”Thelabour and management relationship itself is from the first arelationship between one group of human beings and another group ofhuman beings. ” (Nakayama 1974, 121)Japan’smanagement is best known for three of its practices : lifetimeemployment, seniority wage system, and its enterprise unions.According to the 2010 Basic Survey on Labour Union, there are about26.
000 labour unions in Japan, with about 10 million peole beingaffiliated to one. After reaching a record high of 55.8% in 1949, thepercentage of unionization stayed in the low 30% from the 1950s tothe 1970s, and after the oil crisis of 1973 and the belt-tighteningthat followed, the increase of regular employees was curbed,resulting in the rate to fall from 1975 to 2008. In 2009, partly dueto the growing unionization of part-time workers, the rate increasedslightly. The history of labour and management relations isfilled with turmoil, as Japan experienced a period of intense labourand management disputes after World War II. These constantconfrontations eventually turned into collaboration during Japan’shigh economic growth period, and became one of the pillars supportingthe economic growth. However, one can wonder : has confrontationor collaboration been more significant in Japan’s history ofindustrial relations ? To answer this question, we will studyJapan’s labour and management relations throughout its history, toexplain how today’s labour and management relations are the result ofboth rejecting and inheriting labour and management relations fromthe period of high economic growth.
Thelabour and management relationship, which is one of the most basicsocial relationships in industrial society, appeared with the arrivalof the industrial sector. After World War II, Japan and Japanesesociety fell into a state of despair and ruin. Its industries were atabout 30% of the prewar level, and people were starving. As aconsequence, the Labour Union Law was instituted in 1945, givingofficial recognition to the formation of unions and their activities.As workers were desperate and living in extreme poverty, theydeveloped intense labour movements, whose slogans were”democratization of the workplace”, ”wage hikes”, or ”nofirings”, to protect themselves. At the time, management haddifficulties carrying out their activities, as a result of theauthorities of the Occupation Forces, who had ordered the dismantingof the zaibatsu (financialcombines), or the purging of financiers from public offices. Underthose circumstances, labour and management both laid out theirclaims, which resulted in intense disputes. In 1949, the Dodge Line1was implemented, which resulted in a reduction in government workers,mass dismissals in public corporations overseeing the railroad,telegraph, telephone and postal services.
As a result, about 490.000workers were targeted by job reductions, and a great number ofworkers lost their jobs because of bankruptcies in small andmedium-sized companies : this resulted in workers organizinglabour unions and going on strikes, and in 1949 the rate of labourunion organization reached its record of 55.8%. In 1950, theKorean War started, which resulted in special procurements thathelped the revival of the Japanese economy.
As austerity had beenforced upon them for so long, Japanese consumers were finally able topurchase their lives’ necessities, to the point that it resulted in a”consumption boom”, and in 1954, per capita consumption surpassedthe prewar level. However, this growth in consumption did not calmlabour and management disputes, and it was a time of one strike afteranother (1951 Mitsukoshi Strike, 1952 Japan Federation of Coal MineWorkers’ Unions Strikes ; All Japan Workers Union Strike ;1953 Nissan Strike, Toyota Strike, Mitsui Miike Strike ; 1954Amagasaki Seiko Strike, Omi Kenshi Strike, Nikko Muroran Strike), ascorporate profit begun to rise due to the business recovery, butstandard of living did not reach the halfway point of the prewarlevel (Economic Stabilization Agency 1949, 44-45), and because ofmassive dismissals due to rationalization. These disputes inflictedgreat damage upon both corporations and workers, and had a hugeeffect on economy. However, those conflicts were also the reason ofthe birth of the labour and management relations of the high economicgrowth period. Though the Japanese economy had recovered tothe prewar level by the mid-1950s, Japan’s per capita GNP was only11% of the United States’, and it was behind developed countries.
Additionally, in 1974, Japan’s average export amount was 76% of itsimport amount, its trade balance continued to record a currentdeficit and as the country was not competitive in internationalmarkets, it was put in an inferior position. At that point, economicdevelopment was the most important task for Japan, but it was not inthe postwar period anymore, therefore it could not hope for the sameeconomic development that during the postwar reconstruction. For thisreason, modernization was the most important task.
However, as labourand management were always in dispute, they hindered themodernization. In that sense, those long lasting conflicts weredamaging the economy, which is why both sides decided to look for away out, and in 1955 the Japan Productivity Center was established,as well as the ”Three Guiding Principles of the ProductivityMovement”. Influenced by Commercial Service Officer Haroldsonof the U.S Embassy, the Japan Association of Corporate Executivesstarted to accept the ”productivity improvement movement”, and in1954, four economic organizations (Keidanren, Nikkeiren,The Japan Association ofCorporate Executives and the Japan Chamber of Commerce and Industry)created the Japan-U.S Productivity Enhancement Committee, which laterbecame the Japan Productivity Center, a private sector organizationcomposed of people from labour and management, as well as academyexperts. The Three Guiding Principles of the ProductivityMovement were created : First of all, productivity improvementultimately increases employment. However, regarding excess personnelarising transitionally, from the point of view of the nationaleconomy, the government and the private sector shall cooperate todevise appropriate measures, such as through as much as is possiblepersonnel redistribution and other ways to prevent the loss ofemployment. Secondly, regarding specific methods to achieveproductivity improvment, labor and management shall cooperate tostudy and discuss this, based on the circumstances of the individualcorporations.
