Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Jun Imai
Assistant Professor, Center for the Study of Social Stratification
and Inequality, Tohoku University
List of Figures x
Acknowledgments xiii
Appendices
A1.1 List of interviewees 176
A3.1 Major reforms of labor market regulations
in the post-WWII period 178
A3.2 Revisions of the limited-term contract 180
A3.3 Labor market changes 183
A4.1 Chronology of working time regulations 186
A4.2 Discretionary work regulations as of 2000 188
A5.1 Future principles of labor management 190
A5.2 The COMPUJ organizational chart as of July, 1994 191
Notes 192
References 210
Glossary 223
Index 225
viii
xii
The research and writing of this book were made possible by the sup-
port 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
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 eco-
nomic growth was constantly below that of western advanced indus-
trial 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’ employ-
ment and ‘seniority’ wage system, are particularly called into question2
(Kikkawa 2005). Against the backdrop of a struggling economy, mount-
ing 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, particu-
larly for high- end professional and white- collar jobs. Companies were
keen to use a number of regulatory changes to pursue labor manage-
ment system reform. At the core of the corporate reform movement
The purpose of Chapter 1 is to fully explicate why and how the con-
ceptual framework is necessary and useful in the analyses of employ-
ment 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 politi-
cal 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 regu-
late these aspects of employment relations. Finally, the outline of the
book will be explained that also introduces the methodological schemes
adopted in the analyses.
Contract/effort
Contracts
Contracts and effort point to two different aspects of employment rela-
tions, 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
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, nor-
mative 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 (espe-
cially to shorten it) because, during this working time, workers were
under the control of employers6 (Thompson 1993). Thus the legal regu-
lations (at societal level) on working time such as the normal hours of
work (per month/week/day) became substantial factors in contract rela-
tions (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 work-
ers make in employment-related social space: job to job, occupation
state, firm and labor (Fligstein 1996, 2001). Fligstein especially empha-
sizes 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 automat-
ically 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 politi-
cally 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 regu-
lations 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 employ-
ment relations. Formally, they virtually cover all dimensions of con-
tract 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 con-
sideration 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.
The reform efforts described above put the complex dynamics that reg-
ulate 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 com-
pare 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 distin-
guishes 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 tra-
jectory 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 eco-
nomic 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
history especially when the impact of the reforms on the previous insti-
tutional 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 dynam-
ics 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 institu-
tions 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 post-
war situation in employment will be given in Chapter 2, the context-
specific 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, there-
fore no overtime premium is paid, for the expanding group of white-
collar 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 profes-
sionals, 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 institu-
tions, it is not to point out how history constrains actors in the fields. As
the scholars of the historical institutionalist analysis claim, it is import-
ant to assume ‘agency’ in actors (Steinmo, Thelen, and Longstreth 1992)
under given historical institutional settings. Here, agency means actors’
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 work-
place 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
Societal:
collective Organizational: Workplace:
bargaining, labor enterprise bargaining control and
market and labor and labor management authority
standard regulations practices relations
Introduction
17
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 blue-
collar 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 strug-
gle. 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 sen-
iority wage system can be found in densan-gata chingin (wage system of
electric power industry). And it is possible to say that the basic philoso-
phy 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.
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
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 per-
cent as employers understood that the economy was still volatile and
the boom might be temporary. Employers tried to adapt to the vola-
tile 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 require-
ment of other flexibility measures. Labor unions at that time still had
influence on personnel planning, but had begun to accept the flexibil-
ity 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, how-
ever, 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 insti-
tutionalization 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 adminis-
tration (1960) was designed to achieve that goal, and eventually helped
support the rise of the middle class in Japan. This period of rapid eco-
nomic 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 man-
agement. 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
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, rede-
fine 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 success-
ful (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, rank-
ing and qualification system. Under this system, wage was still pegged to
components such as age and seniority, but workers’ acceptance of the eval-
uation 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).
1,000
(trade balance)
500
(current account)
0
∆500
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 weaken-
ing 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 stand-
ards. 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 compa-
nies was to reduce working time, especially overtime (Dore 1986: 91).11
When firms face an economic downturn, they cut the amount of over-
time instead of firing employees. Even when firms experienced growth,
they expanded overtime rather than expand employment.
23
21
19
17
15
13
11
Figure 2.2 Trend of overtime and business conjuncture by firm size (manufac-
turing) (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.
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 norma-
tive 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.
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 organi-
zation throughout their career as organizational members (see catego-
ries 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 childbear-
ing 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
A. Torishimariyaku (employer)
B. Managers, administrators
E (mostly non-union eligible,
A
some union eligible)
C. Male regular employees
B (union eligible)
D. Female regular employees
(union eligible)
E. Shokutaku (regular employees
re-employed as contract workers)
F. Tenseki, shukko (transferee: from
F G and to allied companies)
C G. Haken workers (temporary agency
dispatched workers)
F D D G H. Shitauke, shagaiko (dispatched
from suppliers)
H G I. Paato (part-time middle
age women)
J. Arubaito (student and young
part timers)
H I, J, K, L G
K. Rinjiko, Kisetsuko (temporary
labourers, seasonal workers)
L. Gaikoku-jin rodosha
(foreign workers)
Allied Regular ‘member’ employees
External
firms, Temp. A, B, C, D, F
Labor
Sub- Agency Non-regular employees
Market
contractors E, G, H, I, J, K, L
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 iden-
tity 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, regu-
lar members experience rotation within a certain breadth of expertise
(Koike 1999). Each of these assignments does not have clear defini-
tion. 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 employ-
ees, 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 retire-
ment 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 pro-
grams (Osawa 1993).
