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Spring Offensive: Japanese workers sit at the negotiating table

Trade Unions and Business Organizations Rising Sun Countries Start Discussing Salary Raises

The annual spring negotiations between trade unions and Japanese business organizations to raise wages in fiscal 2020 started at the end of January. As noted by the Japanese media, traditionally they will be aimed at working out optimal sizes for raising wages. But, almost certainly, new to them will be the formulation of recommendations for revising a number of Japanese principles of labor relations in connection with internal and global structural changes in the economy.

Spring Offensive: Japanese workers sit at the negotiating table
Photo: pixabay.com

BETWEEN “LABOR” AND “CAPITAL”

Traditionally, negotiations since the 1950s have been called the "spring offensive" of the workers ("shunto"), because at that time they were accompanied by sharp strikes by the trade unions in the struggle for higher wages. The leaders of the trade unions were convinced that the strikes lead to a decrease in production efficiency, and with this - the competitiveness of products in the markets, reduction of their sales and enterprise incomes. Opponents sat down at the negotiating tables, the search for mutual interests began. In the course of them, proposals from the trade unions began to increase labor productivity and create “quality control circles”.

Quite quickly, by the early 1960s, the conscious transition from confrontation to business negotiations between “labor” and “capital” had ended, with the cessation of “destructive strikes” that disrupted the production process. The transition was beneficial to both parties. The Japanese method of regulating labor relations was formed and strengthened. It is based on three principles: a system of life-time hiring, payment for seniority and company unions.

In the late 1960s, businessmen from many countries came to study this method. So, "quality circles" began to be created in US companies since 1974 and showed an increase in labor productivity, a decrease in marriage and an increase in profits at times. In the UK, "quality circles" have been organized since 1978, in Germany since the early 1980s. Everywhere there were noticeable improvements in production. In Japan itself, these principles have ensured a conflict-free relationship between labor and capital for half a century. The parties, taking into account the economic situation in the country and the prospects for its development, agreed to increase wages in each financial year, which begins in Japan on April 1.

The exchange of views at the highest level between "labor and capital" has already taken place on January 28. The unions were represented by the chairman of the Japan Trade Union Confederation (Rengo) Rikio Kodzu. The business community was represented by the president of the Federation of Economic Organizations of Japan (Keidanren), Hiroaki Nakanishi, whose collective members are about 900 corporations, more than 100 industry associations. This is the headquarters of Japan’s business, with more than 30 committees on a wide range of issues, on foreign policy, economy, space and much more.

The Japanese government is closely monitoring the assessments of business organizations and trade unions on economic and social issues. Moreover, Keidanren committee members, as well as representatives of Rengo, are included in various groups of specialists formed by the government in the preparation of important economic plans, for example, medium-term prospects for the development of energy. Representatives of these committees are included in special groups formed by state bodies in the preparation of important bills.

The parties, which began in January as part of the Sento negotiations, have so far provided general assessments of the prospects for economic development. Based on them and the draft budget for the next 2020, the leadership of Rengo will develop recommendations to lower-level trade union organizations on rational requirements for the size of wage increases and a general policy on employment issues. The Japanese media are already considering forecasts for the development of the situation for the year and the prospects for changes in the Japanese principles of labor relations.

Representatives of the summit between "labor and capital" were rather stingy with detailed comments on the outcome of the negotiations. In the media they were much fuller.


NEW SYSTEM

Japanese industry is undergoing restructuring. The structures of corporations in its main basic industries, such as automotive, electronics, construction and others, are diversified, their composition is expanding in terms of nature and areas of production, many enterprises are being transferred abroad. The scale of the movement of labor is growing not only in enterprises of one corporation, but also between industries. This complicates the course of negotiations on raising salaries, as well as on the already necessary beginning of the reform of the entire decade of the current employment system in Japan, at least the refusal of a lifelong contract, The Yomiuri Shimbun reports. Surveys show that university graduates admitted to large corporations themselves do not expect to work in them for more than ten years.

Chairman Keidanren Nakanishi at a meeting with reporters stressed that "it is extremely important to consider the problem of creating an environment in the workplace that would motivate people to work productively." The Yomiuri Shimbun newspaper considers this to be a criticism of the situation in which the current wage system provides for its increase without taking into account the effectiveness of a particular person or the level of responsibility in his post.

