2001 annual review for Japan

This record reviews 2001's main developments in industrial relations in Japan.

Economic developments

GDP declined by 0.5% in real terms in 2001, representing a reversal in trend after the relatively high growth of 2.4% in the previous year. A major factor behind this was listless private investment, together with sluggish private consumption expenditure: private fixed investment, which had recorded a substantial increase of 10.4% in 2000, increased by a mere 0.4% in 2001, and private housing investment shifted from an increase of 1.6% to a substantial decline of 7.9%. Moreover, external demand made a substantial negative contribution to GDP due to a decline in exports (a fall of 6.6% in real terms) against a backdrop of the slowdown in the world economy. On the other hand, in the midst of sluggish domestic private demand and external demand, 'official fixed capital formation' (public investment) - a variable policy of the government - which had declined by 9.8% in the previous year, declined by 3.4% in 2001.

Reflecting this economic trend, the unemployment situation deteriorated, with a steeper decline in the number of employed. The unemployment rate in 2001 was 5.0%, 0.3 points higher than the previous year.

A distinctive characteristic of recent years has been the continued decline in price levels, and this continued in 2001. Even corrected for the GDP deflator (an indicator of inflation for the whole economy over one or more years, derived by dividing total GDP at current prices by total GDP at constant prices), prices declined by 1.4% in 2001, after declining by 1.4% and 2.0% in 1999 and 2000 respectively. In these circumstances, several senior government officials were of the opinion that the economy was on a moderate deflationary trend.

Political developments

In January 2001, central government reforms were implemented as part of an administrative reform, with the result that the system of one Prime Minister's Office and 20 ministries and agencies was reorganised into a system of one Cabinet Office and 12 ministries and agencies. In conjunction with the establishment of the Cabinet Office for the purpose of strengthening cabinet functions, a system has been established under which a vice-minister and at least one parliamentary secretary are appointed to each ministry or agency and participate in the planning of important policies, with the aim of 'politician-led' policy planning. The Ministry of Labour was formerly in charge of labour issues, but such issues are now handled by the Ministry of Health, Labour and Welfare, under which the former Ministry of Health and Welfare and the Ministry of Labour were unified.

At the beginning of 2001, the coalition government of the Liberal Democratic Party (LDP), Komeito and the Conservative Party, led by Prime Minister Yoshiro Mori was still in power. However, its approval rate remained low due to the ignominious label of the 'secretly elected Prime Minister' which had attached itself to Mr Mori since the inauguration of his cabinet (JP0112157F), as well as to what were widely regarded as his imprudent statements and behavior. In particular, the Prime Minister’s handling of the unfortunate sinking of a fisheries senior high school training ship by a US nuclear submarine off the Hawaiian Islands in February 2001 was perceived as clumsy, leading to considerable doubt being cast on Mr Mori's aptitude for crisis management.

In these circumstances, Prime Minister Mori announced his intention to step down in April 2001 after the approval of the budget for the 2001 fiscal year and after witnessing the adoption of important bills necessary for the execution of the budget. Thus, the Mori cabinet resigned en masse without being able to overcome the unpopularity that had existed since its inception, although it achieved some results, including the enactment of the Information Technology (IT) Basic Law, setting the target of the 'regenesis of Japan'.

After Mr Mori's departure, Junichiro Koizumi took office as Japan's 87th Prime Minister. Since he was elected president of the LDP via an election process in which the collective opinion of party members was represented, and then elected Prime Minister in a vote in the Diet (parliament), he was free from the dubious circumstances that surrounded the birth of the previous administration. Moreover, the subsequent cabinet formation process was vibrant, being unrestrained by past practices, and the Koizumi administration enjoyed a high approval rate for a considerable period after its inauguration in April 2001, maintaining a warm relationship with public opinion. The policy stance of the administration is pro-reform, as demonstrated by the slogan 'structural reform with no sacred cows'. Reform is, however, being accompanied by 'pain'. While it is necessary to enhance the 'safety net' to cope with this pain, Mr Koizumi's basic philosophy is that the implementation of reform in the face of such pain will, as is implied in the slogan 'no growth without reform', eventually generate desirable results.

