By Hugh Williamson
Japan's economic boom of the late 1980s has run into trouble. Workers are the first to bear the burden — lower wages, higher unemployment, worsening working conditions, and so on.
Wage increases agreed to late March 1993 as part of the year's "Shunto", or spring wage offensive, were mostly below 4%, one percent lower than in 1992. The workers who receive these increases, those in secure jobs with big employers, are the lucky ones, since many other groups of workers — such as migrant workers, women, old and young workers and those in small firms — face real wage cuts, less job security or unemployment. The mainstream union movement has, by it sown admission, been unable to counter-act this deterioration of workers' livelihoods.
Japan's current recession is its most severe for 20 years, with economic growth of only 1.5% in 1992, the lowest since the 1974 oil crisis. For 1993, growth of only 1.6% is predicted, and government economists say even this may not be reached. Many firms have seen profits fall in each of the last three years.
The recession may also have a major structural impact on the economy, with Japan unable to bounce back to recovery the way it has in the past. Future growth rates may be more like those of the US and European countries that the 5-10% annual growth rates of some of Japan's Asian neighbours.
The increased value of the yen is partly the cause of these structural changes. Standing at over ¥130 to the US dollar only a few months ago, by late March the rate was ¥115. Ironically, although this increase reflects the underlying strength of the Japanese economy compared to other industrialised countries, it has also deepened the recession, for instance by making exports more expensive.
Spring wage struggle
When it comes to paying for the recession, Japan's unions complain that workers bear an unfair burden. For a recession that in the unions' view was caused by Japanese business's over-extended spending spree — the "bubble economy" — it's tough for wages and working conditions to be the main target for company cut-backs, unions claim.
Instead, Rengo (the Japan Trade Union Confederation, a 7.6 million strong national union centre) argued for a 7% wage increase which, together with tax cuts, would fed into higher consumption and thereby contribute to economic recovery, For its part, Zenroren, the 850,000 strong, communist aligned National Confederation of Trade Unions argued that despite the recession, Japanese firms had sufficient reserves to fund monthly wage increases of ¥35,000 (US$300), a rise of about 10%.
Neither union was successful, nor were their industrial olved in negotiations. Settlements in the four industries which the unions earmark as pace-setters for the broad economy — electronics, motors, shipbuilding and steel — mainly ranged between 3.5%-4%, about half the unions' target rises. Variations exist — workers in five large steel companies got only 2.65%, while those in eight shipbuilders got 4.27% — and other elements in the total wage packet have yet to be agreed.
The weighted average wage increase in the 1993 Shunto was 3.83%, according to Nikkeiren, the Japan Federation of Employers' Associations. This figure covers 243 companies in 24 key industries and it is the first time since 1986 that wages have increased by less than 4%.
Unions fear that when these other times — in particular overtime pay and annual bonuses, both sharply down on previous years — are included, real earnings increases may be below 2%, the current inflation rate in Japan. Employers also used this year's Shunto to break with the union-supported pattern whereby companies in the same industry adjust their final wage increase levels to be as equal as possible between different firms.
At the outset of the Shunto shorter working time was also on the union negotiating agenda, but in general this was not prioritised in final negotiations. Unions are still aiming at 1,800 hours a year, down from over 2000 in 1992, but as one Japanese newspaper put it, "essentially labour unions were forced this year to choose between a bigger wage hike and more holidays. They chose the wage hike."
'Barely passed'
Union leaders recognised that their Shunto negotiators made very little impression. Teruhito Tokumoto, president of the influential Council of Metal Workers' Unions said that "I don't say we have failed, but we have barely passed."
The recession set the context for the wage round, and perhaps because of this, Rengo and its affiliates were unable to mobilise their members to take action, even of a symbolic nature, to support wage claims. Rengo itself avoids taking a militant position on most issues, and while some short strikes occurred, major one day stoppages by private railway and telecommunication workers, for example, were called off at the last minute.