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 work-
ers’ 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 sociali-
zation is continual. Under the ranking and qualification labor manage-
ment 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 imple-
mentation of personnel evaluation helps facilitate the socialization of
mature but obedient company citizens (Shire ibid.).
The creation of company citizenship historically parallels the estab-
lishment of the productivity coalition between managers and regular
workers, which signifies the gradual decline of the labor unions’ influ-
ence 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 sys-
tem is not based on job description and does not rely solely on meas-
uring performance. Thus the evaluation system has tended to focus
on employees’ personal qualities and contributions as organizational
2600
Labor force survey
2500 Monthly labor survey
2400
2300
2200
2100
2000
1900
1800
1700
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Mobility
The establishment of the corporate-centered society, under the circum-
stances 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 set-
ting 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
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.’
Source: Imano and Sato 2002: 55 (translated and arranged by the author).
(Ranking)
bucho
kacho
(Promotion speed
competition)
(Seniority)
(Length of service)
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 posi-
tion 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 competi-
tion. 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 competi-
tion system effectively motivates workers throughout their careers with
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 social-
historical 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 employ-
ment regulation presented in this chapter is summarized in Table 2.2.
Table 2.3 The advisory council: the case of the Central Labor Standards Council
as of 2000
Note: The table is translated by the author from the government document.
40
35.4
34.4
35
30.8
30 28.9
25.2
25 23.8
21.5
18.7
20 18.1
15
10
0
1970 1975 1980 1985 1990 1995 2000 2005 2008
9000
Non-strike
8000 Strike
7000
6000
5000
4000
3000
2000
1000
0
1970 1975 1980 1985 1990 1995 2000 2005 2007
Month/ Deregulation
year committee Cabinet Chairperson
Source: The table is constructed by the author from various government documents.
Table 2.5 Members of deregulation committees, samples from 1998 and 2001
50
14.0
12.0
10.0
average 3.8%
8.0 (1974–1990)
0.0
(2.0)
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
(4.0)
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.
The core of the proposal shown in the report is basically the strategy to
diversify employment at firm organizational level and calls for regula-
tive reforms to support such a strategy. The strategy divides the work-
force 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
Target
workers
Work (skill/career Wage Retirement /
contract expectation) Career system pension
workers in this group are designed to be under pressure from the results-
oriented 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 flex-
ible employment strategy, in addition to the reform efforts at organiza-
tional 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 employ-
ment 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 histori-
cal development of Japanese employment relations, and it is also neces-
sary 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 establish-
ment 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.
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 sta-
ble and flexible business relationships. 5 Using the network, Japanese
firms developed practices of labor lending (without a labor contract)
1956 1959 1962 1965 1968 1971 1974 1977 1979 1982* 1987
Regular 88.93 90.27 92.19 92.17 92.98 92.69 92.21 90.28 88.92 84.23 81.59
Non- 11.07 9.73 7.81 7.83 7.02 7.31 7.79 9.72 11.08 15.77 18.41
regular
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 devel-
oped 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 employ-
ees. Given the low unemployment rate during this period (about one to
two percent throughout the 1960s), it was only a small part of precari-
ous 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.
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.
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 environ-
mental 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
0
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
Figure 3.2 The trend of unemployment rates from 1970 to 2004 (%)
Source: Labour Force Survey: ILO 2010.
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 reorgan-
ization 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 deregula-
tion 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 sys-
tem. 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 manufac-
turing lines. Here again the rationale behind labor’s opposition was
the concern over the replacement of regular employees with tempor-
ary 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 com-
mittee, 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 secur-
ity. 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 long-
term employment commitments, the labor ministry pointed out that
employment security may even have been interfering with the abil-
ity 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 improv-
ing 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 com-
plex. 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 permit-
ted 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
limited-term contract employees also reflects the fact that labor unions
were strongly opposed to the system since employers might use the sys-
tem 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 subdiv-
ision 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 busi-
ness 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
Regular 37,653 81.59 42,032 79.96 42,392 77.10 38,452 70.35 38,336 66.98
employees
Non-regular 8,498 18.41 10,532 20.04 12,590 22.90 16,206 29.65 18,899 33.02
employees
paato / 6,563 14.22 8,481 16.13 10,342 18.81 12,062 22.07 12,935 22.60
arubaito
haken 87 0.19 163 0.31 257 0.47 721 1.32 1,608 2.81
keiyaku / 730 1.58 880 1.67 966 1.76 2,477 4.53 3,313 5.79
shokutaku
others 1,118 2.42 1,008 1.92 1,025 1.86 946 1.73 1,043 1.82
Total 46,151 100 52,564 100 54,982 100 54,658 100 57,235 100
employees
Reported 46,153 52,575 54,997 54,997 57,274
total
employees*
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).