Finally, the various fruits of productivity improvementshall be distributed fairly to managers, workers and consumers,according to the actual conditions of the national economy. Thoseprinciples became the model for the labour and managementrelationship during the high economic growth period. Corporationsand workers have different goals : productivity improvement andthe securing of employment usually are incompatible, which results inconflicts. However, both management and labour understood thatcorporations grow through enlarging their business, which makespossible the securing of employment by workers, and wages rise as aresult of fair distribution, therefore corporate growth also works toimprove the life of labour. This means that for workers to protecttheir employment and improve their lives, the prosperity of theircorporation is necessary. From this realization started acollaboration, as to reach their goals, labour and management createda collaborative relationship built by using their conflict as anopportunity to grow. It was a relationship where both labour andmanagement persisted in carrying their objectives and sought theirown growth, and tried to seek further growth in the long-term :it was a collaborative relationship that included conflict and stoodupon it. At the time, productivity was a popular national movement,and Japan did not have international competitiveness.
Therefore,labour and management understood that their continuous disputes werean obstacle to modernization and despite different positions, theyboth sought the growth of the Japanese economy. Industry based unionstherefore aggressively promoted the productivity improvement movementand carried out educational activities to have to movement penetrateinto enterprise unions, and devoted themselves to improve workers’lives by striving for industry cultivation and promoting the growthof corporations. Those labour and management relations had agreat effect. For instance, the wages determined through the SpringLabour Negociations were an important index, both for labour unionmembers and for small and medium-sized corporations, as well as nonorganized workers. Business expansion was indispensable for acorporation to maintain jobs, and market share expansion became thepriority. As Japan did could not compete internationally, the onlyplace Japanese corporation could expand was the domestic market, withmarket creation. In order to achieve this, a fair distribution of thepie was necessary, which would secure employment, wage hikes and lifeimprovement sought by workers.
At that point, corporations andworkers stopped fighting for the pie at hand and aimed to expand thepie itself, and placed priority on medium and long-term profitsrather than short-term, which led to intense competition and Japan’seconomic growth. Though there are still some disputes andstrikes, comparative studies of labour and management relations invarious foreign countries have been carried out such as those byAbegglen (1958) and Dore (1973), and they found that labour andmanagement disputes in Japan are fewer in number particularlycompared to western countries, and unions and employers have formedrelatively cooperative relationships. Furthermore, the number oflabour strikes during the high economic growth period in 1965 therewere 3051 cases of strike, and 4551 strikes in 1970.
However, therewere far fewer recently, with only 708 cases of strikes in 2005, and612 cases in 2011. Moreover, the number of employees involved instrikes has also declined with the high economic growth period :there were 8.975.000 employees in 1965, 9.137.000 in 1970, it thendropped to 646.000 in 2005, to be at 58.000 involved workers in 2011.
However, though there is far fewer strikes now compared to during thehigh economic growth period, it doesn’t necessarily mean thatrelations are satisfactory. Indeed, Japan is currently one of theworld’s leading economic powers, which is a very differentenvironment from the one during the high economic growth period. Thismeans that as the situation changes, so do social issues. Indeed,there is currently a variety of problems at present, such as theimplementation of great numbers of early retirements as a result ofstreamlining through rationalization, an unemployment rate notdropping below 4% even in periods of prosperity, and real wagesfalling after 1997. Furthermore, labour and management changed, andtoday they are estranged labour and management relations, where theresults of the improvement of a corporation’s productivity are notalways returned to the workers, and corporate growth does notautomatically lead to an improvement in workers’ lives.
We canexplain the fall in strikes with the fact that strikes are aneffective means of negociating when the economy is good, but theyactually please management if the corporate performance is poor.Indeed, the decline in strikes is partly due to the fact thatrelationships of trust between labour and management have improved,and it has become possible to reach an agreement without resorting toforce in the form of a strike, but it can also be because of thestagnation of the economy. Labourand management relations were built by going through the intensedisputes of the postwar period.
Indeed, tired from the fighting, botheventually came to place priority on job stability and better workingconditions to protect the livelihood of workers, over ideologies thatsought political reforms. Through these disputes, pre-modern labormanagement and violations of human rights seen in labour andmanagement were eliminated, leading to further democratization soughtby workers after the war. As a result, workers developed corporateloyalty and awareness of the development of the corporation wherethey were employed. Furthermore, although those disputes were eachcorporation’s internal problem, they eventually started to spreadnationwide, as the social problems they were highlighting went beyondthe framework of one corporation. This made people realize thatcorporations and labour unions were necessary players, which ledcorporations and labour unions to become aware that they were socialinstitutions, and therefore they acted accordingly striving for thedevelopmentof the Japanese economy, as expected of them by nationalconsensus.
Therefore, we can draw several conclusions. First ofall, in Japan’s labour and management relations’ case, collaboration doesn’t come without confrontation : several yearsof confrontations were necessary to come to agreements that resultedin Japan’s growth, as both labour and management had to learn fromtheir past disputes to understand that their goals were linked toeach other. However, we can therefore think that all in all,confrontation has been more significant in postwar Japan’s historyof industrial relations, as it was confrontation that gave theimpulse to seek a way out of the disputes, and led Japan to theincredible economic recovery it is known for.