2002 annual review for Japan

This record reviews 2002's main developments in industrial relations in Japan

Economic trends

Real GDP growth for 2002 was 0.1%, marking a second consecutive year of economic stagnation. Behind this was a downturn in consumer spending in the private sector, accompanied by a contraction in private investment due to a decline of 4.9% in corporate capital expenditure (following a 1.3% increase in 2001) and of 4.8% in housing investment (following a 5.5% decrease in 2001). Domestic demand fell 0.6% (compared with a 1.1% increase in 2001) due to a downturn in government spending caused by continuing cutbacks in investment (in public works). Meanwhile, the effects of a moderate recovery in the global economy served to push exports up 8.2% (following a 6.1% decline in 2001) and to generate an upswing of 0.7% (down 0.7% in 2001) in external demand, enabling the economy to avoid negative growth by a narrow margin. However, although the downturn in the Japanese economy was generalised, viewed in terms of fluctuations in economic indicators and the business cycle, there were indications that - in contrast to the slowdown of 2001 - 2002 marked a period of relative recovery.

Reflecting these trends in the economy, the working population again contracted, having increased on a year-on-year basis from spring 2000 to autumn 2001, and there was further deterioration in the employment situation as employers made deeper cuts in their workforces. The unemployment rate was 5.4% on an annualised basis in 2002, exceeding the rate for the previous year by 0.4 percentage points. On a monthly basis (seasonally adjusted), the unemployment rate fluctuated at a level of around 5.3%-5.5% at the beginning of 2002 and showed signs of leveling off as the year continued.

A continuing decline in prices has been a marked feature of the Japanese economy in recent years, as demonstrated by 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), which fell by 1.5% in 1999, 1.9% in 2000, 1.6% in 2001 and 1.6% in 2002, and is still decreasing. Accordingly, there now appears to be unanimous consensus that the Japanese economy is on a moderate deflationary trend.

Political developments

The government is a coalition of the Liberal Democratic Party (LDP), Komeito and the Conservative Party. The current cabinet led by Prime Minister Junichiro Koizumi, which was inaugurated in April 2001, remained in power throughout 2002, with the Prime Minister adhering to his slogans: 'structural reform with no sacred cows' and 'no growth without reform'.

In his policy address given at the opening of the ordinary session of parliament (the Diet) in February 2002, Mr Koizumi stated that he intended to set on track the reforms started in the previous year and to generate increased momentum for reform. He described 2002 as 'a year of all-out reform' and declared his intention to push through the reforms with which he had been grappling since taking office. His key policy objectives were the disposal of non-performing loans - part of a clean-up of the financial sector that is intended to revive the economy - as well as reforms of quasi-governmental corporations and deregulation.

A September cabinet reshuffle saw Mr Koizumi bolster his stance on financial reform. with Hakuo Yanagizawa, the minister of financial services, being replaced by Heizo Takenaka, who took up two ministerial portfolios at financial services and economy. Mr Takenaka lost no time, announcing his intention to accelerate the disposal of non-performing loans at major banks in October and issuing a 'financial sector revival programme' aimed at bringing the issue to a close by March 2005.

The government made headway with legislation based on a 'consolidation and rationalisation plan' for quasi-governmental corporations that was announced in December 2001, and many public corporations are slated to be restructured as independent administrative organisations between 2003 and 2004.

The Council for Comprehensive Regulatory Reform, an advisory body that has been pursuing comprehensive investigations into the reform of regulation, put forward a number of new proposals in December 2002 and set deadlines for key reform items. Further, legislation relating to the establishment of 'special zones for structural reform' was enacted in December, with the work of setting up the zones expected to achieve 'critical mass' in and after 2003.

In terms of other political and policy developments, 2002 was a good year for diplomatic relations with some considerable achievements being made. The year opened with an international conference on reconstruction assistance to Afghanistan in January, which made a considerable contribution toward the efforts being undertaken in that country. 2002 also saw: the acceptance of the Kyoto protocol, which seeks to prevent global warming; the first Asian FIFA football World Cup, which was jointly hosted by Japan and Korea; and the 'Pyongyang declaration' between Japan and North Korea in September. Domestically, aside from by-elections the year passed without a national election and, although a number of politicians were involved in money-related scandals, 2002 was a relatively stable year in politics.