In June 2001, the Koizumi cabinet formulated 'muscular policies' for the economic and financial management of bad debts, making the most of advisory organs, such as the Council on Economic and Fiscal Policy established under the Cabinet Office as a result of the central government reform. Starting with this measure, the cabinet put forward a 'reform work schedule'- a plan concerning the process for implementing these policies. Moreover, the Koizumi administration proceeded actively to examine the reform of 'special public corporations', along with regulatory reform, and had formulated a succession of plans concerning their direction by the end of 2001.

While various plans have been presented in this way, the disposition of bad debts, which is regarded as the most important agenda item, is far from progressing satisfactorily. The Koizumi administration marked its first anniversary in April 2002. While the sluggishness of the economy and the severity of the employment situation continue, criticism and a sense of irritation that although plans are made, they are not carried through, appear to be increasing, not only among opposition parties but also among the general public.

Collective bargaining

General

In Japan, there is no practice of labour-management negotiations to determine working conditions at national or regional level. However, it should be noted that enactment or amendment of labour legislation or major labour policy changes are, in most cases, first discussed in tripartite (public authorities, unions and employers) deliberative councils and a certain level of consensus between the parties is reached in advance. In this sense, the government's labour policy can be regarded as the result of mutual agreement between labour and management.

Negotiations between labour and management over key working conditions, and wages and salaries in particular, are predominantly held in spring each year; thus, such negotiations are generally called the Shunto, or 'spring labour offensive'. Although the Japanese Trade Union Confederation (Rengo), the largest national trade union centre, sometimes plays the role of a general 'mood-maker', actual bargaining and agreements are conducted and concluded between labour and management in individual companies. Moreover, the general pattern for the spring-time negotiations is that major manufacturers in leading industries, such as electrical goods or auto manufacturers, take the lead, and are followed by other large companies and finally by small and medium-sized enterprises.

Pay

Most companies have a system of periodic wage increases for regular workers according to which, barring exceptional circumstances, there is a virtually automatic annual increase in wages as employees move up the wage scale. This annual increment accounts for the major portion of the spring wage increase so that the so-called 'base-up' portion is in fact very small.

In the 2001 spring-time negotiations, since the economic situation was considered relatively favourable, despite general sluggishness, and corporate profits were improving, Rengo adopted a policy targeting the stimulation of the economy and the 'stabilisation of national life' through a substantial wage increase, including a basic demand for a 1% increase in the wage level in addition to periodic wage increases (see above). Moreover, by upholding a basic demand for a wage increase for part-time workers, Rengo clarified its stance of making efforts to improve the treatment of part-timers. Faced with this position, management countered by arguing that a wage increase was unnecessary. The employers' position was that companies could not afford to agree to a basic wage increase, taking into account factors such as the continued harsh economic situation and continuing globalisation, and that if any offer were to be made it would be more appropriate to offer lump-sum payments, such as bonuses, based on improvement, if any, in corporate earnings.

The provisions of agreements reached in major enterprises surveyed by the Ministry of Health, Labour and Welfare every year indicate the results which emerged from the interplay of these basic arguments from unions and employers. The average wage increase achieved in the spring-time negotiations in 2001 was 2.01%, which was lower than the 2.06% for the preceding year, and indeed the lowest level since the survey began.

According to another survey by the Ministry of Health, Labour and Welfare - the Survey on Wage Increase, covering enterprises employing 100 persons or more - 21.3% of enterprises did not make any wage revisions in 2001, up from 19.1% in the preceding year, and the highest level since the survey began. Overall, the low wage increase rate in 2001 can be said to be due to both the fact that the increases agreed were low, and the fact that the number of enterprises that eschewed wage increases, including periodic wage increases, increased.

On the other hand, an examination of agreements on lump-sum payments - which account for a substantial portion of employees' income in major enterprises (assumed to be about 25% on average) in Japan - reveals that the amount of the payments awarded in summer 2001 increased by 2.86% over the preceding year, following a decline of 0.54% in 2000. Year-end lump-sum payments increased by 1.76% in 2001 compared with the preceding year (when there was an increase of 0.76%). Thus, lump-sum payouts in 2001 held firm. This meant that, at least in major enterprises, efforts were made to increase lump-sum payments to some extent, against the backdrop of some improvement in corporate performance in the preceding year, while basic wages were restrained.

