Japan Press Weekly

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2012 October 31 - November 6 [LABOR]

Political support for corporate restructuring - II: US demand for deregulation of labor laws

The U.S. business circles have forced the Japanese government to change its labor market to one preferable to U.S. corporations operating in Japan by demanding the removal of regulations on dismissals and working hours.

US states demands in annual ‘Regulatory Reform Recommendation’

In the 1996 “Regulatory Reform Recommendation,” the U.S. government requested Japan to deregulate the staffing industry by complaining about the Japanese labor market’s tendency to increase overall labor costs and prevent flexible labor mobility.

At a meeting of the government’s Market Access Ombudsman Council in 1998, the American Chamber of Commerce in Japan made a request to adversely revise the nation’s employment laws. Later, it also called for a removal of the rules for dismissing workers.

In the late 1990s, following an increase in direct investment by U.S. capital to Japan, the ratio of U.S. shareholding in Japanese companies increased. Along with this move, Japanese management began prioritizing shareholders’ interests, driving many companies to pursue more profits and higher stock prices by cutting personnel costs under the pretext of strengthening international competitiveness. Business leaders called on the government to establish a labor market system which enables employers to hire workers at low wages only when necessary and to fire them easily.

In response to the Japanese business circle’s management strategy and demands of U.S. corporations, successive Liberal Democratic Party governments pushed ahead with a series of adverse revisions of the regulations on the use of workers and corporate activities.

With various government supports in place, large corporations enhanced their business structures to make profits even under low business performance while saving labor costs through restructuring measures such as dismissals of full-time workers and shifting toward the use of more contingent workers.

Such corporate restructuring measures, however, resulted in creating a vicious circle of cooling domestic demand and hollowing out industries.

>Political support for corporate restructuring - I: End of life-time employment system