However, even after the year had ended there was no escaping the impression that 2002 had been another 12 months of policy framework building, rather than actual change. The non-performing loan portfolios of the major banks, rather than decreasing, even appeared to increase. There was some regulatory easing, but the effects were not as marked as initially expected. The government gave its habitual response to criticism from the opposition and the general public that its endless plans were failing to produce reform, merely stating that progress was in fact being made. In April 2003, the Koizumi government had been in power for two years, a singular feat in recent years.

Collective bargaining


In Japan, there is no practice of labour-management negotiations to determine working conditions at national or regional level. However, the enactment or amendment of labour legislation and any major labour policy changes are, in most cases, discussed in tripartite councils comprising representatives of public authorities, trade unions and employers, 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 (JP0211101F).

Negotiations between labour and management over key working conditions, which focus on wages and salaries, are predominantly held in spring each year, and accordingly the negotiations are generally referred to as 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 wage negotiations is that major manufacturers in vital industries, such as electrical goods and auto manufacturers, take the lead, followed by other large companies and finally by small and medium-sized enterprises (SME).

With economic conditions continuing to be bleak, the general mood of the 2002 Shunto wage negotiations was that safeguarding jobs would take precedence over pay increases. For the first time, Rengo broke from its tradition of presenting a unified demand for an increase in basic monthly pay and focused its demands on the two pillars of 'regular' annual pay increases and maintaining employment levels. (To explain 'regular' annual pay increases, the wage increases negotiated in spring relate only to the basic component of the wage. However, in addition to the basic component, there are 'non-regular' components and bonus payments, both of which constitute a substantial part of the wage and fluctuate widely in response to economic conditions. Moreover, within the regular component of the wage, there is a performance allowance which fluctuates depending on the state of the industry - JP0112157F). Management, represented by the Japan Federation of Employers’ Associations (Nikkeiren) (which merged later in the year with the Japan Federation of Economic Organisations [Keidanren] - see below under 'The organisation and role of the social partners') countered that cuts in total personnel expenses would be necessary to correct Japan’s high cost structure and that it might, in some cases, even be necessary for employees to accept reductions in their paychecks.

The spring wage offensive of 2002 witnessed two distinct departures from the bargaining rounds of previous years.

First, discussions on 'work-sharing'- sharing out employment opportunities though reducing working hours with the aim of maintaining employment rates - gathered speed, with a certain level of consensus being reached between unions, management and the government in March 2002. The cornerstone of the agreement was to continue to promote diversified employment patterns such as part-time work, while establishing work environments that would accommodate such workers. The accord also included five basic principles for the introduction of work-sharing, incorporating measures such as 'emergency' work-sharing, aimed at tackling the current employment situation, which continues to be severe.

The other unprecedented development predominantly involved leading electronics manufacturers. Just a few days after these firms agreed to trade union demands for regular pay rises, they reversed their position, proposing a postponement of the date for the implementation of the increases and pay cuts within a set time-frame. Some level of agreement was reached between labour and management on these issues. Union acceptance of these proposals is believed to reflect the fact that employment anxieties are at an all-time high with a succession of leading electronics manufacturers having, since mid-2001, announced plans to slash jobs in the wake of the bursting of the 'IT bubble'.

The Survey on Collective Agreements, which is compiled by the Ministry of Health, Labour and Welfare (and covers 5,000 trade unions), was released in June 2001 for the first time in five years. It found that 91.5% of unions surveyed had reached collective agreements, which represented a 2.3 percentage point increase on the figure found in the 1996 survey. A comparatively large number of accords were reached on 'union-related' issues (union organisation, collective bargaining, disputes etc), with between 50% and 70% of agreements covering such topics, followed by those on working conditions (pay, working hours, holidays, breaks, human resources, fringe benefits, health and safety etc), dealt with by 40%-60% of agreements. By contrast, fewer agreements contained provisions on 'management' issues (the introduction of new technologies, advances into new fields, office relocation etc), which appeared in only 20%-30% of accords. However, advance discussions relating to the reduction and/or closure of a business increased, and these matters appeared in 40% of all agreements reached. It is worth noting that many unions have managed to come to written agreements of some nature with employers, even where these do not have the status of collective agreements.


As noted above, the spring wage offensive of 2002 was weighed down by the severity of the employment situation, which has been accompanied by anxieties in some quarters. The provisions of agreements reached in major enterprises surveyed by the Ministry of Health, Labour, and Welfare every year indicate that the average wage increase achieved in the spring negotiations of 2002 was 1.66%, representing a further decline on the 2.01% for the preceding year and marking the lowest level since statistics were first published.