The timing of lump-sum payment negotiations varies widely: for example, they may be negotiated: at the same time as spring-time pay raise negotiations; between spring and summer, separately from spring-time pay raise negotiations; or between autumn and winter. Moreover, negotiations are conducted either with respect to both summer and year-end lump-sum payments for the year, or separately for summer and year-end lump-sum payments.

Workers whose wages are determined by the spring-time negotiations do not necessarily constitute the majority of the workforce in Japan, given the unionisation rate - indeed in 2001, the proportion of the workforce directly covered by the Shunto was 20.7% (compared with 21.5% in 2000). It should be noted that the wage increases which result from labour-management bargaining in these sectors, while having a major influence on general wage levels, are not always directly reflected in average wages.

Looking at the trend in average wages based on the Ministry of Health, Labour and Welfare's Monthly Labour Survey (which covers establishments with five or more employees), total cash earnings in 2001 were JPY 351,335 per month (EUR 3,232), which represented a 1.2% decline over the previous year (compared with a 0.5% increase in 2000) - a shift to a decrease from an increase in the previous year. This overall decrease in 2001 was composed of a 0.5% decline in the regular component of the wage (compared with a 0.7% increase in the preceding year), a 4.2% decline in the non-regular component of the wage (compared with a 4.4% increase in the preceding year) and a 3.0% decrease in bonuses and other special payments (compared with a 1.1% decrease in the preceding year). This reflected the severe economic conditions, including the substantial decline in the non-regular wage component due to a further deterioration in the economic situation in the latter half of the year. Real wages declined by 0.5% despite the fall in prices.

As indicated, a slight decline in workers' wages, together with the sluggish employment situation in 2001, constituted one of the major factors which account for the absence of an upsurge in personal consumption as a whole.

Working time

Apart from the minimum working hours standards laid down in the Labour Standards Law (in principle, 40 hours per week and eight hours per day), no other national standards in this area have been agreed between labour and management. In general, working hours are decided on the basis of negotiations between labour and management at the individual enterprise level.

According to the results of a survey by the Ministry of Health, Labour and Welfare (the General Survey on Wages and Working Hours System) as of January 2001, average scheduled weekly working hours were 39 hours 14 minutes for full-time workers. This was the same as the result of the previous survey at the end of December 1999. However, there is a fairly substantial disparity according to the size of the enterprise, with scheduled weekly working hours ranging from 38 hours 34 minutes for companies with 1,000 employees or more, to: 38 hours 35 minutes for companies with 300-999 employees; 38 hours 57 minutes for those with 100-299 employees; and 39 hours 24 minutes for those with 30-99 employees. Smaller enterprises thus have longer scheduled weekly working hours. Scheduled working hours are determined by collective agreements or 'work rules' (uniform rules on working conditions that employers are required to draw up by law) with the minimum condition that these conform to the minimum standard laid down by the Labour Standards Law. Although scheduled working hours are on the decrease on a long-term basis, in the short term, the changes are small except for periods before and after any changes in the minimum standard laid down by the Labour Standards Law.

On the other hand, substantial changes in the hours actually worked - referred to as 'total actual hours worked'- occur from time to time. Of these, the hours worked within the scheduled working hours laid down by the company are referred to as 'scheduled working hours' and any additional hours worked are referred to as 'non-scheduled working hours'. These hours are also covered by the abovementioned Monthly Labour Survey. According to this survey, the monthly average 'total actual hours worked' in 2001 was 153.0 hours (×12 months = 1,836 hours), a decrease of 0.8% over the preceding year (compared with an increase of 0.7% in 2000). Of these, 'scheduled working hours' accounted for an average of 143.6 hours per month in 2001, a decrease of 0.7% over the preceding year (compared with an increase of 0.5% in 2000). Average monthly 'non-scheduled working hours' stood at 9.4 hours in 2001, a decrease of 4.4% over the preceding year (compared with an increase of 3.6% in 2000), thus recording a substantial decline, mainly in the latter half of the year when the economy deteriorated further.

According to the calculations of the Ministry of Health, Labour and Welfare, in 1999 the annual total actual hours worked (for manufacturing industry production workers) were almost the same in Japan, the USA and the UK (1,942 hours, 1,991 hours and 1,902 hours respectively) but showed considerable disparity with France (1,672 hours (1998)) and Germany (1,517 hours (1997)).

