak un-

employment rate, 5.4 percent in 2002, remained well below European levels, but

non-regular employment has grown rapidly (academics sometimes debate whether

non-regular jobs are ‘‘replacing ’’ regular jobs, though most other observers certainly

assume they do). School-leavers could until recently be relatively sure of finding

decent work, but the previous ly tight school-to-work link has been severed

and

youth unemployment has reached double figures. Considerable attention has focused

on ‘‘freeters,’’ youths who live with their parents and work at marginal jobs rather

than pursuing careers and raising families. Elder unemployment was a labor policy

priority for years, but Japan has quickly joined other OECD countries in shifting

resources toward alleviating youth unemployment. However, employment-support-

related expenditures remain very low by OECD levels.

The changed socioeconomic environment has altered the dynamics of labor policy-

making. Like other industrialized countries, Japan now seeks to utilize market prin-

ciples to encourage the creation of new (and better) jobs rather than protect old ones,

and to better incorporate women into the workforce. In the mid 1990s, the Cabinet

began more closely to support business demands for increased labor flexibility

through direct intervention in labor policy-makin g. The white collar and service

sectors (which, in contrast to manufacturing, were long notorious for low labor

productivity) have been an important target of liberalization (or deregulation). By

2004, the main obstacles to hiring contract and agency temporary workers were

mostly eliminated.

Japan has enjoyed great success in channeling women into economically useful

roles, especially dedicated housewives and low-wage workers,

but this legacy means

506 CHARLES WEATHERS

that the country n ow lags badly in instituting equal opportunity. The deterioration of

economic conditions in the early 1970s prompted managers to intensify the use of

women as non-regular employees, a strategy that clashe d with the simultaneous

emergence of gender equality (or equal opportunity) as a global norm. Consequently,

the 1985 Equal Employment Opportunity Law (EEOL) was enacted largely to

placate international opinion, and did not actually prohibit discrimination.

Equal

opportunity was further undermined by government policies encouraging women to

emphasize their roles as homemakers.

Nonetheless, women continued to advance in the working world, while new

concerns – especially the falling birthrate and the desire to raise workforc e quality –

led policy-makers to view equal opportunity more seriously from around 1990.

Childcare support has been steadily upgraded, and the Revised EEOL (1997) pro-

hibited discrimination, though it has few teeth. The greatest obstacle to equal

opportunity now is less overt discrimination than strong economic incentives to

utilize low-cost non-regular workers (primarily part-timers, but also contract work-

ers, agency temporaries, and arubaito, people doing low-status jobs like restaurant

work).

Non-regulars earn less than regular workers and are much easier to dismiss,

though many perform the same tasks as regular (full-t ime) workers, so the incentives

to hire them grow ever stronger as competitive pressures intensify. Non-regular

employees now account for 30 percent of the workforce, and more than half of

female employees. The belief (of government bureaucrats especially) that poor

work conditions dissuade couples from having more children is an important force

presently driving much labor-related policy-making. Japan continues to emphasize

market-oriented policies (which hold down spending) and incremental reforms

(which do not challenge managerial prerogative), but many observers believe that

the real priorities should be improving work conditions and strengthening the social

safety net.

The 700,000-plus foreign workers in Japan pose another vexing problem. Al-

though they are already essential to some industries, many are illegal aliens who

work in hazardous jobs and lack basic rights. The steady decline of the working-age

population means that Japan probably faces a choice between accepting far more

foreign workers and accepting much lower economic growth or even economic

decline.

Conclusion

The period since the burst of the bubble has seen great change in employment

policies and practices, yet labor–management cooperation remains strong, as does

the work ethic. Nonetheless, Japan, once seemingly impervious to the problems of

poverty and youth unemployment troubling other societies, is now also being forced

to consider how to prevent the socioeconomic marginalization of growing numbers

of citizens. While close labor–management cooperation generated major controversy

in past decades, the next great theme in labor-related studies may center on em ploy-

ment policy. Many observers believe that Japanese labor and welfare institutions

resemble those of Europe’s social democratically oriented societies, others that they

are closer to American-style market-driven practices. Research on new labor practices

BUSINESS AND LABOR 507

and the relatively neglected policy-making arena should play a leading role in the next

stage of the ongoing controversy about the relative benefits of Japan’s employment

and industrial relations practices.

NOTES

1 Gordon, The Wages of Affluence; Dore, British Factory Japanese Factory. Clear-cut advo-

cates seem to be much more common among Japanese than non-Japanese scholars.

2 Shirai, ed., Contemporary Industrial Relations in Japan; Kumazawa, Portraits of the

Japanese Workplace.

3 See Hunter, ed., Japanese Women Working; Roberts, Staying on the Line.

4 For example, Cole, Japanese Blue Collar.

5 Tsurumi, Factory Girls.

6 Gordon, The Evolution of Labor Relations, p. 45.

7 Gordon, The Evolution of Labor Relations and Labor and Imperial Democracy ; similarly

Tsurumi, Factory Girls.

8 Garon, The State and Labor.

9 Tsutsui, Manufacturing Ideology.

10 For example, Rohlen, For Harmony and Strength; Clark, The Japanese Company.

11 Foote, ‘‘Judicial Creation of Norms.’’

12 Tsutsui, Manufacturing Ideology.

13 Cole, Strategies for Learning.

14 Roberson, Japanese Working Class Lives, p. 94.

15 Rohlen, For Harmony and Strength; Clark, The Japanese Company.

16 Foote, ‘‘Law as an Agent of Change?’’

17 Suzuki, ‘‘The Death of Unions’ Associational Life?’’

18 Honda, ‘‘Formation and Transformation.’’

19 Female factory operators made crucial contributions to the textile and consumer elec-

tronics industries. Thanks to the public sector unions, women have enjoyed relatively

equal treatment in public teaching and the local civil service.

20 Lam, Women and Japanese Management.

21 The proportion of male non-regular workers is rising, but three-quarters or more are still

women.

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