90
85 1000~
500~999
80
300~499
100~299
75
30~99
1~29
70
public
total
65
60
1987 2002 2007
9780230_209084_04_cha03.indd 68
Regular 7,072 65.7 1,938 65.7 1,617 65.0 3,681 63.9 4,506 64.0 10,921 67.9 4,129 79.9 4,219 66.5 38,336 66.9
employee
paato 1,531 14.2 416 14.1 360 14.5 967 16.8 1,292 18.3 2,660 16.5 312 6.0 1,170 18.4 8,855 15.5
arubaito 809 7.5 201 6.8 164 6.6 365 6.3 532 7.6 1,552 9.6 105 2.0 218 3.4 4,080 7.1
haken 527 4.9 142 4.8 127 5.1 276 4.8 232 3.3 121 0.8 25 0.5 96 1.5 1,608 2.8
keiyaku 627 5.8 188 6.4 158 6.4 321 5.6 298 4.2 245 1.5 127 2.4 256 4.0 2,255 3.9
shokutaku 145 1.3 52 1.8 48 1.9 110 1.9 112 1.6 102 0.6 278 5.4 207 3.3 1,059 1.8
others 47 0.4 10 0.3 10 0.4 34 0.6 69 1.0 475 3.0 190 3.7 179 2.8 1,043 1.8
Non-regular 3,686 34.2 1,009 34.2 868 34.9 2,073 36.0 2,534 36.0 5,154 32.0 1,036 20.0 2,126 33.5 18,899 33.0
total
Total 10,762 18.8 2,948 5.1 2,486 4.3 5,757 10.1 7,046 12.3 16,088 28.1 5,168 9.0 6,345 11.1 57,274
employee
Regular 6,831 73.7 1,933 71.5 1,627 69.5 3,822 67.5 4,692 67.2 10,862 67.8 38,452 70.3
employee
paato and 1,693 18.3 540 20.0 487 20.8 1,325 23.4 1,781 25.5 4,382 27.3 12,061 22.0
arubaito
haken 217 2.3 67 2.5 59 2.5 137 2.4 105 1.5 55 0.3 720 1.3
keiyaku and 487 5.3 150 5.5 151 6.4 329 5.8 306 4.4 302 1.9 2,477 4.5
shokutaku
12/3/2010 6:11:00 PM
others 34 0.4 9 0.3 13 0.6 38 0.7 83 1.2 400 2.5 946 1.7
Non-regular 2,431 26.2 766 28.3 710 30.3 1,829 32.3 2,275 32.6 5,139 32.1 16,204 29.6
total
Total 9,271 16.9 2,704 4.9 2,342 4.3 5,661 10.3 6,978 12.7 16,026 29.3 11,240 20.5 54,733
employee
9780230_209084_04_cha03.indd 69
500∼ 300∼ 100∼
1987 1000∼ % 999 % 499 % 299 % 30∼99 % 1∼29 % public and others total
Regular 7,579 89.2 3,761 85.6 4,559 82.6 5,731 80.2 11,514 74.3 37,673 81.6
employee
paato and 684 8.1 489 11.1 744 13.5 1,127 15.8 3,232 20.9 6,562 14.2
arubaito
haken 25 0.3 15 0.3 20 0.4 17 0.2 10 0.1 87 0.2
keiyaku,
shokutaku and 207 2.4 131 3.0 198 3.6 269 3.8 734 4.7 1,848 4.0
others
Non-regular 916 10.8 635 14.4 962 17.4 1,413 19.8 3,976 25.7 8,497 18.4
total
Total 8,495 18.4 4,396 9.5 5,521 12.0 7,144 15.5 15,491 33.6 5,074 11.0 46,153
employee
12/3/2010 6:11:00 PM
70 Transformation of Japanese Employment Relations
90
80
15-24
70 25-34
35-44
60 45-54
55-64
50 65-
total
40
30
1987 1997 2002 2007
0 10 20 30 40 50
0 10 20 30 40 50
0 10 20 30 40 50 60
100
12.2 13.1 13.6 14.4 14.9
90
80
60
13.4 13.5 13.5 14.1 13.2
50
6.4 6.6 7.3
40 9.1 9.8
30
0
1987 1992 1997 2002 2007
Agri./fish. Unclassified
(D.I.Point)
30
professional and technical sales
20 service
10
trans. and comm.
Total
total
0
skilled workers
unskilled
−10 workers
−20 managers
clerical workers
−30
1996 97 98 99 2000 01 02 03 04
4.7%
1600
Tech./pro.
1400
9780230_209084_04_cha03.indd 74
Management
Clerical
1200
36.6%
Sales
1000
Service
800 Security
6.1%
Agri./fish.
600
49.9% Trans./comm.
400 39.6%
Man./con.
11.7%
200 Unclassified
70.0% 26.6%
0 10.9%
1987 1992 1997 2002 2007
*
Figure 3.10 Haken workers by occupation (numbers in thousands)
Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009.
* 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.
12/3/2010 6:11:04 PM
Political Segmentation of the Labor Market 75
Tech./pro.
14.5%
3000
Management
9780230_209084_04_cha03.indd 76
2500 Clerical
26.4%
15.3%
Sales
2000
Service
26.4% 11.0%
1500 Security
10.7%
12.0% Agri./fish.
1000 10.5%
18.1% Trans./comm.
29.3% Man./con.