Job security, training and skill development

Employment stability and skills development are important issues for both labour and management. However, in terms of collective labour-management relations, since these matters are subject to discussion at the individual company level, there is no systematic data available. Nonetheless, the results of the Survey of Labour-Management Communication by the Ministry of Health, Labour and Welfare shed some light on this issue. As reported in the 2000 EIRO annual review for Japan, the 1999 survey found that issues such as 'temporary lay-off, workforce rationalisation and dismissal' and 'education and training plans' are dealt with by a majority of the labour-management consultative bodies which exist in around 40% of private-sector establishments with more than 30 employees. No new survey data are available since 1999.

Regarding employment stability, employer-instigated dismissals for purely economic reasons may cause problems, but no formal regulations exist within Japanese labour law restricting this type of dismissal. However, the accumulation of legal precedents has seen the establishment of the legal principle that dismissal without a rational reason is invalid. Due to the high priority assigned to employment stability in enterprises, together with the influence of this legal principle based on precedents, it can be said that dismissals are generally handled with caution.

With poor economic conditions continuing, the number of companies engaged in restructuring, including workforce reductions, is increasing and even those companies which formerly gave strong support to employment stability for regular workers are beginning to show signs of a change in direction. In particular, a succession of plans were announced for personnel reductions in the immediate aftermath of the terrorist attacks on the USA on 11 September 2001, when the outlook for the world economy appeared extremely bleak. In response to the recession in the IT sector, the scale of personnel reduction plans announced by major Japanese electrical manufacturers was particularly remarkable, with some tens of thousands of workers slated for redundancy (see below under 'Structural change - more firms to cut jobs in IT slump'). In terms of the contents of such plans, many of the personnel reductions were to be effected in multinational's overseas establishments and, even when they were effected domestically, there were many cases of opting for non-replacement of employees retiring normally, so the proportion of workforce reduction through means such as voluntary retirement schemes was not so great. However, it cannot be denied that such plans constituted a factor underpinning the bleakness of the current employment environment. In such circumstances, the unemployment rate (it should be noted that Japan's unemployment rate is derived based on the situation in the week at the end of each month), which was 5.0% for August 2001, rose to 5.3% for September, and was 5.3% for October, 5.4% for November and 5.5% for December.

More detail on unemployment is provided by the Labour Force Survey conducted by the Statistics Bureau of the Ministry of Public Management, Home Affairs, Posts and Telecommunications (which covers about 40,000 households). Among the wholly unemployed, in the first half of 2001 the number of those who were involuntarily unemployed was smaller than in the previous year. However, this figure began to increase in August, and the margin of increase became greater in ensuing months - an increase by 100,000 in September over the corresponding month in 2000, by 160,000 in October, by 290,000 in November and by 310,000 in December.

Thus, it is probably true that the orientation among Japanese enterprises toward employment stability and avoidance of unemployment has begun to weaken. For this reason, vigorous discussion took place in 2001 between Rengo and the Japan Federation of Employers' Associations (Nikkeiren) on the importance of measures to sustain employment, and in August 2001, agreement was reached to continue discussions along these lines. In these circumstances, approaches to so-called 'work-sharing' (ie sharing out employment opportunities though reducing working hours) were adopted for debate. In brief, the conclusion was that while the employer side should endeavour to maintain/secure employment, the labour side should respond flexibly to reductions in working hours, as well as to the wage situation resulting therefrom. The government subsequently joined the debate on work-sharing, and a certain level of consensus was reached, with the argument for work-sharing becoming one of the trade unions' core demands in the 2002 spring-time negotiations, in the form of 'a demand for sustainable employment'.

Legislative developments

There have been a number of major revisions to employment law in recent years in response to changing socio-economic conditions. In 2001, enactment of and amendments to labour-related laws included the following.

