Japan Press Weekly

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2012 October 24 - 30 [LABOR]

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

At present, many large corporations, mainly electrical manufacturers, carry out large-scale downsizing policies which trample on workers’ human rights and destroy their lives. In the background, there is a history of labor abuse that in accordance with demands from corporations, successive Liberal Democratic Party governments changed labor-related legal regulations to allow large corporations’ exploitative labor practices.

Between the late 1950s and the early 1970s, big companies increased their productivity and profits by utilization of the so-called “three symbols of Japanese-style management”: the life-time employment system; seniority-based wage system; and company-based unions.

‘Maihama’ Meeting

At the early 1990s, amid the spread of an economic crisis triggered by the collapse of the bubble economy and the resultant recession, the business world began to argue that the traditional Japanese-style management system should be changed.

On February 25, 1994, at a luxury hotel in Chiba’s Maihama area, 14 members of the Japan Association of Corporate Executives (Keizai Doyukai) held a meeting to discuss a new Japanese-style management system.

In the meeting, Miyauchi Yoshihiko, chair of ORIX Corporation at that time, insisted that Japanese corporations should change their way of management to one focusing on the interests of shareholders as done by U.S. corporations.

His view caused a major impact not only on large corporations’ management strategy but also on the government’s labor and employment policies. The late Sasamori Kiyosi, former President of the pro-business Japanese Trade Union Confederation (Rengo), once said, “The ‘Maihama’ meeting was a turning point for the business circle to promote labor-related deregulation.”

Acceleration of use of contingent workers

In 1995, the Japanese Employers’ Federation (Nikkeiren), a predecessor of the Japan Business Federation (Nippon Keidanren), announced a new management policy under the name of the “Japanese-Style Management in the New Era.” This created the momentum for deregulation of labor laws. The policy called for neo-liberal structural reform and deregulation, and showed ways for Nikkeiren member companies to develop as global corporations.

With the aim to destroy the life-time employment system and the seniority-based wage system, the new management policy proposed: to categorize workers into two employment types, workers with open-ended contracts and workers with fixed-term contracts; to seek diversity and flexibility in the use of labor; and to apply an ability- and performance-based wage system to workers.

The proposal for the flexible use of labor was intended to reduce personnel costs through replacing full-time workers with contingent workers and to secure profits regardless of the business situation.

Based on the new policy, Nikkeiren in the following year submitted to the government various deregulation requests which included expansion of the discretionary labor system, introduction of a flexible working hour system, removal of penalties from the Labor Standards Law, and liberalization of the use of temporary agency workers.

In response to the business circle’s requests, the government began to implement policies to ease and abolish regulations on labor practices and corporate activities.