According to another survey by the Ministry (the Survey on Wage Increases, which covers enterprises with 100 employees or more), 27.1% of companies made no wage revisions in 2002, up from 21.3% in the preceding year, and the highest level since the survey began. Overall, it is believed that the low level of wage increases in 2002 was not only the result of the fact that the increases agreed were low, but was also due to a rise in the number of enterprises eschewing pay increases, including the regular annual pay rises. Meanwhile, the same survey reports that the number of companies introducing pay cuts reached 7.0% (up from 2.2% in 2001).

Again, whilst some improvement was observed in agreements on lump-sum allowances - which account for a substantial portion of employees' income in major enterprises in Japan (assumed to be about 25% on average) - as compared with the previous year, many of the accords reached in 2002 provided for bonus cuts. Year on year, summer bonuses were down 4.30%, whilst year-end bonuses fell 5.88%. The timing of negotiations over lump-sum payments varies widely. They may, for example, be negotiated at the same time as spring wage negotiations, or independently, between the spring and summer or between autumn and winter. Moreover, whilst negotiations may involve both summer and year-end bonuses, in some companies the two payments are dealt with as separate issues.

Workers whose wages are determined by the spring negotiations do not necessarily constitute the majority of the labour force, even when viewed in terms of the unionisation rate - indeed in 2002, the proportion of the workforce directly covered by the Shunto was 20.2% (compared with 20.7% in 2001 and 21.5% in 2000). It should also be noted that the wage increases that 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 (JP0112157F).

Looking at the trend in average wages based on the Monthly Labour Survey (which covers establishments with five or more employees), total cash earnings in 2002 were JPY 343,480 (EUR 2,909) per month, or a 2.4% decline over the previous year (compared with a 1.1% drop in 2001) - marking a downturn after increases in the previous year. The breakdown reveals a 1.2% decline in the regular ('scheduled') component of wages (compared with a 0.4% decrease in the preceding year), a 0.9% decline in the non-regular ('non-scheduled') component (compared with a 4.1% decrease in the preceding year) and a 7.3% drop in bonuses and other special allowances (compared with a 2.9% decrease in the preceding year). Despite falling prices, real wages declined by 1.3% (compared with a 0.4% drop in the preceding year).

As outlined above, 2002 presented a relatively torpid picture in terms of the outlook for jobs, and overall cuts in pay continued, constituting one of the major factors underpinning the absence of an upsurge in personal consumption as a whole and marking the onset of a deflationary process in the labour market.

Working time

Apart from the minimum standards for working hours laid down in the Labour Standards Law (in principle, a 40 hour working week comprising eight-hour days), no other national working time standards have been agreed between labour and management. Generally speaking, 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 Systems) as of January 2002, the average scheduled working week was 39 hours 25 minutes for full-time workers. This represented an 11-minute increase as compared with the previous survey (covering the period up until January 2001). However, there is fairly substantial disparity according to company size, with the scheduled working week ranging from 38 hours 40 minutes for companies with 1,000 employees or more in 2002 (38 hours 34 minutes in 2001) to: 38 hours 55 minutes for companies with 300-999 employees (previously 38 hours 35 minutes); 39 hours 3 minutes for those with 100-299 employees (previously 38 hours 57 minutes); and 39 hours 36 minutes for those with 30-99 employees (previously 39 hours 24 minutes). This provides evidence of increasingly longer working weeks as companies decrease in size. Scheduled working hours are determined by collective agreements or 'work rules' (uniform rules on working conditions that employers are required by law to compile) 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 statutory minimum standards.

The reasons for the slight increase in the scheduled working hours under the 2002 survey as compared with the previous year, which is particularly marked among companies with 300-999 employees, are not apparent.

On the other hand, substantial changes in the hours actually worked - referred to as 'total hours actually worked'- do 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' (ie overtime). These hours are also covered by the Monthly Labour Survey. According to this survey, the monthly average number of 'total hours actually worked' in 2002 was 152.1 hours (×12 months = 1,825 hours), a decrease of 0.8% over the preceding year. Of these, 'scheduled working hours' accounted for an average of 142.6 hours per month, a decrease of 1.0% over the preceding year. Average monthly 'non-scheduled working hours' stood at 9.5 hours, a decrease of 0.1% over the preceding year. The comparative buoyancy in non-scheduled working hours is believed to be a reflection of the brief expansionary period that occurred during the 2002 business cycle, despite the overall sluggishness.

