HRM Project

Industrial Relations in Japan

Presented By: Group 12

Amal Balaji PGP26262

Anil Digvijay PGP26263
Anil Dasa PGP26264
Bharat D PGP26273
Pragati Mandal PGP26294
Introduction
 Shimada Haruo, a leading Japanese IR scholar opines that Japanese
managers regard human resources as the most critical asset

 Japanese culture places a high value on family relations

 Unity within the firm becomes a central value and corporate objective

 Smaller companies have a tenuous existence and cannot guarantee secure

employment

 Japanese firms exhibit fewer traces of individualism and place more

emphasis on group relationships

 Authority is respected so highly that the outcomes of group problem-solving

tasks will reflect the views or preferences of senior managers
Three Pillars of Japanese IR
 Japan’s rapid economic growth from the mid-1950s through the 1980s
propelled its industrial relations and organizational practices into the
centre of international attention and debate

 Three interrelated features of the system have attracted the most

attention:
(1) Enterprise unions
(2) Labour–management cooperation
(3) Lifetime employment security (Nenko)
 Enterprise Unions
 In the immediate postwar period the lifting of restrictions on unionization
resulted in a wave of labour activism and unrest

 Japanese government and the American occupation authorities launched a

counteroffensive (the “Red Purge” of l947–48) to deny union rights to
Communist-backed organizations

 The newly formed Japan Federation of Employers’ Associations (Nikkeiren)

embarked on a campaign to form moderate, anti-Communist enterprise
unions

 Employers made important concessions to the labour movement, including

employment security, seniority-based wage systems

 This shaped the large-scale enterprises that led Japan’s remarkable

economic growth from l950s to l970s
 Labour-Management cooperation
 Low levels of conflict, even in declining industries, are characteristic of the
generally cooperative relationship

 This may be the case because blue- and white-collar workers belong to the

same union

 The scale of management bonuses is tied to the size of bonuses for blue-
collar workers. Many senior Japanese executives served as union leaders in
their companies at earlier stages in their careers

 Problems are solved by employing cross-functional teams that provides

engineers and managers with job experience in multiple functions, including
working on the factory floor
 Employment Security
 Lifetime employment security is not guaranteed by law or contract but is
embedded in the business and human resource planning policies

 Growth in company size and stabilization of employment are high

priorities for Japanese executives

 In most large Japanese firms, employees are expected to stay with the
firm until they retire. Layoffs are carried out only as a last resort, even
during periods of technological change or a downturn in the business
cycle

 Wages in Japanese companies tend to rise with seniority, and most job
openings within the blue-collar and managerial ranks are filled through
internal promotions

 These combined features limit the likelihood that workers or managers

will make mid-career transfers to other companies
 Evolution of IR in Japan
 Prewar Period (Before 1945)

 Postwar Period (1945 ~ 1973)

 IR post oil crisis (1973 ~ 1990)

 Latest trends in IR (1990 ~ present)

Prewar Industrial Relations
 From early days of industrialization, Japanese employers, labour leaders,
and bureaucrats were divided over whether conflicts between
management, labour relations, unionization and dispute resolution

 Between 1920 and 1931 government policymakers brought forward eight

proposals to provide a legal framework for the establishment of labour
unions, but each was defeated

 In 1931, the union movement had reached only 7.9% of the total industrial
labour force

 Large-scale enterprises forestalled the formation of unions, and several

developed alternative “Japanist” models of paternalistic management

 With the outbreak of World War II, the union movement was brought to a
halt
Postwar IR in Japan 1945-49
 After the passage of Labor Union Law in December 1945, a number
of labor unions were formed

 By the end of December 1947, 45 percent of the workforce were

unionized

 Majority of unions were enterprise-based and comprised of both blue

and white-collar workers

 Powerful position of workers was destroyed by the Labor Union Law

Agreement of June 1949. In that period, a wage system was created
for the purpose of securing a livelihood for the people
 Postwar IR in Japan 1950-59
 During this decade, both permanent workers and temporary workers were
employed by Japanese firms and number of temporary workers increased
after Korean War broke in June 1950

 Japanese firms continued to cut staff including permanent workers and thus
employment conditions became extremely insecure

 There were significant labor disputes in major enterprises, through which the
enterprise union system began to emerge

 The co-operative enterprise unions were born in this period. Enterprise

unions had several weaknesses including weak bargaining power and lack of
a universal impact across the industry or nation

 To compensate for these weaknesses, union leaders devised a unique wage

determination system called “shunto” or the spring wage offensive in 1955
 Postwar IR in Japan 1960-73
 First, as the result of the defeat of Miike dispute of 1959-60, the unions
lost the effective control of the workplace and labor disputes in the
essential heavy industries disappeared

 Second, it became clear that the workplace struggles were to be

subordinate to the union’s unifying function

 Third, federations of co-operative enterprise unions were founded in

1964

 The formation of cooperative enterprise unions rendered collective

negotiation meaningless so, collective negotiation was transformed into
the joint management-labor consultation exercises. This trend allowed a
sense of enterprise community to emerge
Post Oil Crisis 1980 ~ 90
 Human resource strategies focused on generalist workers rather than
specialist workers who focused on innovative technology

 The percentage of total white-collar workers with much slower productivity

growth than blue-collar workers increased dramatically from 36 percent in
1970 to 50 percent in 1990

 Second, workforce has been aging rapidly, with an excess of older

workers. 20 percent of the Japanese workforce will be 60 or older in 2020

 These factors caused the rise of labor cost because the older workers
were given high salary because of the seniority pay system

