Changes in Japanese Employment Relations

Mr. Hiromasa Suzuki
Emeritus Professor, Waseda University
Associated researcher at IDHE-ENS-Cachan, France Fellow Researcher

 

The legal framework of Japanese employment relations was basically shaped just after World War II. The Trade Union Law of 1949 provides freedom of association and guarantees collective bargaining as a means of improvement of conditions of work. The Labour Standards Law of 1947 fixes minimum conditions of work such as minimum wages and hours of work. These two laws remain the basis of employment relations though their contents have been amended gradually.

 

In principle, an employment contract is concluded voluntarily between an employer and a worker. The employment contract is either for an open-ended period or for a fixed term. In the case of open-ended contracts, one of the parties can end the contract at any time. However, the recent law on employment contracts provides that to terminate the contract, the employer needs justifying reasons. Otherwise, the termination is nullified as an abuse of right.

 

Collective bargaining takes place almost always at the level of enterprise (or group of enterprises) as trade unions are basically organized at this level. There is hardly any multi-employers or industry –level bargaining. The main activity of collective bargaining revolves around the annual spring wage round which has been institutionalised ever since the mid-1950’s. Pattern wage bargaining begins with the New Year and settles in March-May period. In recent years, because of low economic growth, global competition and moderate decrease of consumer prices, this mechanism of wage adjustment has undergone several changes: firstly, wage adjustment is kept minimum just ensuring real wages. Secondly, prosperous enterprises choose to increase bonus pay (traditional seasonal wage supplements in proportion of basic wages) instead of across-the-board wage increase.

 

While the above features of employment relations are stable and institutionalised, considerable changes are observed as to the scope of collective bargaining. As in many countries, union density has decreased gradually but surely: while in 1980 31% of workers were organised in trade unions, this figure dropped to 17.5% in 2014.Unionisation differs greatly according the sector of activity and the size of enterprises. Unionisation is relatively high in large manufacturing  enterprises, public utilities and the public sector, unions are scarcely represented in the growing service sector and in small enterprises. Put together, more than 80% of workers are now out of the scope of collective bargaining and they have to negotiate their own conditions of work in the labour market. Needless to say that growing precarious workers (today around 40% of workers are considered as precarious) are not in a position to negotiate their conditions of work on an equal footing with enterprises. 

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