According to calculations by the Ministry of Health, Labour and Welfare, the annual number of hours actually worked by production workers in the manufacturing industry was 1,970 in Japan in 2000, which was virtually on par with the USA at 1,986 hours and the UK at 1,902 hours, but considerably at variance with the figures for France (1,589 hours) and Germany (1,525 hours) (1999 figure).

Job security, training and skills development

Employment stability and skills development are important issues for both labour and management. However, there is no systematic data available due to the fact that, in terms of collective labour-management relations, these matters are subject to discussion at the individual company level. The results of the 2000 Survey of Labour-Management Communication by the Ministry of Health, Labour and Welfare shed some light on this issue - finding 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 (JP0112157F) - but since no new data has been released to date, it is not possible to discuss the matter in detail here.

Employer-instigated dismissals for economic reasons have become an issue in employment stability. No formal regulations exist within Japanese labour law to restrict this type of dismissal, but the accumulation of legal precedents has seen the establishment of the legal principle that dismissal without rational cause is contestable. The impact of this legal principle and the high priority assigned to maintaining and preserving employment levels in corporations, means that dismissals are generally handled with caution. On the other hand, the protracted economic malaise has forced many employers to resort to direct 'labour shedding'.

Against this background, there have been moves to incorporate regulations on dismissal into the Labour Standards Law. After discussing the issue for more than a year, in December 2002 the Labour Policy Council issued a number of recommendations, including the view that: 'Case law establishing a doctrine of abuse of the right of dismissal must be written into the Labour Standards Law and a regulation to the effect that if a company dismisses an employee without a specific objective and a rational reason, and if such dismissal is recognised to be inappropriate in light of regulations such as the Labour Standards Law, the company shall be regarded as having abused its rights, and such dismissal shall be invalidated, incorporated therein.' In response to the proposals of the Labour Policy Council, the government presented a draft bill incorporating the gist of the Council’s recommendations to revise the Labour Standards Law in the Diet session that commenced in January 2003. However, serious concerns were raised over the potential for the bill to result in employees having to shoulder the burden of proving unfair dismissal.

The Labour Force Survey conducted by the Statistics Bureau of the Ministry of Public Management, Home Affairs, Posts and Telecommunications (which covers approximately 40,000 households) sheds light on the other side of the employment stability coin - ie unemployment. According to this survey, the unemployment rate rose to 5.4% in 2002, up 0.4 percentage points from the previous year and indeed the highest level since the statistics were first published. By gender, the unemployment rate was 5.5% for men (up 0.3 points year on year) and 5.1% for women (up 0.4 points on the previous year); both were record highs.

In recent years, the unemployment rate has shown evidence of increases across all age brackets with comparatively conspicuous rises among young people. The 2.0 percentage point rise in the unemployment rate over 1997 to 2002 breaks down as follows: 3.2 points in the 15-24 age group (rising from 6.7% to 9.9%); 2.2 points in the 25-34 age group (from 4.2% to 6.4%); 1.8 points in the 35-44 age group (from 2.3% to 4.1%); 1.9 points in the 45-54 age group (from 2.1% to 4.0%); 1.9 points in the 55-64 age group (from 4.0% to 5.9%); and 0.8 points in the 65 and over age group (from 1.5% to 2.3%). The unemployment rate for those between the ages of 15 and 24 who are making the transition from school to the labour market, which tends to be relatively high anyway, has reached dangerous levels in recent years. For males in this age group, the unemployment rate has been in double digits since 1999.

The desire to avert job losses and safeguard jobs appears to be weakening among Japanese corporations. For this reason, Rengo and the then Japan Federation of Employers' Associations (the predecessor of the Japan Business Federation) were involved in vigorous discussions on the importance of measures to maintain and preserve employment levels in 2002. In March, the two organisations reached a broad agreement to stabilise employment by focusing on measures such as 'work-sharing' (see above under 'General'). However, there has been little evidence of any measures with sufficient clout to improve the current employment situation to date.

