Industrial Relations Trends in Japan


1 Enterprise-based Unionism


Enterprise-based unionism is a significant feature of Japanese industrial relations. In this system, trade unions are established within an individual enterprise. They bargain collectively with a single employer. Collective agreements are concluded at the enterprise level. These are the main characteristics of enterprise-based unionism.

              Enterprise-based unions within the same sector often join a sectoral federation of unions and the sectoral federations are affiliated with national confederations. However, sector-level collective bargaining is very rare in contrast with European societies.

An enterprise-based union consists of workers who work in the same company irrespective of their jobs. This means that both blue-collar and white-collar workers are organized in the same union. Enterprise-based unions normally limit their membership to regular workers though there are no legal obstacles which prevent enterprise-based unions from organizing part-time, fixed-term or temporary workers.

              This is due to the fact that the interests of regular workers are different from that of non-regular workers, and they sometimes even conflict. Regular workers are employed under indefinite term contracts and are paid with a monthly salary. In contrast, non-regular workers are usually employed under fixed-term contracts and are paid at an hourly rate. It is understood that regular workers implicitly agree to comply with overtime orders or transfer orders in accordance with business necessity, while non-regular workers usually do not owe such obligations.

              It is the established practice to terminate contracts of non-regular workers before dismissing regular workers. Therefore, the employment security and better working conditions of regular workers are often sustained by the unstable and contingent employment of non-regular workers. This difference between regular and non-regular workers prevents enterprise-based unions from actively organizing non-regular workers within the same company.


2 Decentralized Collective Bargaining and Shunto


The most significant feature of collective bargaining in Japan is its decentralization. Reflecting the organizational structure of trade unions in Japan, most collective bargaining takes place at the company level. Sector-level or national-level bargaining is very rare. As a result of decentralized bargaining, most collective agreements are concluded at the company level. Since their application is confined to the individual company, collective agreements in Japan do not create universal norms which are applied to particular sectors or occupations.

              This decentralized bargaining system has enabled enterprise-based unions and employers to adapt changing socio-economic circumstances swiftly and flexibly. On the other hand, it has several defects, such as the weak bargaining power and the lack of the universal impact across the sector or nation.

              To compensate for the weakness in bargaining power and lack of sector or nation-wide impact, trade union leaders devised a unique wage determination system called gShuntoh (spring wage offensive) in 1955. Under the Shunto system, every spring, sectoral federations of enterprise-based unions and the national confederation set the goal for wage increases and coordinate the time schedule of company-level negotiations and strikes across companies and sectors. According as the schedule, strong enterprise-based unions in a prosperous sector, which are chosen as pattern setters, start negotiations first and set the market price for that year. Other enterprise-based unions then follow suit. The market prices established in Shunto also affect the public sector where strikes are prohibited. In this way, the Shunto strategy has compensated for the limitations of enterprise-based unionism in terms of bargaining power and establishing social standards across companies and sectors.


3 Information and Consultation via Enterprise-based Unions


              There is no general legislation concerning employerfs obligation to inform and consult employeesf representatives in Japan. However, Japanese companies and enterprise-based unions have developed joint consultation committees (Japanese works councils). Majority of such committees are established in the form of collective agreement between a single company and an enterprise-based union.

              In European countries where cross-enterprise unions are prevalent, trade unions and employee representatives are distinctly separate. However, the situation is different in Japan. The members of an enterprise-based union are the employees of the company, and the trade union is a single, exclusive organization composed only of those employees. Therefore, under the joint consultation system, the representatives of labour and management are entirely the same as the parties to the collective bargaining. Moreover, both labour and management conduct discussions and negotiations through these systems in the broad sense. Therefore, collective bargaining and joint consultation are, in fact, difficult to be distinguished in terms of organization and its function.

              As union density has fallen from 55.8% in 1949 to 35.4% in 1970, to 25.2% in 1990, and to 18.1% in 2007, the number of workers who are not organized by trade unions has increased. This is particularly the case for small-and-medium-sized enterprises. In companies with 1000 employees or more, union density is 47.5%. But it is 14.3% in companies with 100-999 employees, and it is just 1.1% in companies with less than 100 employees (2007). This means that many medium-sized enterprise workers and almost all small-sized enterprise workers are virtually excluded from information and consultation procedure which larger enterprise workers can enjoy. Therefore, some labour law academics have advocated the introduction of statutory employeesf representation scheme.