  • Partial amendment of the Employment Insurance Law (came into force in April 2001). Under this amendment, the period for payment of unemployment benefits now varies based on the reason for termination of employment. Where a worker simply resigns for personal convenience or where the timing of old-age retirement is known and it is possible to make preparations in advance, the period of eligibility for payment of unemployment benefits has been shortened, but where there is a valid reason for dismissal or resignation, the period of payment has been lengthened.
  • Law concerning the Continuation of Employment Contracts Following the Division of a Company (came into force in April 2001). In line with an amendment to the Commercial Code concerning the division of a company into separate organisations, this law lays down rules concerning the continuation of employment contracts in the event of such a division. The law stipulates that, in cases where the contracts of workers who are engaged in work affected by the division are not carried over to the new organisation, those workers can lodge an objection and have the employment contract continued.
  • Employment Measures Law etc (came into force in October 2001). For the purpose of promoting smooth re-employment in response to changing socio-economic conditions, the Employment Measures Law, the Law Concerning the Promotion of Local Employment Development, the Human Resources Development Promotion Law and a number of other statutes were amended simultaneously. The main points of the amendment are that: those employers which make an employment adjustment that generates a large number of redundancies at one time are required to adopt a plan to support re-employment systematically ahead of termination; and employers are required to endeavour to ensure equal opportunities without, as a rule, setting an age limit at the time of recruiting/hiring workers.
  • Law on the Promotion of the Settlement of Individual Labour Disputes (came into force in October 2001). This law is aimed at providing a structure for a scheme for dealing with the not infrequent occurrence of individual disputes between employers and workers, and of promoting the smooth and simple settlement of such disputes. In concrete terms, counselling in such cases will be provided by (prefectural) labour bureaus - local offices of the state, established in each prefecture - or by others, and, as necessary, advice/guidance will be provided by the director of the bureau. Moreover, good offices will be offered, at the request of a party concerned, by the 'dispute adjustment committee', which is established within the labour bureau.

The organisation and role of the social partners

The Ministry of Health, Labour and Welfare's Basic Survey of Labour Unions gives an overview of the situation of trade union organisations. As of June 2001, there were 11,212,000 union members in Japan, a decline of 326,000 or 2.8% from the previous year. These figures confirm a continuing, gradual decline in union membership over the long term. The proportion of union members among the total number of employed persons, or estimated unionisation rate, was 20.7% in 2001, a 0.8 point decrease from the previous year.

One of the reasons often given for the decline in the unionisation rate is that unions formerly concentrated their attention on 'regular' employees and have failed to adjust to the diversification of employment patterns toward more part-time and other 'non-regular' forms of employment. For example, if we look at the organisation of part-time workers, there were 280,000 union members among this group n 2001 (260,000 in the previous year) with an estimated unionisation rate of 2.7% (2.6% in the previous year), representing a gradual increase - however, the rate is still quite low.

Turning to the membership of the major trade union federations: in 2001, Rengo had 7,120,000 members (a decrease of 195,000 from the previous year); the National Confederation of Trade Unions (Zenroren) had 1,012,000 members (a decrease of 24,000); and the National Trade Union Council (Zenrokyo) had 250,000 members (a decrease of 11,000).

As national centres, Rengo and the Japan Federation of Employers’ Associations (Nikkeiren) represent the interests of the workers' and employers' sides respectively. In addition to being engaged in information dissemination and publicity activities, they endeavor to promote their respective positions by undertaking a wide range of survey and research activities. Accordingly, the Rengo white paper and the Report of the Nikkeiren research committee on labour problems, which are issued immediately before the Shunto each year, attract considerable attention as the major expressions of their respective positions.

It was agreed that Nikkeiren and the Japan Federation of Economic Organisations (Keidanren) would merge to form the Japan Business Federation (Nippon Keidanren) on 28 May 2002. Hiroshi Okuda, currently chair of Nikkeiren, was named as the chair of the new organisation.

The Ministry of Health, Labour and Welfare's latest Survey on Labour Unions’ Activities (which is conducted every five years), conducted in July 2000, was published in July 2001. It found that the percentage of trade unions which reported that the workplaces in which they organised had undertaken revisions to the wages/retirement allowance system in the past three years was 56.0%. Regarding the contents of these revisions, 'new establishment or expansion of payment based on job/payment according to function/payment by results' accounted for 53.0%, and 'adjustment of the calculation method for retirement allowance' for 26.5%. The proportion of unions that played an active part in such revisions of wages/retirement allowance systems was 94.0%. The issue given highest priority in these revisions by the unions was 'securing transparency and fairness/impartiality', at 60.1%. With respect to the fact that in recent years there has been a marked trend among employers towards the introduction of skill factors in the awarding of salaries, the most common approach adopted by unions (47.9%) was that 'it is acceptable if the method of evaluating the skills of workers is appropriate', followed by 'even if it is an unavoidable trend, measures are necessary so that workers will not be placed at a disadvantage' (32.6%). Generally speaking, while understanding management policies, trade unions are endeavouring to be cautious so as to avoid workers being disadvantaged when such policies are implemented.

