The Changing Labor Market, Industrial Relations and Labor Policy

Abstract

Since the collapse of the bubble economy, the once world-acclaimed Japanese-style management tends to be either discarded or ignored. However, more recently the system is being reevaluated, especially by some of the business leaders who successfully revamped their companies amidst the general persistent serious economic stagnation. According to them many Japanese companies failed not because they were under Japanese style management but they failed to continue the process of self-reform and deal with global challenge. In spite of such reevaluation of Japanese style, some of the significant features of most successful cases of spectacular recovery of once seriously troubled companies are: 1. Leaders coming from the outside introduced drastic innovations, 2. implanted the spirit of competition, 3. promotion and employment from outside, 4. bold restructuring, 5. leaders are distinguished by their ability to communicate. All these features seem to be incompatible with traditional employment practices, most of them being features of flexibilization of the labor market. Regardless of the outcome of the debate on the merit of life-time employment, there is probably no need to mention that the practice is declining both in terms of the number of workers covered by this system and the role that plays within the contemporary Japanese labor market. The number and percentage of non-regular workers such as part-time workers, temporary workers among the total number of employed persons have been growing constantly and steadily within these recent decades. Japanese-style lifetime employment has two serious defects. First, it has created a distinctly discriminatory employment structure against women, minorities, foreigners, handicapped and aged persons. Secondly, it created a unique type of trade union known as enterprise unions, which in turn accepted and buttressed this discriminatory system. Unions in Japan organize only privileged regular employees covered by lifetime employment and exclude non-regular workers. As a result they have suffered from declining unionization rate in recent decades and have only started to try to organize non-regulars but in vain. The most significant feature of the postwar labor policy-making system is tripartite committees established at the Labor Ministry(present Ministry of Welfare, Labor and Health) which approve major labor policies including introduction and amendment of labor legislations. Labor leaders from big enterprise unions represented in these committees have been effectively controlling the policy-making process promoting the interests of privileged regular employees of big enterprises. They have successfully defended and promoted restrictive legislations on management prerogatives for flexible HRM methods such as flexible working hour system, employment adjustment measures including dismissals, short-term employment contract, agency labor supply etc. The most recent example of this kind is the last year amendment of the Labor Standards Law to introduce a provision requiring just cause to dismiss workers. This amendment accelerated the recent development of managements preference of non-regular employment and avoidance of regular employment. The result is that the vested interests of privileged already-employed workers are well protected while reducing opportunities of regular employment for most of the job seekers and thus promoting under-privileged employment in general.

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