500 24.1%
9.1% 25.0%
Unclassified
23.2%
0
1987 1992 1997 2002 2007
12/3/2010 6:11:05 PM
Political Segmentation of the Labor Market 77
Employment security
There is nothing immediately clear about the impact of the deregula-
tory 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 work-
ers 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 employ-
ment security than registered-type workers as they have continuing
employment with THAs. Midterm termination of the contracts is par-
ticularly 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 mid-
term termination of the business contracts that were involved with the
6000 5242
5000 4270
4000
3000
2114
2000
960
1000
0
(2001)** (2002) (2003) (2004)
0 10 20 30 40 50 60 70 80 90 100
%
Table 3.5 Average hourly wages of temporary staff by occupational category (yen)
2002 2006
Methods of payment /
Employment Status Hourly (women) Daily Monthly
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 prac-
tices 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 employ-
ment. 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-
74.5
Employee Keiyaku
29.0 73.4
pension Paato
33.1
1999
41.1
23.0 2003
Company Regular Employee
17.0
pension Keiyaku 9.8
Paato 5.1
3.1
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
7.00
Total
6.50 Men
6.00 Women
5.50
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1962
1965
1968
1971
1974
1977
1979
1982
1987
1992
1997
2002
2007
Figure 3.15 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.
Labor force 54,358 89.8 58,808 89.4 59,479 88.8 56,414 86.8 56,679 85.9
with
no status
change
Career 2,646 4.4 2,986 4.5 2,911 4.3 3,327 5.1 3,683 5.6
changers
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
New entrants 3,422 5.7 3,850 5.9 4,480 6.7 4,391 6.8 4,044 6.1
Total labor 60,502 99.9 65,756 99.8 67,003 99.8 65,009 98.7 65,978 97.6
force*
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 “self- employed,” “family workers,” and “employees.” The
percentages of all these categories do not add up to 100% due to the n.a. and d.k.
9780230_209084_04_cha03.indd 84
current job
12/3/2010 6:11:10 PM
Table 3.9 The number of workers who changed jobs (2002–7) (numbers in thousands)
9780230_209084_04_cha03.indd 85
current job
12/3/2010 6:11:10 PM
86 Transformation of Japanese Employment Relations
Destination
Destination
70,000
Annual sales (in hundred million yen)
60,000
50,000
40,000
30,000
20,000
10,000
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Figure 3.16 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 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 reg-
ular 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 con-
trol (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 work-
effort 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 work- effort expected to each
of them period.1 Second, the level of working time regulation is
the level of monitoring work- effort. Legal regulations set societal-
level constraints on normal hours of work (per month/week/day)
that successfully monitor work- effort by working time and the line
92
9780230_209084_05_cha04.indd 95
2,200 2170 400
2117 2108
2110 21112111
2102 2088 2194
2,100 2064 2052
2039
2016 350
1932 1933 1972
2,000 1937 1946
19301922 1913 19091919
(annual scheduled working hours) 1898 1904 1900
1,900 1866 18791859 1846 300
1841 1842 1848
1837
1823 1774
262 1780 1750
1,800 17721772 1742 1720 1700
(annual overtime working hours) 170917141700 250
1,700
198 200 190
1,600 189 186 200
178 178 175
162 172
1,500 149 150 146
145
137 139134137 150
127 133132137 133
1,400
1,300 100
1,200
50
1,100
1,000 0
35 40 45 50 55 60 61 62 63 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1960 1965 1970 1975 1980 1985 1990 1995 2000
11/25/2010 8:12:55 PM
96 Transformation of Japanese Employment Relations
25
20
15
10
recession after recession after high-yen recession after kin-yu kiki
the first oil crisis the second oil crisis recession the bubble burst (crisis of financial
system)
5
0
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
−5
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 busi-
ness expands, they agree to increase working hours instead of employ-
ing 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 over-
time (sābisu zangyō) from this period. Unpaid overtime, as introduced
in Chapter 2, refers to unreported overtime. Regular employees volun-
tarily (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 sig-
nificantly 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.
410
390
370
350
330
310
290
270
250
230
1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Figure 4.3 Estimated hours of unpaid overtime work (hours per year)
Source: Monthly Labour Survey: MHLW 2008c; Labour Force Survey: ILO 2010.
301– 46 44 44 40 40 40 40
101– 300 46 44 44 44 44 40 40
31–100 48 46 46 44 44 40 40
10– 30 48 46 46 44 44 40 40
1–9 48 46 46 46 44 40 40
301– 46 44 44 40 40 40 40
101– 300 46 44 44 44 44 40 40
31–100 48 46 46 44 44 40 40
10– 30 48 46 46 44 44 40 40
1–9 48 48 48 46 46 46 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: here-
after, 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 negoti-
ated amount of scheduled working hours per week. Firms could use
these measures upon agreement with labor unions following the con-
vention in the case of overtime work. IWHS- One Month does not even
require agreement.
The DWS was qualitatively very different from other measures of work-
ing time. While other measures offered flexible coordination of sched-
uled 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 excep-
tional 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 nor-
mal line of command” (MOL 1991b: 108–9). Thus the application of
the system was strictly limited to workers involved with research and
180
500– 100–499 30–99
175
170
165
160
Hours
155
150
145
140
135
130
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Figure 4.4 The amount of scheduled working hours by firm size (hours per
month)
Source: Monthly Labour Survey: MHLW 2008c.
45
40
Firms larger
35 than 1,000
1990
1992
1994
1996
1998
2001
2003
2005
2007
Figure 4.5 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 question-
naires, 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 com-
pensate 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).