Industrial action

The Statistical Survey of Labour Disputes, issued annually by the Ministry of Health, Labour and Welfare, provides an overview of trends in labour disputes. The latest edition available is that covering 2000. Bearing in mind that 2000 was a year in which there were signs of relative economic recovery, there were 958 labour disputes, involving a total of 1,117,000 workers. Compared with the previous year, the number of disputes decreased by 144 (13.1%) and the total number of participants by 17,000 (1.5%). In 2000, there were 305 disputes involving strike action, in which 85,000 workers participated. The number of working days lost was 35,000. Compared with 1999, this represented a decrease of 114 strikes (27.2%), 22,000 participants (20.4%) and 52,000 working days lost (59.7%).

Looking at the disputes in terms of the major demands made, wage increases were the largest single item at 310 cases (32.4%), followed by non-regular wage payments (bonuses) at 224 cases (23.4%), and opposition to dismissal and reinstatement of dismissed workers at 147 cases (15.3%). A comparison of these figures with the statistics for 1999 reveals that in 2000, there were 75 fewer disputes over wage increases, 12 more disputes over bonuses, and 61 fewer disputes over dismissals or reinstatement of dismissed workers. The decrease in disputes involving dismissals or reinstatements was particularly marked.

Examining the number of disputes involving strike action according to the affiliation of the workers involved with one of the three leading union federations, we find that in 2000 Rengo was involved in 118 disputes with 33,000 participants and 11,000 working days lost. The figures for Zenroren were 99 disputes, 38,000 participants, and 10,000 working days lost, and for Zenrokyo 24 disputes, 1,000 participants and 1,000 working days lost.

New forms of work

Employment patterns continue to diversify over the mid to long term. The Special Labour Force Survey is issued by the Statistics Bureau of the Ministry of Public Management, Home Affairs, Posts and Telecommunications in February each year. According to this survey, the percentage of employed persons (excluding those in managerial positions) who are 'regular' employees declined from 80.2% to 72.8% between 1991 and 2001. Conversely, the percentage of part-time workers increased from 11.5% to 15.4%, and the percentage of casual workers (known as 'arubaito' in Japanese) from 4.7% to 7.6%. Employment patterns are indeed diversifying.

With respect to part-time workers, the percentage of those who occupy important positions (for example, restaurant managers) is increasing, and the equal treatment of part-timers and full-timers has become an issue. In the Japanese labour market, where the concepts of different types of work or of hourly wages are not clear, it is not always possible to make judgments on the basis of the principle of 'equal pay for equal work', and there is a tendency to search around for an ideal form of equal (balanced) treatment of different kinds of workers based on Japanese traditions.

Even among regular employees, the number of employees working non-traditional schedules is increasing. For example, the number of employees working under a flexitime system increased gradually from 4.8% in 1990 to 8.7% at the end of 2000. This percentage is higher (14.9%) in large corporations employing 1,000 persons or more; that is, one in seven workers in such firms is working flexitime.

Personnel practices are also becoming increasingly diversified. More than 90% of corporations with 300 or more employees have a personnel evaluation system in place. A comparatively large proportion of companies, particularly large corporations, have introduced new personnel management systems, including self-evaluation by employees, publicising of job openings in-house and 'multi-track' personnel systems.

On the other hand, the number of workers engaged in telecommuting is also increasing. While it is extremely difficult to collect systematic data on telecommuting, according to a report by the Japan Telework Association, the telecommuting population (total of those working at home and those working in satellite offices) was 2,464,000 at the time of the survey in 2000; this figure is expected to rise to 4.45 million in 2005.

These changes are an indication that the former 'group-based' employment contracts under which all workers shared common conditions will increasingly be replaced by contracts of an individual nature. In these circumstances, the adaptations and changes that this will necessitate in existing patterns of labour-management relations can be expected to become the subject of considerable debate.