The General Survey of Employment Conditions published by the Ministry of Health, Labour and Welfare in October 2002 (covering non-primary industry private corporations with more than 30 employees) includes the results of a 2001 survey on labour costs, which sheds light on companies investment in training. In 2001, companies spent a total of JPY 449,699 (EUR 3,809) per month on each regular employee (this figure was JPY 502,004 [EUR 4,252] in the previous survey conducted in 1998). Of this sum, cash earnings accounted for JPY 367,453 (EUR 3,112) or 81.7% and non-cash earnings for JPY 82,245 (EUR 697) or 18.3%. A breakdown of the non-cash earnings wage component reveals that more than half, or 51.0%, was devoted to compulsory benefit costs - ie contributions that companies are required by law to make. This was followed by retirement benefit costs at 31.4% and non-compulsory benefit costs at 12.5%. Education and training costs amounted to JPY 1,256 (EUR 10.6) per person per month, which represented 1.5% of non-cash earnings costs and a mere 0.3% of the total labour bill. The figure in the previous survey was JPY 1,464, (EUR 12.4), indicating that spending on vocational training declined 14.2% between 1998 and 2001.

It should be noted that these education and training costs do not include the costs (mainly opportunity costs) involved in 'on-the-job' training, which plays an important role in the in-house training undertaken by Japanese companies.

Legislative developments

Socio-economic changes over the past few years have led to a number of major revisions to employment law in Japan. However, whilst several procedural revisions were presented during 2002, none are worthy of particular attention. The most notable legislative event of the year was the proposal for amendments to the Labour Standards Law, related to dismissal (see above under 'Job security, training and skills development').

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 2002, there were 10,801,000 union members in Japan, a decline of 412,000 or 3.7% from the previous year (the figures include members of industry-based unions and so-called community unions). These figures confirm a continuing, gradual decline in union membership over the long term. The ratio of organised labour to total employment, or the estimated unionisation rate, was 20.2% in 2002, a 0.5 percentage point decrease from the previous year.

One of the reasons often given for the decline in the unionisation rate is that unions have tended to concentrate their attention on regular workers and have failed to adjust to the diversification of employment patterns toward more part-time and other 'atypical' forms of labour. For example, the number of part-time workers who are members of trade unions was 293,000 in 2002 (280,000 in the previous year), and their estimated unionization rate was 2.7% (unchanged from 2001). This indicates a gradual increase, but the rate remains low.

Turning to the membership of the major trade union federations in 2002: Rengo membership stood at 6,945,000 workers (a decrease of 175,000 from the previous year); the National Confederation of Trade Unions (Zenroren) had 1,018,000 members (an increase of 6,000); and the National Trade Union Council (Zenrokyo) had 172,000 members (down 79,000).

On 19 September 2002, a new industrial trade union called UI Zensen was formed by the merger of: Zensen, an industry union covering mainly the textiles and distribution sectors (with 621,733 members); the Japanese Federation of Chemical, Service and General Trade Unions (CSG Rengo) (171,781); and the small Federation of Textile, Clothing and Living Goods Workers' Unions of Japan (Sen’i-seikatsu-roren). The new organisation has a membership of 795,000, making it the largest industrial union in the private sector, representing workers at 1,989 companies. The new union formation is larger than the Japanese Electrical Electronic and Information Unions (Denki Rengo) and the Confederation of Japan Automobile Workers’ Unions Jidosha-soren, both of which have around 720,000 members. UI Zensen chose Tsuyoshi Takagi, the chair of the former Zensen, as its chair.

On the employers' side, on 28 May 2002, the Japan Federation of Employers’ Associations (Nikkeiren) merged with the Japan Federation of Economic Organisations (Keidanren) merged to form the Japan Business Federation (Nippon Keidanren). Hiroshi Okuda, the chair of Nikkeiren, was designated first chair of the merged organisation.

As national centres, Rengo and Nikkeiren (now merged into Nippon Keidanren) represent the respective interests of the workers and employers. In addition to being engaged in information dissemination and publicity activities, they endeavour 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 issues, which are issued immediately before the Shunto wage negotiations each year, attract considerable attention as the major expressions of their respective positions.

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 2001. There were 884 disputes during the year involving a total 1,071,000 workers, with the number of disputes down by 74 (7.7%) and participation by 46,000 workers (4.1%) year on year. There were 246 disputes involving strike action, with 75,000 workers participating and 29,000 days being lost. This represented a decrease on the 2000 figures of 59 strikes (11.8%), 10,000 participants (11.8%) and 6,000 working days lost (17.1%).