45
40
All firms
35 Irregular Working Hour
30 System – One Month
Irregular Working Hour
25 System – One Year
Flextime System
20
0
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2001
2002
2003
2004
2005
2006
2007
2008
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.
18
16
14 20%*
10–20%
12
10 5–10%
(%)
8
6
5%
4
2
0
Managerial Professional/ Clerical Sales Blue-collar Skilled Unskilled
technical
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 white-
collar 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
72.1 73.2
9780230_209084_05_cha04.indd 107
36.5
28.6
13.8
8.7
4.8 4.1
1.6 3.2
To introduce results- To facilitate creative Workers’ request To reduce working Because competitors Others
oriented labor works towards results- time (and overtime also introduce
management orientation premium)
Figure 4.8 Employers’ reasons to introduce the DWS (multiple answers: %)
Source: The Special Survey on the Discretionary Work System: Rengo 2000, created by the author.
11/25/2010 8:12:58 PM
108 Transformation of Japanese Employment Relations
Category in
employment
diversification
strategy Details Types of the DWS
● There is a danger that the DWS would merely legitimate unpaid over-
time 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 dis-
cretion. 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 excep-
tional cases
● (Rengo 1995a).
The first concerns the labor intensification without rewards. The sec-
ond concerns the coverage, and the third points to the nonexistence
of individualized discretion at Japanese workplaces. Labor union repre-
sentatives 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 white-
collar 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 sub-
mit 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 expect-
ation regarding the expansion of the system for white- collar workers,
reflecting environmental changes, such as industrial structural trans-
formation, the redesign of the work process, and a change in work-
ers’ values (Rengo 1997a: 80–2). The report suggests that the DWS is
Table 4.4 Summary of opinions on the expansion of the DWS by related actors:
early stage
necessary for white- collar workers especially those who have highly
specialized skills and creativity that could be comparable with inde-
pendent 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.
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 revi-
sion of the LSA. As Rengo could not repeal the bill at tripartite bargain-
ing 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 opposi-
tion 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 labor-
management council on the issues that will specify the conditions and
practices of the new act.27 All these needed to be recorded and sub-
mitted 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,
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 associ-
ations 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 con-
tinuously 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 underpay-
ment 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 effec-
tive in 2004. The major points of relaxation were as follows:
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 popular-
ity 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
15 Companies that
adopt DWS white
Workers covered by
10 DWS professional
Workers covered by
DWS white-collar
5
0
1995
1996
1997
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
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
Table 4.5 Changing working time regulations for white- collar workers
that has a central role in the reform of the labor management system
that emphasizes results- orientation. Under the new arrangement, the
coupling of the DWS and the results- oriented labor management sys-
tem, management now manages results, rather than working time, to
control work- effort.
firms has been highly subjective, thus the renegotiation about the crite-
ria of measurement will be a major issue of contention between employ-
ers 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 com-
petitive 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.
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 signifi-
cant reforms of labor management practices to cope with globalization
and industrial structural change. This reform was to introduce results-
orientation 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 work-
place 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 reor-
ganization 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 reg-
ulation, helped support the change by emphasizing ‘self-management.’
122
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
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
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 white-
collar 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 man-
agement 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 sys-
tem 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 com-
pany, 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 pro-
vider 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 founda-
tion including broadcasting equipment for radio, TV and satellite sys-
tems. 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 hun-
dred million yen (40 billion dollars) in 1990. At the end of the 1980s,
COMPUJ had three broad areas of business. One was the ‘communi-
cations systems and equipment’ area that includes digital switching
systems, fiber optic and radio transmission systems, and mobile com-
munication 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 operat-
ing in the computer industry that was faced with international compe-
tition 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 aver-
age 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
managers
60
(%)
clerical worker
40 engineers
technicians
20
0
1985 1990 1995 1997
Vision
In 1977, Matsuyama, the president of COMPUJ at that time, presented the corpo-
rate 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 recog-
nition 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 mar-
ket-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 mar-
keting support groups.
--------------------------
--------------------------
Year Results- Orientation Fairness of evaluation Self management
Opportunity
1988 announcement
1989 Flextime system
1990 Group bonus system
MBO evaluation and skill/career development system
-------
1992 Reorganization of ranking/qualification
(introduction of ‘wage band’ system)
1993 DWS for professional occupations
New wage system for managers
----------------------------
1994 Revision of the promotion standards Career development
1995 system for managers
---------------------
Reorganization of ranking/qualification
2000 New system of evaluation (konpitenshī manejimento)
2002 DWS for white- collar works
Role Grade System (managers)
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 organiza-
tional objectives and evaluation that emphasizes achievement. Targeting
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 develop-
ment, 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 cat-
egories through which management intends to control workers. First,
it has an independent category that evaluates performance. In this cat-
egory, 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 determina-
tion means the increasing importance of this part of personnel evalua-
tion. 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 self-
development 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;
Table 5.2 The MBO evaluation sheet at COMPUJ (translation of the performance
measures by rank)
environment and
opportunities that
enhance subordinates’
abilities
● Degree of trust given by
subordinates
III. Employment of specialist
qualities
Competency I. Planning ability ● Operational ● Operational
and ability ● Theoretical and knowledge knowledge
effective business ● Ability to ● Ability to
directions pinpoint the pinpoint the
II. Organizational ability issues (problem issues
● Flexible and realistic setting) ● Planning ability
distribution of work ● Planning ● Execution ability
III. Leadership ability ● Leadership
● Information gathering ● Execution ● Ability to review
● Prompt decision ability the process and
making ● Leadership refocus on the
● Strong leadership ● Ability to new issues
IV. Specialist abilities review the
● Quality knowledge and process and
skills in specific fields refocus on
● Creative R&D the new
V. Coordination ability issues (ability
● Liaison and of critical
communication assessment)
VI. Suitability to the current
position
VII. Capability for more
senior positions
Continued
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.