Structural change - more firms to cut jobs in IT slump

Amidst the slump in the IT sector, many electronic-device and computer companies announced plans to reduce their workforces in 2001.

Toshiba Corp announced plans to spin off its semiconductor and memory-chip business, which would merge with another company and in the process shed some 17,000 workers in Japan. Approximately 10,000 of these jobs would be lost due to 'natural wastage'. The company planned to rely on an early retirement scheme operating over a limited period to cut the remaining 7,000 positions. Toshiba is the biggest supplier of semiconductors in Japan, but on this occasion its main factories were subject to restructuring. The plan was to affect some 30% of its production base, or six factories, in the form of mergers or shutting down production lines.

Voluntary retirement was also expected to become a reality at Matsushita Electric Industrial Co Ltd, which had previously been a model of Japanese-style business management through steadfastly maintaining the lifetime employment of skilled workers. Voluntary retirement was recommended for some 80,000 workers aged 58 and younger with service of 10 years or longer. The company did not set a limit on the maximum number of retirees, and was prepared to pay the retirement allowances laid down in company regulations, together with an extra payment of, at a maximum, 2.5 times the annual salary. The workforce reduction plan was be carried out over an extended period, with no definite deadline set for applications for voluntary retirement. Matsushita aimed to carry out a fundamental restructuring of both its home electronic goods and computer-related businesses.

Many of the restructuring plans announced by major electronic machinery companies were characterised by the closure and sale of overseas factories. Hitachi Ltd announced that it would slash 4,500 jobs abroad within the fiscal year by selling factories in Malaysia and Singapore that produced display tubes for personal computers. It would also cease production of electrical equipment systems for automobiles in the UK, entrusting the production to US manufacturers instead. Fujitsu Ltd was expecting to target 11,400 overseas jobs in its projected 16,400 job cuts. In a similar fashion, NEC was to slash 4,000 jobs, 1,500 of them abroad; and Aiwa a total of 5,000 jobs, 3,600 of them abroad. Such moves seemed to indicate a change in policy by Japanese firms concerning the role of their overseas operations.

Industry Labour Situation Survey

The Ministry of Health, Labour and Welfare's Industry Labour Situation Survey for 2001 investigated corporate initiatives and labour practices brought about by the globalisation of the economy. The Ministry conducted the survey in September 2001 among 4,000 private sector companies throughout Japan that consistently employed 30 or more employees. Responses were sent in by 3,153 companies (77.1%).

The survey found that 7.6% of all the companies surveyed conducted business in other countries, and that 47.9% of companies with around 1,000 employees were conducting business operations overseas. In terms of country/region, a total of 60.2% of the surveyed companies with foreign operations were operating in Asia (not including China). This was followed by China (54.4%), North America (27.3%), and Europe (17.4%).

A high percentage of large companies stated that they planned to make inroads into overseas markets, or expand their existing overseas businesses. By business category, 16.9% of the companies in the manufacturing sector replied positively, followed by finance/insurance companies (12.6%), and wholesale and retail as well as food and beverage companies (8.8%). When asked about their reasons for advancing into overseas markets, 55% cited 'to expand or develop their markets', followed by 'to secure cheap labour' (42.5%), and 'to procure cheap raw materials and parts' (32.5%).

The survey also studied the employment status of foreign workers in Japan. When asked to cite the channel through which they hired these foreign nationals, 47.2% of the companies apparently did so 'through personal connections', followed by 'through private job placement offices in Japan' (19.5%), and 'through public employment security offices in Japan' (13.8%).

Outlook

Recently, there have been signs of improvement in the world economy, which was on the verge of an extremely bleak situation particularly in the latter half of 2001. Signs of recovery are also evident in the IT sector, which was previously overshadowed by pessimism, and the view is becoming stronger that there is no need to be excessively pessimistic. While these trends basically constitute bright factors for the Japanese economy and its employment situation, which continues to be sluggish, it is difficult to anticipate a straightforward economic recovery if the collapse of the so-called 'IT bubble' implies a change in the terms of industry profitability. It has to be said that the Japanese economy, which has not yet succeeded in solving the question of bad debts, will continue to face a number of crucial tests.

This review was provided by the Japan Institute of Labour. However, it does not represent the organisational views of the Institute but is a personal paper by the author, Yutaka Asao.

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