Outline of Japanese Industrial Relations

Fujikazu Suzuki
Director of the Labor Culture Network, NPO

1.    Characteristics of Japanese Industrial Relations

Characteristics of Japanese Industrial Relations are generally pointed out as follows.
(1) A trade union is organized at the enterprise level. The core of industrial relations lies within the enterprise.
(2) An enterprise union forms various networks at industry, business category, central and regional levels. Through these networks, Industrial Relations are institutionalized on the industrial, regional and national levels which supplement the Industrial Relations within the enterprise.
(3) Industrial disputes are not frequent. Industrial relations are quite stable based on the trust relationship between labor and management. Deep share of information as well as interests among the social partners is the key elements of industrial peace.
(4) Various labor-management communication schemes are developed mainly centered on labor-management joint consultation system.
(5) As to daily practice of industrial relations, a large weight is placed on labor-management joint consultation rather than collective bargaining
(6) An enterprise is regarded as a social entity, not as merely a nexus of contracts. And a kind of social norm is formed, where an employer considers ensuring the employment and enriching welfare program for the employees, and the employees make efforts for the prosperity of the enterprise.

2.    Evaluation toward Japanese Industrial Relations

In the past, most evaluation toward Japanese Industrial Relations was negative or passive domestically and internationally. Domestically, they were positioned at an immature stage that should be overcome, where the backwardness is still found. On the other, international interest for the Japanese Industrial Relations were not very high generally.
It can be said such situations started changing approximately after the 1970s. Several leading arguments which positively evaluate Japanese Industrial Relations appeared, and Japanese themselves also began to have much confidence in the system being built by themselves.  
As representing point of views which positively evaluated the Japanese Industrial Relations, there is a report “The Development of Industrial Relations Systems: Some Implications of Japanese Experience” published by OECD (the Organization for Economic Co-operation and Development). The OECD report gives a positive evaluation for the system of Japanese Industrial Relations as “they were integral parts of economic success, had relatively stable characteristics and were satisfactory both for employers and workers.” The report regarded “the present Japanese Industrial Relations are a product born from the combination of various systems enforced from outside during post-war period of occupation policy and behavioral patterns peculiar to Japan,” and as major contents of “behavioral patterns peculiar to Japan,” “three pillars” are mentioned. That is to say, it includes “life time employment,” “seniority wages” and “enterprise unionism.” As the conclusion, the report gives an evaluation that “cooperation based on the idea of labor-management integration within an enterprise” generated from “the idea that a company is its people” will give an important implication also to other countries.

3.    Future issues of Japanese Industrial Relations

Economy of not only Japan but also various countries in the world is at the center of big changes of globalization (the era of fiercer competition) and informatization (telecommunications revolution). In such a situation, the employment environment is about to change significantly, and the system of Industrial Relations are also urged to respond to such changes.  
When considering this issue, it is important to clearly differentiate between a problem of recognizing the current situation of whether or not the Japanese Industrial Relations are “changing” and a policy debate that “change should be made.”  
Firstly, concerning the recognition of the current situation of whether or not the Japanese Industrial Relations are “changing,” it should be stressed that there haven’t been significant changes in the tone of behavioral patterns of putting priority on information sharing, mutual trust, and employment stability between labor and management within each enterprise even in the process of long-term business recessions of this time. At least in the foreseeable future, it is difficult to think that the Japanese Industrial Relations will change into a totally reverse direction.  
Concerning a policy that “change should be made or not,” on the other hand, it will be important to consider solution of following issues that are being faced, from perspectives of using of the past merits of Industrial Relations in the enterprise which have been promoting compatibility between long-term stabilization of employment and productivity improvement.

(1)    Long-term tendency of declining union density
The union density in Japan has continued to decline consistently since the middle of the 1970s. As of June 2015, the union density fell as low as 17.5%. Since the scope of collective agreement almost overlaps with the unionizations scope of trade union in Japan, the lower union density leads to reduction of the scope of collective agreement. As well as recovering of the union density, it is also required to improve the minimum wage system and extended application system of collective agreements to bottom up working conditions of workers who are not unionized in trade unions.

(2)    Shedding from Industrial Relations centered on regular employees
The Industrial Relations in the enterprise in Japan are mainly consisted of regular employees or core employees. Atypical employees of various types of employment other than regular employees are less likely to be organized into trade unions and outsiders of Industrial Relations in the enterprise in many cases. It is now an urgent issue to include atypical employees, who has reached and exceeded 40% of the labor force, in Industrial Relations in the enterprise.

(3)    Response to growth of settlement of individual labor disputes
In present Japan, strikes and other collective labor disputes are little seen. On the other hand, however, individual labor disputes between individuals and enterprises show the tendency of significant increase. Efforts of the government regarding settlement of individual labor disputes are becoming important.

(4)    Response to internationalization of enterprises and globalization of production activities
Amid the development of enterprise activities beyond national boundaries and the expansion of the scope of the influence, the trade union side is also required to respond globally.

Amid the globalization and information revolution, if survival measures are sought only in the policy of pursuing the efficiency, social instability factors, such as instable employment and expansion of income gap, are unavoidable to occur. An issue of harmonization between “efficiency and fairness” has been a universal issue of economy and society in any age. The development of industrial democracy was also evolved in this context, and it can be said that the future of Japanese Industrial Relations is also possible to be looked only by practicing this old and new issue.


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