9780230_209084_06_cha05.indd 135
Intelligent System
Overseas Planning Marketing Seizo No. 1 Seizo Seizo
Bldg. Dept. Dvlp.
Dept. Dept. Dept. No. 2 No. 3 no. 2
12/3/2010 6:50:25 PM
136 Transformation of Japanese Employment Relations
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 under-
stood 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 self- development
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 (dory-
oku) 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 willing-
ness (netsui) to meet objectives and the accuracy of his work opera-
tion highly.
● He had to have struggles to organize different divisions within
COMPUJ, but he has never lost forward-looking attitude (maemuki
na torikumi).
● 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 mar-
ket. 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).
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 back-
ground, 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 conten-
tion 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
This last comment reflects the expectation that workers should submis-
sively 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
* 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).
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 relation-
ships with customers is often considered more important than profit.
Therefore, managers tend to have a more process- oriented view on per-
sonnel 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 griev-
ances 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 over-
whelming 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
Intensification of results-orientation
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/respon-
sible 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 posi-
tions, 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 fol-
lows. 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 impor-
tance. Managers in the same grade earn the same salary alongside the
results-sensitive bonus that theoretically makes up the 100 percent differ-
ence between the highest and lowest achievers. In wage determination,
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 con-
tribution 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 ‘results-
responsibility’ and the ‘necessary competency,’ which was written down
in detail and publicized on an intra- organizational network. Figure 5.5
WHAT:
Results
responsibility
• Strategy
• Performance
• Coaching
HOW: Practice
Behavioral traits, skill and knowledge to perform
assigned organizational role
Monthly salary
(Ranking)
(grade 1)
(grade 1) (grade 1)
(grade 2) (grade 2)
(grade 2)
(grade 3) (grade 3)
(grade3)
(grade 4)
(grade 4)
(grade 5) (grade 5)
(grade 6) (grade 6)
Figure 5.6 An overview of the ‘salary band’ for workers in groups A, B, and C
Source: Internal material of COMPUJ.
fast management
track
normal
track
1 shunin
Rank
2
slow track
0 2 4 6 8 10 12 14
length of service
Updated
knowledge
Value, belief
Character,
personality
Continued
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 Make a better plan from the analysis of
customer claims. Report to supervisors when
s/he appropriately judges that the claim is
important.
Quality control Make a strategic plan to improve customer
satisfaction with positive efforts with necessary
consensus building with related departments
and sections. Provide effective feedback.
Others SE qualification, TOEIC 470, etc.
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 move-
ment after the 1990s included the improvement of the job announce-
ment system too.16 At the latest renewal in 2000, a manager from the
personnel department said;
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
Yes, management proposed it, and we agreed upon it. ... Since the sys-
tem automatically calculates working time, workers tend to lack self-
management. 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;
The major characteristic of the DWS (and the system that has a simi-
lar 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 help-
ing to raise consciousness on self-management and results-responsibility.
This is why a series of reforms to introduce results- orientation 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 pro-
fessional 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 perform-
ance evaluation to make a greater difference in bonus payment between
Bonus in December
Bonus in June
individual performance
Basic monthly salary
Dependent allowance,
night-shift, and work on a
regular day off overtime
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 short-
term 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 over-
time 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 real-
ize the same effect, COMPUJ invented a system called A-style. A-style
system is the combination of the Flextime system and the fixed over-
time 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 allow-
ance 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
Globalization/International competition
Individualization of control
Diversification of career track, the implementation of the MBO, and
the detailed criteria of evaluation, in combination, facilitates the indi-
vidualization of workplace control. It achieves the higher level of inte-
gration of workers’ effort to organizational objectives while giving
161
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 for-
mal ‘expectations’ attached to different forms of employment contracts.
Effort points to the agreed intensity of work that completes the labor con-
tract, which mainly concerns workplace control and consists of the core
of workplace authority relations. The mobility aspect concerns move-
ments between the internal/external labor markets, rotation, career for-
mation 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 ‘equal-
ity’ and ‘freedom’ are organized in the institutional arrangement.