Zenroren affiliates, such as metal and medical workers did hold strikes and protests, as did unions affiliated to Zenrokyo, the smaller left-wing National Trade Union Council. Zenrokyo also used the Shunto to highlight its views on wider issues, such as opposition to the deployment overseas of Japan's Self Defense Force.
In addition to the results of the Shunto, the recession also has a wider and possibly longer term impact on employment relations in Japan. Many firms in economic difficulties have sought to cut labour costs through various methods. In big firms this has usually not involved compulsory redundancies of core workers, as this would run against the spirit of the 'life-time employment' ese mainly male, full-time employees. But other tactics have been used.
The Nissan vehicle maker, for instance, announced plans in February to close its Zama plant near Tokyo. Some of 2,500 workers will have to move to other Nissan factories, or lose their jobs. As one Zama worker, faced with the prospect of moving as far as Kyushu in southern Japan exclaimed. "In addition, Nissan said it would cut 8000 jobs through 'natural attrition' — not replacing workers who leave — and 2500 will be transferred to Nissan subsidiaries, in particular sales dealerships.
Other companies have used similar tactics. For instance, the NTT telephone company will "rationalise" 33,000 jobs by 1996, Sanyo will lay off 3000 employees and Hitachi will shift thousands to subsidiaries.
These methods are common in recessions in Japan, and are designed to protect the job security of core workers in big companies. Usually "peripheral" workers, in particular, women and migrant workers, area first to leave or not to have their contracts renewed. Japan's enterprise based unions, consisting mainly of core workers, may not like job cut-backs but they have little material interest in protecting peripheral workers.
Yet this recession, unlike earlier ones, has seen both a reinforcement of the gap between core and periphery workers, and apparent fracturing of the employment system itself. First, workers in the peripheral economy (who actually make up the majority of employees) face severe problems on many fronts which, combined, significantly undermine employment security.
Jobless numbers climb
Unemployment itself is on the increase, though this is not yet reflected in official figures, which in January were measured at 2.3%, much lower than in most other industrialised countries. However this figure hides a growing number of workers, in particular women, who would like to work but because of difficulties in getting a job are not even officially registered unemployed. The ratio of job offers to applications reveals this: in March 1991 there were 145 offers to 100 applications while by January 193 there were only 96 offers to 100 applications.
Workers also suffer in small businesses, which often sub-contract for big companies, and have traditionally acted as a "sponge", absorbing the labour and cost adjustments; they themselves face difficult business conditions and can barely afford either to cut costs or absorb surplus staff transferred from their big clients. Wage levels are already lower than for the core workforce, and, following an established pattern, will increase in Shunto by less than the 3.5%-4% agreed by big companies.
Unemployment is also rising among migrant workers, another group on the margins of the labour market. In the 1980s many firms employed illegal immigrants from south and southeast Asia to meet labour shortages, particularly in "dirty and dangerous" jobs. Now these jobs are being cut, leaving illegal immigrants with few enterprise unions feel no responsibility for them. An increasingly well-organised — and vital — network of migrant support groups in Tokyo and other cities maybe able to offer some support, however.
Old and young targeted
These developments are serious for those involved, but in the context of Japan's employment system are to be expected; the system is geared to coping with recessions by protecting full-time core workers in secure jobs at the cost of the livelihoods of marginalised workers.
However, changes to the employment system itself are also occurring, indicating the seriousness of the current recession — and perhaps also the need for reform within these discriminatory employment structures.
Young and old workers are particularly vulnerable. Young workers looking for secure jobs with big firms find far fewer job vacancies than in previous years, and the terms of employment for some of the jobs that do exist have also changed. The Tokyo office of Northwest Airlines, for instance, in March informed its 81 new recruits that rather than receiving jobs for life, they would only be employed on one-year contracts.
Older workers, traditionally the most respected by Japanese companies that operate seniority based promotion schemes, also face a bleaker future. In order both to save money and to be able to promote high-performing younger managers, companies such as Sanyo Electronics are "offering" early retirement to managers in their fifties. Sometimes the only alternative is redeployment to a subsidiary or to a lower paid job.
[From Asian Labour Update.]