Looking at the disputes in terms of the major demands made, wage increases were the largest single item at 235 cases (26.6%), followed by non-regular wage payments (bonuses) at 176 cases (19.9%), and opposition to dismissal and support for reinstatement of dismissed workers at 151 cases (17.1%). A comparison of these figures with the statistics for 2000 reveals that in 2001, there were 75 fewer disputes over wage increases, 48 fewer over bonuses, and four more disputes over dismissals or reinstatement of dismissed workers. Whilst marginal, the number of disputes involving dismissals or reinstatements is on the increase.

New forms of work

Employment patterns continue to diversify over the mid to long-term, with increasing numbers of workers being forced to accept 'atypical' contracts as the economy remains trapped in a deep recession. According to the Labour Force Survey issued by the Statistics Bureau of the Ministry of Public Management, Home Affairs, Posts and Telecommunications, between February 1997 and the January-March quarter of 2001, the percentage of 'regular' employees excluding executives in the overall workforce declined from 76.8% to 71.3%. Conversely, the same period saw the proportion of part-time workers rise from 12.9% to 14.3%, casual workers (known as 'arubaito' in Japanese) from 6.2% to 6.6%, and temporary agency staff and contract workers from 4.2% to 7.8%.

According to the Comprehensive Survey on the Actual Conditions of Part-time Workers (conducted in October 2001), which was issued in September 2002 by the Ministry of Health, Labour and Welfare, the main reasons given by companies for employing part-time workers were: 'lower labour cost', cited by 65.3%; 'to cover busy periods during the workday', cited by 39.2%; 'the work involved is easy', cited by 31.4%; and 'to cover temporary rush periods', cited by 27.3%. Aside from shorter working hours, many firms have introduced part-time workers because they are comparatively less expensive to employ. In terms of the ratio of duties formerly undertaken by full-time employees being assigned to part-time workers, one-third of the companies surveyed, or 31.1%, responded that few if any of the jobs undertaken by full-time employees had been assigned to part-time workers, whilst 27.7% responded that they had assigned more than half of their areas of work to part-time workers, revealing that many companies are choosing to allocate work previously undertaken by full-time staff to part-time workers. Furthermore, 40% of the companies surveyed stated that they employ part-time workers who do the same jobs and have the same level of responsibility as their full-time counterparts.

The survey also covered the opinions of part-time workers. In terms of the reasons given for choosing to work part-time, the most frequently cited reason was 'because I want to work the hours (days) that suit me' at 50.0%, followed by: 'because the hours/days are shorter' at 31.2%; 'because I was interested in the job' at 23.8%; and 'because no companies were willing to take me on full time' at 21.1%. As many as 54.3% of part-time workers stated that they were currently dissatisfied with or had complaints about their company and/or job. Their dissatisfactions/complaints included (multiple answers were possible): 'low wages' at 51.1% and the most frequently cited reason; 'insecurity' at 21.1%; 'the difficulty of taking paid leave' at 19.2%; and 'the impossibility of becoming a regular worker' at 19.2%.

With respect to part-time workers, the percentage of those who occupy important positions (for example, restaurant managers) is on the increase, and the equal treatment of part-time and full-time staff members has become an issue. In the Japanese companies where job descriptions/demarcations are not always clear and regular employees are normally paid on a monthly basis whereas part-timer are paid on an hourly basis, the concept of 'equal pay for equal work' is not prevalent. Currently a tendency has been observed to search around for an ideal form of equal (balanced) treatment of different types of workers, based on Japanese traditions. These issues were discussed in a study group set up by the Ministry of Health, Labour and Welfare, whose report was compiled in July 2002.


According to a survey of teleworkers conducted by the Japan Telework Association, the estimated number of employed teleworkers increased from 2.46 million in 2000 to 3.11 million in 2002 (5.7% of total employment), while self-employed teleworkers stood at 0.97 million in 2002 (8.2% of total self-employed). It is predicted that the number of employed teleworkers will nearly double to 5.63 million by 2007. These figures are based on a definition of 'teleworkers' as those who: i) are engaged in paid work on a regular basis; ii) utilise information technology (IT) (networks) at work; iii) work either in more than one workplace where they utilise IT, or in only one workplace that is other than their employer's premises; and iv) work outside their employer's premises for more than eight hours per week.