Second, I see that employment relations are subject to multiple lev-
els of regulation at the societal, organizational, and workplace lev-
els, 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 bargain-
ing 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 contrac-
tual 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 employ-
ment 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
Table 6.1 Changes in employment relations since the 1990s (core regular
workers)
Societal:
collective Organizational: Workplace:
bargaining, labor enterprise bargaining control and
market and labor and labor management authority
standard regulations practices relations
The deregulatory reforms of the labor market did not bring about
radical change with regard to the contractual status of regular work-
ers. The main form of employment contract is an unlimited-term con-
tract 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 secu-
rity 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 estab-
lishment 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 work-
ers, 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 occupa-
tions, for instance, was based on the socially defined credentials or cer-
tificate. 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 person-
nel 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 individ-
ual’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 perform-
ance, responsiveness to market fluctuation was expected to be higher
(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 thor-
oughly 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 blue-
collar at COMPUJ, might be common in reality at Japanese firms, but
the formalization of the division may have further impacts on the con-
tractual 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 indi-
vidual work- effort to organizational goals, and the emphasis of self-
management 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 work- effort than age and seniority,
they became more competitive. The introduction of the DWS helps
this process. Since the DWS decouples the association between work-
ing time and wage, it enabled employers to control work- effort by work
results, making them easier to adopt a results- oriented labor manage-
ment system. Further, since the DWS ends the concept of scheduled
working time and overtime, employers became able to take the work-
effort, 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 work-
effort to organizational objectives. The tight coupling of the work-
ers’ 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
Mobility
The deregulation of the labor market did not change the mobil-
ity 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 work-
ers. 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
be free from the ‘duties,’ therefore it is natural that they are not enti-
tled 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 regu-
lar 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 non-
regular 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.
176
Note: In addition to the interviewees listed above, workers at F Department, COMPUJ, were
interviewed during the field research in 1995–6.
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.
technical and 18 21 30 44 76
professional 20.7% 12.9% 11.7% 6.1% 4.7%
management 0 0 0 0 0
0.0% 0.0% 0.0% 0.0% 0.0%
clerical 39 94 180 360 588
44.8% 57.7% 70.0% 49.9% 36.6%
sales 0 0 4 48 91
0.0% 0.0% 1.6% 6.7% 5.7%
service 4 10 10 43 72
4.6% 6.1% 3.9% 6.0% 4.5%
security 0 0 0 0 0
0.0% 0.0% 0.0% 0.0% 0.0%
agriculture/ 0 0 0 1 4
fishery 0.0% 0.0% 0.0% 0.1% 0.2%
transportation 2 6 4 11 31
and 2.3% 3.7% 1.6% 1.5% 1.9%
communication
manufacturing 14 27 28 192 636
and 16.1% 16.6% 10.9% 26.6% 39.6%
construction
unclassified 10 5 0 21 110
11.5% 3.1% 0.0% 2.9% 6.8%
total 87 163 257 721 1,608
100.0% 100.0% 100.0% 100.0% 100.0%
Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009.
Source: Employment Status Survey: Statistics Bureau 1988, 1993, 1999, 2004, 2009.
100
90
80
70 Unknown
60
Difficult to tell
50
Seniority and results
40
Results-oriented
30
20 Seniority-oriented
10
0
1990 1993 1996 1999 2002
Source: Survey on Employment Management: MOL 1990a, 1993b, 1996a, 1999d; MHLW
2002d.
Board of Directors
President
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
Advertising
11 Operating Groups
IT Infrastructure Group
Computers Group
Semiconductor Group
Source: COMPUJ CI DATA, published by Corporate Design Division, 19 October 1994, mod-
ified by the author.
192
Yamada 2004). Fligstein argues that what the state-firm-labor politics cre-
ate is the patterns of institutions that cover rules to local cognitive frame-
work (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.
8. The studies of neo- corporatism 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).
9. 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).
10. In this strand of thought, the market is not an automatic and completely
autonomous system that regulates the transaction between the par-
ties. 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 con-
ditions 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 con-
clude valid contracts, to acquire, and dispose of, property” (Bendix 1996
[1964]: 92).
11. In most of the cases, exogenous states are discussed as only hindering
market processes or, at best, setting incentives for actors in the markets.
12. Ujihara had already in the 1980s, pointed out that the roles of labor stand-
ards and labor market regulations in defining contract relations are unrea-
sonably downplayed by the scholars of social policy who only emphasize
the importance of labor relations and collective bargaining (Ujihara 1989a:
Chapter 1).
13. This is again where ‘free contract’ and ‘free mobility’ matter. Given the dis-
proportionate 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.
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 bet-
ter 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, espe-
cially after the outbreak of Korean War. After this period, the interfirm rela-
tion 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 work-
ers 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
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.
24. To solicit scientific advice before deliberation, the advisory council some-
times creates study groups composed solely of scholars.
25. 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 histor-
ical 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).
26. 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.
27. 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 meza-
shite)’ by the Administrative Reform Committee for further detail.
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.
5. 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 trad-
ing company systems, were utilized to support rapid economic growth
(Lincoln and Gerlach 2004).
6. 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.
7. For further details about the development of the regulations that tried to
distinguish between regular kōnai ukeoi and illegal ones, see Imai (2004).
8. In the context of the chaotic situation after the war in the 1950s, the mis-
sion of the labor ministry was full employment (in Japanese, it is called as
kanzen koyō) besides modernization and democratization of the labor mar-
ket. In an expanding economy, full employment was defined as no unem-
ployment or precarious employment (Ujihara 1989b).
9. The first eight companies established the industry organization as The
Japanese Association of Clerical Service Contracting (nihon jimu-shori
sābisu kyōkai) in 1984 (JASSA 2002).
10. One of the major clerical jobs at that time was telex operator. Due to the inter-
nationalization of commercial activities, there were increasing demands for
telex operators working at irregular working times at, for instance, trading
companies (Takanashi 2001a, 2001b).
11. The law was made as the special law of the ESL, and was primarily a regu-
lation that controls temporary dispatching work business. For the further
details of the process of law making, see Imai (2004).
12. It allowed the triangular employment relationship, unusual as an employ-
ment 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.