 After the collapse of the bubble economy, the unemployment rate has
increased and repeatedly reached new records, hitting 5.4 percent in 2002
increased the need for corporate restructuring
Present Trade Union Structure

Trade Union Structure

Changes in Labor Relations 1/2
 The proportion of workers joining labor unions in Japan has been continuously
declining

 The estimated unionization rate calculated by the Ministry of Health, Labour

and Welfare MHLW reached a peak of 55.8 percent in 1949 and hovered
around 30 percent from the 1950s to the 1970s

 In the early 1980s, the figure fell to the 20% level, in 2003 rate dropped to19.6
%

 Japanese annual collective bargaining called “shunto” or the spring wage

offensive is about to collapse

 In 1990, non-regular workers made up 20.2 percent of the Japanese workforce

 in 2004 this has risen to 31.5% caused by the spread of outsourcing practices
among Japanese firms
Unionisation Rate

Unionisation Rate
Changes in Labor Relations 2/2
 Non-regular workers usually are left unprotected and outside of the union
organizations

 Changes of labor relations in Japan are characterized as the decreasing

rate of union membership

 Losing influence of shuntoor the spring wage offensive in industry-wide

wage determination, and increasing number of non-regular workers such
as temporary, part-time, and contract employees

 Nature of labor-relations in Japan is changing from the collective labor-

management relations to individual-based labor-management relations
also associated with the individualization and diversifications of
employment practices
Ratio of non-regular to regular
employees

Rate of Non-regular Employees

Industry wise Unionisation

Industry wise statastics

No List of Labor-Related Acts

Labor Union Act (latest revision: 2005)

1
Order for the Enforcement of the Labor Union Act
Labor Relations Adjustment Act (last revision: 2004)
2
Order for the Enforcement of the Labor Relations Adjustment Act (last revision: 2006.2.1)
Labor Standards Act (last revision: 2004) 
3
Ordinance for Enforcement of the Labor Standards Act
4 Defined Contribution Pension Law (last revision: 2001.6.29)
5 Employment Insurance Act (last revision: 2007)
6 Employment Measure Act (last revision: 2009.7.15)
Employment Security Act (last revision: 2007)
7
Ordinance for Enforcement of the Employment Security Act
8 Human Resources Development Promotion Act (last revision: 2006)
9 Labor Contract Act (Act No.128 of 2007.12. 5)
10 Minimum Wage Law (last revision: 2002.5.31)
11 Act on Promoting the Resolution of Individual Labor-Related Disputes (last revision: 2004)
Act on Securing, Etc. of Equal Opportunity and Treatment between Men and Women in
12
Employment (last revision: 2006)
Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working
Conditions for Dispatched Workers (last revision: 2006) 
Ordinance for Enforcement of the Act for Securing the Proper Operation of Worker Dispatching
13 Undertakings and Improved Working Conditions for Dispatched Workers
Order for Enforcement of the Act for Securing the Proper Operation of Worker Dispatching
Undertakings and Improved Working Conditions for Dispatched Workers (last revision: 2007) 

14 Security of Wage Payment Law (last revision: 2002.5.31) 

15 Law concerning Stabilization of Employment of Older Persons (last revision: 2004.6.11)
Act on the Succession to Labor Contracts upon Company Split (last revision: 2005)
Ministry of Labour Ordinance No. 48
16
Ministry of Labour Announcement No.127

Act on the Welfare of Workers Who Take Care of Children or Other Family Members Including Child
17 Care and Family Care Leave 
(last revision: 2004)
18 Act on Improvement, etc. of Employment Management for Part-Time Workers(last revision: 2007)
 Labour Standards Law (1949)
Chapter I – General provisons
 Principle of Working Conditions
 Determination of Working Conditions
 Equal Treatment
 Principle of Equal Wages for Men and Women
 Prohibition of Forced Labour
 Elimination of Intermediate Exploitation
 Guarantee of the Exercise of Civil Rights
 Scope of Enterprises Covered
 Labour Standards Law
 Chapter II – Labour Contract
 Chapter III – Wages
 Chapter IV - Working Hours, Rest Periods, Rest Days and Annual
Leave with Pay
 Chapter V - Safety and Health
 Chapter VI – Minors
 Chapter VI-II – Women
 Chapter VII - Training of Skilled Labourers
 Chapter IX - Rules of Employment
 Chapter X - Dormitories
 Chapter XI - Inspection Bodies
 Chapter XII - Miscellaneous Provisions
 Chapter XIII - Penal Provisions
 Supplementary Provisions
Outline of Working Hours / Holidays
(in Labour Standards Act)
1. Legal Working Hours
・ 8 hours or less a day / 40 hours or less a week in principle
2. Legal Holiday
・１ day a week, or 4 days per 4 weeks
3. Overtime Work
・ Dependent on conclusion of labour-management agreement (Standards on maximum
overtime)
15 hours a week / 45 hours a month / 360 hours a year
4 Premium Payment
・ Ordinary overtime work …25% or more
・ Night work (22:00-5:00) …25% or more
・ Work on a day-off …35% or more
e.g. overtime ＋ night work …50% or more
day-off ＋ overtime work …60% or more
5 Annual paid leaves
・ Entitled to 10 days when worked for first 6months continuously
After that, 1 day (the following 2 years) or 2 days (after that) are added for each service
year up to 20days
Thank you