With regard to the present legal status of teleworkers (see 'Telework in Japan', Shinya Ouchi, Japan Labour Bulletin, Vol.39, No.8, August 2000), Article 9 of the Labour Standards Law (LSL) prescribes that a 'worker' is a person who is employed at an enterprise or place of business and receives wages therefrom, without regard to the type of occupation. The characteristic of the regulations in the LSL, which is also common to other so-called 'labour protection' laws such as the Minimum Wages Law, is to apply a series of uniform legal protective measures to people defined as 'workers'. Article 9 determines the range of people to whom the LSL is applicable, and those who are not defined as a 'worker' in the LSL are excluded from the legal protection embodied in this law.

The terms used in Article 9 of the LSL are so ambiguous that they do not distinguish 'worker' from 'non-worker'. However, case law regarding Article 9 provides some critical factors in determining whether someone is a 'worker'. These factors include: whether they can refuse in practice to accept the work; whether and to what extent they can freely decide on when and where to work; whether and to what extent the employer supervises and controls the process of accomplishing the work; whether they can entrust to others the order received; which party — the worker or employer — must bear the expenses for materials or utensils used in accomplishing the work; and whether remuneration is paid for the accomplishment of the work itself or only on completion.

A 'non-worker' is not always excluded from legal protection. For example, the Workmen's Accident Compensation Insurance Law allows special admission to workers' accident compensation insurance for certain categories of the self-employed (Article 27 et seq). Moreover, although homeworkers were not considered 'workers' under the LSL, in 1970 the Industrial Homework Law was enacted, extending some degree of legal protection to homeworkers. Teleworkers who are engaged in industrial production at home may qualify as homeworkers and thereby enjoy legal protection. However, many teleworkers who work in the service sector or are engaged in information-related activities are not covered by the Industrial Homework Law.

In collective bargaining in general, teleworking is scarcely on the agenda. However, recently, both Rengo and Nippon Keidanren have shown deeper interest in this matter, as Rengo is calling for the establishment of fair work rules for teleworkers, while Nippon Keidanren is promoting diversity in workplaces.

Company restructuring

The bursting of the so-called IT bubble in the latter half of 2001 led to a succession of companies, primarily in the electronics industry, announcing proposals for major personnel cutbacks. These were less frequent in 2002, but many companies continued to reduce their workforces as a means of countering the effects of long-term economic malaise.

When Japanese companies (although this does not apply to all businesses) carry an excessive number of personnel, they do not rush into personnel cuts, but instead will adopt various measures such as reducing non-scheduled working hours, ceasing to renew the fixed-term contracts of non-regular employees, and limiting new hiring, whilst monitoring the situation surrounding their business. If and only if, even having taken these steps, there is no evidence of a turnaround will they then start to shed regular workers. Even when dismissals become inevitable, employers do not name specific workers to be axed, rather large companies tend to solicit applicants for voluntary and early retirement, offering them a 'golden handshake' in the form of an extra pension allowance, for example. The hypothesis/established theory that 'companies will start looking to slim workforces after two consecutive years of losses' has gained currency among a large number of labour economists in Japan.

According to the Employment Management Survey compiled by the Ministry of Health, Labour and Welfare (conducted in January 2003 and covering companies with more than 30 employees), in the three-year period spanning 2000 and 2002 some 8.0% of companies 'solicited applicants for voluntary and early retirement'. This percentage has increased with each passing year: it was 2.1% in 2000, 3.7% in 2001 and 4.8% in 2002. Moreover, an average of 42.8 people applied for the voluntary and early retirement plans offered.

On a related matter, the Survey of Collective Bargaining and Labour Disputes in 2002, issued by the Ministry of Health, Labour and Welfare in June 2003, reports that of the discussions undertaken by unions and management during the last three years, those on 'corporate restructuring and/or reductions in business divisions' have accounted for 42.3% of the total - ie a 3.4 percentage point increase on the previous survey (1997). In terms of the stage at which negotiations are initiated, on the employer side 41.6% of negotiations are commenced once 'the broad framework has been decided', followed by 36.4% at the 'exploratory phase' and 13.5% once 'the details have been fixed'. Thus employers are tending to initiate negotiations with labour representatives at a comparatively early stage in the restructuring process.


At a glance, the outlook for the global economy appears to be characterised by an unusual degree of uncertainty. In all probability this is due to the lack of a powerful driving force. Regrettably, as with the review of 2001, it is necessary to end this review for 2002 on a low note since, with Japan needing to implement structural change at all levels of its system - political, economical and social - and with no lodestar to guide it, it is difficult to envisage a straightforward economic recovery.

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

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