13. The 1988 White Paper on Labor (rōdō hakusho) published by the labor min-
istry, 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).
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 tai-
saku) in 2000.
16. ILO Convention no.181, which is called Private Employment Agencies
Convention, generally accepts the activities of private employment agen-
cies, 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 rati-
fied 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 tech-
nician, 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.
Workers with doctoral or master’s degrees were also chosen, although work-
ers with master’s degrees were required to have three years’ experience.
26. The LSA Article No. 14–2.
27. The examples of the combination of these criteria are shown in the min-
isterial ordnance as “master’s degree with 3 years of experience,” “bach-
elor’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 consid-
ered to expand the applicability of the limited-term contract to the regular
white- collar workers.
28. 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 self- employed and family employment sectors. This is
partly due to the deregulatory reforms that lift the protective regulations for
the self- employed sector, which became the pressure for women to partici-
pate in employment leaving self- employed or family employment. Thus, it
is not completely independent from the deregulation.
29. 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 con-
sidered as a problem since most of these workers are said to be characterized
as not having ‘appropriate future prospects.’ The government started to sub-
sidize funds to give young workers occupational training, and to reestablish
the channels between education and work.
30. 11.2 percent or 887,000 out of 7.9 million were IT (information technol-
ogy) engineers in 2002. The number of IT engineers is only available
from the 2002 survey. Therefore, the dynamics of this category cannot be
discerned.
31. Since deregulation, the types of industries demanding temporary work-
ers have also shifted, from traditional areas of finance and insurance, to
ICT (information and communication technology) and other high-value-
added service industries (haken rōdō ni kansuru jittai chōsa, reported by Imai
2004).
32. Although the equal treatment of haken workers became an issue for the first
time in 1999, which encouraged THAs to participate in employment insur-
ance, 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).
33. 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
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 work-
ing 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 cal-
culated 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 sokushin-
hō) 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 exten-
sion 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 ‘white-
collar 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).
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 construc-
tion prefer IWHS- One Year to One Month, but it is the opposite at trans-
portation/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 com-
menced 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 unex-
pected (Nakamura 2001: 467).
21. One public representative of the tripartite advisory council reluctantly
admits that the discussion was hastily driven by the interest on product-
ivity skipping the discussion about how to locate the concept of ‘discre-
tionary 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 corpor-
ate activities” (Araki 1999: 7).
22. Even when there was already a labor-management committee, it was neces-
sary to establish a new labor-management council (Rengo 1997d; Araki
1999).
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 repre-
sent two of the most influential industries in Japan, and have strong posi-
tions 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 unre-
solved 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 process-
ing; 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 question-
naires to all the companies that reported their use of the DWS for profes-
sional 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 work-
ers 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
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 divi-
sion 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 work-
ing 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.
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).
7. 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 com-
panies’ products.
8. The creation of the new type of worker is not specific to COMPUJ, and is
used commonly among Japanese electronics companies. The division man-
ager of Corporate System No. 4, who later became the CEO of COMPUJ,
explained that “the concept of SI- er emerged out of the developing open-
ness 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.”
9. The division manager believed that COMPUJ’s business had been passive
in its sales style: just receiving orders. As there was no necessity for cus-
tomization before, active marketing was not necessary. He wanted organiza-
tions 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.
10. After working full-time for the union for several years, union officers of
COMPUJ tend to return to the work organization as managers. This inter-
viewee implied that this job transition is different from union officers in
other companies in the same industry.
11. For further details of the term ‘competency,’ see the next section of this
chapter.
12. 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 introduc-
tion 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 rank-
ings, 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 nonmanage-
rial workers: honkyū (main wage), kakyū (additional wage), shigotokyū (per
assignment), shikakukyū (per ranking and qualification), and sho-teate (vari-
ous allowances). The revision is to reorganize these components into two
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 reim-
bursement 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).
210
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Terms
arubaito temporary workers who are mostly students
buchō name of a high rank managerial position (or the person
who occupies the position); usually refers to the head of
department
haken temporary dispatched worker
kachō name of a middle rank managerial position (or the person who
occupies the position); usually refers to the head of section
keiretsu horizontal and hierarchical networks of Japanese companies
keiyaku temporary workers
kisei kanwa deregulation
kōnai ukeoi a practice of labor lending in which the subcontractor dis-
patches workers to parent or client companies
seika-shugi results- orientation
shingikai advisory council set up under ministries to deliberate policy
issues
shokutaku temporary workers who are mostly rehired elderly by previ-
ous employers
shukkō a practice of labor lending within Japanese company net-
works, referring labor mobility from parent company to sub-
sidiaries without contract transfer
shunin name of an entry level managerial position (or the person who
occupies the position); usually refers to the head of work group
shuntō spring offensive, an institutionalized pattern of collective
bargaining in Japan that has cross-sectional influence
tantō-sha rank and file employee
tenseki a practice of labor mobility with contract transfer within
Japanese company networks
ukeoi subcontracting
paato temporary workers who are predominantly middle-aged
women
Proper names
Denki Rengo Japanese Electrical Electronic and Information Union
Domei Japan Confederation of Labour
Jidosha Soren Confederation of Japan Automobile Workers’ Union
Keidanren Japan Federation of Economic Organizations
Nikkeiren Japan Federation of Employers’ Associations
Rengo Japanese Trade Union Confederation
Sohyo General Council of Trade Unions of Japan
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