In the struggle to gain every possible advantage in advanced technologies such as artificial intelligence, global companies compete for talented young workers, regardless of nationality. Proceeding from this, the Nakanishi newspaper notes, it seeks to draw attention to the fact that the salary of highly skilled workers in Japan is lower than its competitors, and believes that it should be determined according to merit in the workplace and this will attract excellent workers and prevent the outflow of talent from Japan.



According to media reports, a number of corporations have already started or plan to attract valuable young and already experienced workers with salaries. NEC Corp. Management since October 2019, it has introduced a new system of remuneration and incentives, according to which a newly hired newly hired employee can receive more than ten million yen per year. The management itself intends to determine the amount of remuneration based on the results of work, and not to establish a unified salary ceiling for beginners. The change in pay is caused by the need to compete globally.

Sony Corp. Raised the salary of newcomers from six million yen to 7,3 million yen per year to a freshman who graduated with a masters degree and has expertise in areas such as artificial intelligence or large data processing. At the same time, according to the results of work, the salary of newcomers can be increased already in the first three months after enrolling in the state, if its effectiveness is shown.

Fujitsu Ltd. Corporation announces plans to reform its payroll system and its willingness to offer tens of millions of yen a year to people with experience in digital fields, in accordance with their level of knowledge and the market value of their labor, regardless of age. The management of the corporation plans to partially refuse to increase the wages of employees, based only on seniority, and move on to pay for actual work results.

Some companies and firms are considering such measures not only in order to increase their competitiveness by hiring talented young workers, but also as protection against the enticement of their own engineers and scientists by other companies offering better salaries and better working conditions. Competition for talents is unfolding.

One can clearly see the development of an environment in which many leading Japanese companies associated with innovative technologies to maintain their position in the face of increasing competition are forced to abandon a number of principles of Japanese labor relations. But even in these enterprises, most enterprises still retain wages based on seniority. There are entire industries in which salaries are determined by seniority.

Keidanren, the country's highest business lobby, the newspaper Mainichi Japan, agrees that the annual recruitment of young people for long-term actual life-long contracts with higher wages based on seniority has helped support post-war economic growth. However, times have changed, and now Keidanren, urges its members to revise their pay methods, which reduce competitiveness, in anticipation of shunto.

If highly educated people with experience in the field of innovative technologies do not receive appropriate compensation for their contribution to production, it is unlikely that Japanese companies today can be competitive in the world, the newspaper The Japan Times writes. This approach is already beginning to understand and accept the unions of global corporations. So, the leadership of the Federation of Trade Unions of the corporation Toyota Motor Corp. proposed to its members a program providing for the expansion of the sphere of salary increase depending on the assessment of the labor contribution of its members. One of the union leaders believes that “percentage unity is not the value to be fought for.” There are more important problems, for example, "concerns about the very existence of factories for the production of spare parts and internal combustion engines, since there is an electrification of cars."

According to the Japanese media, the management of Rengo agrees with the decisions of some companies to abandon traditional methods of employment, but recalls that the traditional system has brought and still brings stable employment, and that the rejection of it could potentially lead to job cuts. So far more urgent at this stage is the requirement to increase the monthly salary for all workers, to eliminate the inequality in wages between regular workers and irregular workers, as well as between small and large firms.


TOTAL IMPROVEMENT

In December last year, according to preliminary data from the Ministry of Health, Labor and Social Security of Japan, for the first time in six years, the average monthly earnings per employee, including bonuses, fell by 0,3% to 322 yen ($ 689) in nominal terms. But this is like "the average temperature of patients in a hospital." The decrease is due to an increase in the number of part-time workers. In December, their share reached a record 2% of the total number of employees.

For the whole of 2019, the average monthly salary of full-time workers increased by 0,3% to 425 yen, while the wages of part-time workers remained unchanged at 288 yen. This gap is due to the fact that those accepted under labor agreements receive payments for overtime work, annual June and December bonuses in the amount of four monthly salaries, and a number of other compensation payments that contract workers do not have.