Japan Press Weekly

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2007 December 19 - 2008 January 8 [LABOR]

Keidanren report shows business circles’ labor policies have caused serious conflict with the public

A report issued on December 19 by the Japan Business Federation’s (Japan Keidanren) Committee on Management and Labor Policy indicates that business circles’ policy of promoting the performance-based pay system and non-regular employment has caused serious conflict with workers as well as the public.

While major corporations enjoy record profits, increasing poverty and widening social gaps between the rich and poor have become a major social issue as the number of workers with an annual income of less than two million yen has exceeded 10 million.

For the healthy development of Japan’s economy, it is urgently required to improve household livelihood by raising wages and stabilizing employment as well as by ending government policies of shifting burdens onto the public.

Unable to ignore public opinion

“Amid sluggish growth of spendable earnings, there is concern that the growth of consumer spending could decelerate,” the Keidanren report stated.

It was even obliged to state, “In order to maintain stable development, it is necessary to build an economic structure in which corporate and household economies go in tandem. Part of the increase in the value added should be used as a resource to revise the overall labor cost.”

The business circles have insisted that there is no condition to raise the base pay no matter how much productivity may increase. The report, however, shows that Keidanren can no longer ignore public opinion demanding that corporations return a part of their big profits to society.

In the 2007 Spring Struggle, labor criticized business circles for giving increased preference to management and stock holders over workers in distributing their profits as well as maintaining huge internal reserves, and demanded wage increases for all workers.

The report vehemently rejected workers’ demands by stating, “It is unrealistic to argue that the labor share should be raised by reducing dividends and internal reserves.”

However, even the government is showing concern over the decrease in the labor share. There is no socially acceptable justification for continuing to accumulate internal reserves that has increased 3.5 times in ten years.

Performance-based pay system failed

The business circles are also attempting to justify the performance-based pay system that they introduced with much fanfare.

They promoted the system, saying, “Work harder and earn more.” However, due to fierce competition and tough quotas many workers have experienced wage cuts and worsening of working conditions. Even the management is forced to review such a system because of a decrease in development capabilities and an increase in accidents and mistakes caused by the focus on seeking short-term profit.

The Keidanren report calls for “building a highly transparent and convincing personnel evaluation system” and even “greater importance to be given to the length of service” that conflicts with the merit-based wage system.

The report, however, clings to the position of pushing workers into intense labor conditions and restraining their wages by stressing, “Efforts are needed to increase the value added by improving productivity.”

Unstable employment expanded

The report also stresses the need to achieve “work-life balance.”

If Keidanren really wants to promote the right balance between work and private life, long working hours must be called into question. However, the report stressed the need of “efficient ways of working” and stated that the introduction of the performance-based pay system “will help increase the degree of concentration during working hours, and thus curb unnecessary overtime work.”

This argument is absurd because in reality the performance-based pay system is forcing workers to work long-hours with excessive workloads.

Furthermore, this Keidanren position paper calls for “flexible ways to work not bound by time and location,” and emphases the need to expand unstable employment, such as work at home (so-called “telework”) to which the protection under the Labor Standards Law will not be applied, as well as to introduce the white-collar exemption system that will lift regulations on working hours. These measures will only worsen working conditions and thus increase the poverty rate and widen social gaps.