Japan's labour unions warn of militant action

By Anthony Rowley, Labor News, 23 March 1999

Switch from docile stance comes amid widespread layoffs

As companies such as Sony Corp begin shedding thousands of workers under corporate restructurings amid a prolonged economic slump, Japan's normally docile labour unions have warned of militant action if lifetime employment becomes a thing of the past.

My concern is that over the next six months, the Japanese unemployment rate (already at a record 4.4 per cent) is going to rise, says Etsuya Washio, president of the Japanese Trades Union Confederation (Rengo).

Rengo, which claims to represent around eight million unionised workers, has not traditionally resorted to strike action, notes Mr Washio, but he warns that if companies propose laying off employees, then unions will take a much harder position.

Japan's annual spring wage ⋔struggle’ (shunto) between unions and management is normally as ritualised and as peaceful as the cherry-blossom viewing which occurs around the same time of the year.

Corporations and workers had forged a social contract under which workers enjoy lifetime employment in return for industrial harmony, a partnership that has fuelled one of the most spectacular economic success stories since the end of World War II.

But in a sign that this partnership is under threat, electronics giant Sony this month announced plans to scale back its worldwide workforce by 10 per cent over the next four years, implying 17,000 job losses.

Sony did not specify whether these would involve redundancies rather than natural attrition but analysts are predicting widespread job cuts as corporate restructuring accelerates in Japan.

Many other major firms have announced plans to slim their workforce.

It is not just the threat of layoffs that is pushing the unions affiliated with Rengo towards militant attitudes. They are worried about a growing gap between the goals and perceptions of management and workers as Japan's economy shifts towards a more market economy model. They fear that workers could become increasingly exploited in terms of wages, conditions and job security.

Despite the fact that this year's collective wage demand by unions is the lowest in our history, according to Mr Washio, many firms are trying to trade off job security against wages and to persuade workers to accept little or no pay increase.

We will decide the rock-bottom level (for a wage increase) and if the settlement is below this, we will take strong action, which could include strike action, Mr Washio said.

Leading companies in four key sectors last week offered unions a total average 2.2 per cent wage hike—the lowest level ever—amounting to a monthly increase of 7,000 yen (US$60) in the automotive, electrical machinery, shipbuilding and heavy machinery and steel sectors. Settlements in these industries usually influence talks in other sectors during the shunto.

Nissan Motor Company, meanwhile, secured union agreement not to raise its base wage this spring, for the first time in post-war history. (Rengo had proposed raising the base wage for Japanese workers in general by around one per cent in addition to a scheduled annual pay increase of around 2 per cent).

Rengo accepts that the Japanese economy is still in poor shape, said its president. But it does not accept an automatic linkage between the level of wage increase and company survival. The powerful union body argues that as Japan's recession has been induced mainly by a dramatic fall in personal consumption, only a combination of wage hikes and personal tax cuts can get consumption moving again.

Rengo fears that whereas up to now workers and management have worked together to overcome their problems, employees are in danger now of being sacrificed to the pursuit, by management, of increased returns on corporate assets and higher shareholder ratings.

Mr Washio noted that Sony's share price rose sharply on news of the firm's proposed job cuts. That is not the way things should be, he lamented.

While individual unions may cave in and accept minimal wage increases this year, Rengo seems determined to strike a more militant profile, both by threatening industrial action and by stepping up action at the political level, especially through Naoto Kan's Democratic Party, to which the union movement has offered broad support.

THE KEY ISSUE WILL BE JOB SECURITY

The Japan Federation of Employers' Associations (Nikkeiren) chairman Jiro Nemoto said recently that every effort should be made to keep Japan's unemployment rate below 3 per cent but trade unions fear that a major shakeout may be imminent, not only among big companies but also among the legions of small and medium- sized firms that provide the backbone of employment in Japan's manufacturing and service industries

The term ‘employment fluidisation’ which is currently being promoted merely represents the sacking of elderly and middle-aged workers and the expansion of part-time and despatch labour into areas where the basic practices of long-term employment still prevail, declared Rengo in its 1999 annual White Paper on employment. We reject any fluidisation of employment geared only to quick returns.

Union are concerned about the implications of a Temporary Workers Act being debated by Parliament, fearing that it is a wedge to further erode the lifetime employment system. They are also concerned about official proposals to establish private job placement agencies to ease the transfer of workers between jobs or from one industry to another. This will destabilise the way of work in Japan, said Mr Washio.