4 Majority Representative and Labour-Management Committee


           Majority representative system is another legal system concerning collective industrial relations which was established by Labor Standards Law (enacted in 1947). The Law stipulates that an employer shall ask the opinion of majority union or ga person representing the majority of workers where no such trade union existsh when he draws up or changes work rules. An employer is also obliged to obtain the agreement of majority union or gmajority representativeh when he orders overtime work. The Law has no explicit provision of who should represent the majority of workers from non-unionized workplace. The Law does not stipulate details such as how to elect majority representative or his competences and responsibilities. The legislators may have thought it just a substitute until trade unions are organized at every workplace. Majority union should be principle, and majority representative should be exception. However, under the long-lasting decline of union density, there are very often gmajority representativesh appointed by the employer without consulting any workers, who tend to be just rubber stamps.

              In 2005, Study group on labour contract legislation set up by Ministry of Health, Labour and Welfare issued a report which advocated the general legislation on labour-management committee. In the report, the committee is proposed to be utilized as a mechanism for determination and modification of working conditions. If the committee or majority union agrees on the disadvantageous change of working conditions or collective dismissals, they may be regarded as greasonableh and gjustifiedh. The topic has been discussed in the tripartite Labour Policy Council in 2006. However, because of the oppositions from trade union side, this idea could not be realized. They insisted that such a huge competence should not be given to non-union committee, which is apt to become rubber-stamp of the employer.


5 Towards a New Employeesf Representation System?


              Because the coverage and the function of both enterprise-based union and gemployeesf representativeh overlap in Japan, it is particularly difficult to design employeesf representation system. If such an organ can be set up at an already unionized workplace, it may affect the activities and membership of the union badly. Even in a non-unionized workplace, the existence of non-union employeesf representative may hinder the motivation of workers to establish a new trade union. However, the decline of union density and de facto exclusion of huge number of workers from proper information and consultation procedure make it unavoidable to review the present industrial relations system.

Indeed, Japan Trade Union Confederation (RENGO) already prepared its own proposal on employeesf representation system. In its proposal, JTUC-RENGO criticizes that current majority representative lacks independence from employer and democratic legitimacy and advocates the establishment of gemployeesf representative committee,h which consists of only employeesf representatives who are formally elected by all employees. The most conspicuous characteristic of the proposal is that the committee shall be set up at only workplace without majority union. This means majority unions should function as employeesf representative. Moreover, the committee should be dissolved when a majority union is established. This proposal intends to strike a balance between the functional retention of current enterprise-based unions and the need of establishing new employeesf representation system.


6 Regulatory Reform and Industrial Relations


              From 1990s, Japanese labour market has experienced successive deregulation or gregulatory reform.h Council for Regulatory Reform which was established within the powerful Cabinet Office has advocated deregulations in working time regulations, upper-limit of fixed-term contract or limitation of the use of temporary agency work. These policies have been realized through the time-consuming discussions in the tripartite Labour Policy Council within the Ministry of Health, Labour and Welfare. From 2005 on, however, the social atmosphere has been completely reversed from enthusiasm for deregulation to re-regulation in the fear of gpolarized society.h For example, the intention of introducing so-called gwhite-collar exemptionh or opt-out of particular workers from working time regulation failed because of harsh criticism in 2007. Regional minimum wages were vastly raised with the intervention of the Cabinet in 2007 and in 2008. Moreover, the discussions on temporary agency work in the tripartite council changed the course from further deregulation to limitation and regulation. The proposal for the revision of TAW Law (providing prohibition of short-term TAW, promotion of indefinite contract, fair treatment of TAW workers etc.) is now in the Diet (Parliament).

              Faced with this sudden gbacklash,h in 2007, Labour Taskforce of Council for Regulatory Reform published defiant policy paper entitled gTowards a labour market of de-polarization and vitality.h In this paper, almost all regulations in the labour market are harshly criticized. gRemaining myth that strengthening the rights of workers leads to the protection of workers is wrong. Raising minimum wages leads to the unemployment of workers with under-productivity. Strengthening the rights of female workers leads to abstention of hiring of female workers. Regulation of dismissals of regular workers leads to the shift to non-regular workers. Direct employment of long-served TAW workers by user companies leads to cancellation of TAW contracts. Upper limit of working hours leads to circumvention of the law.h These assertions were included in the official report of the Council. Ministry of Health, Labour and Welfare immediately rebutted these assertions.

              Moreover, the Council for Regulatory Reform also radically criticized the tripartite policy-making process in the labour issues. It insisted that: gthe opinions of the trade unions which mainly consist of regular workers do not represent the interest of non-regular workers. The current policy-making process in which representatives of employers and workers coordinate their interests should be abolished. Instead, policy-making process should be entrusted to a efairf policy-making organ, which only hears the opinions of stakeholders.h Of course, this assertion completely denies the tripartite principle in the labour issues which is enshrined in the ILO Constitution.

              However, even if the assertion is biased, it has a point in revealing the weakness of the foundation of trade unions representing all workers. If most non-regular workers are not organized, how can trade unions which mainly consist of regular workers represent non-regular workersf interest which frequently contradicts that of regular workers? This is a challenge for Japanfs trade union movement.