Week 8 Blog: Shunto and the Shackles of Competitiveness

This article is written by Charles Weathers of the Osaka City University and discusses the Japanese employment system with regards to the concept of Shunto and how the union movement, in more recent times, is taking certain approaches in attempt to revive this concept that was said to have died in 2002. Shunto reflects one of the pillars of the Japanese employment relations system and is concerned with linking wage raises for low-end earners to those of the workers employed by large firms and in essence promoting social equity. Historically Shunto helped unions maintain a voice in economic decision-making, however it completely broke down in 2002 when unions were restricted so severely that they ceased to even include wage increases in worker demands. Weathers outlines six new approaches that unions are taking in order revive the Shunto system.

   1.     Seeking ‘wage improvement’ instead of traditional wage raises

-    This sees unions incorporating a wide range of matters into bargaining, including raising standards for young workers, correcting wage curves for older workers, improving entry wages, improving wage equality and increasing allowances for overtime work.

-    This approach is intended to respond not only to the difficulty experienced in obtaining significant wage increase, but to also to respond to existing performance differentials and the increased use of performance-based pay schemes.

   2.    Demanding policies to support work-life balance

-      Japan has in recent decades been experiencing a very low birth rate, which is becoming a very significant problem as the majority of the population head towards retirement. The features of the current system fuel this problem as long working hours make it practically impossible for women who are raising children to pursue careers and it also is regarded as a major cause of workplace inequality. Unions are demanding family-friendly personnel policies and the enhancement of childcare support.

   3.    Shift influence from export-oriented to domestic demand-oriented sectors

-       Japans strong economic growth has been driven primarily by exports and not by household spending. With strong GDP and low inflation there is still minimal wage growth. The Prime Minister made the statement “I want the people also to feel the results of this economic prosperity” and urged businesses to be more generous towards employee wages.

   4.   Strengthening the bargaining leverage of small-firm unions

-    This approach is aimed at once again closing the wage-and-benefit differential evident in different sized firms. This has traditionally been a distinctive feature of the Japanese employment system. During the high growth period this differential shrank substantially because SMEs were forced to raise wages so that they could compete with larger firms for good workers. By giving more leverage to the unions representing these SMEs the aim is to close the differential permanently.

   5.   Strengthening the representation of non-regular workers

-    Non-regular workers, or peripheral workers, have been viewed as buffers protecting the company as well as the full-time employees. Unions need to organise this group of workers so that they can attempt to re-establish their union voice. This is also an important approach as there is well-documented public concern regarding the growing ranks of the working poor.

   6.   Introducing a new wage setting approach

-       A new approach to wage setting has been suggested, one that is designed to establish wage demands on an occupational basis. An Approach like this will ultimately reduce the importance of tenure and formal education, both of which have been historic features of the Japanese system. It also supports other approaches by helping to reduce differentials between firm sizes and between regular and non-regular workers. The proposed standardization of wages for jobs is beneficial in that is facilitates job switching, and enhances flexibility for both employees and employers.

The article provides a really great insight into the changing role of the union movement in Japan over the last few decades. It very effectively described the historical context of Japans employment relations system and how specific event and processes essentially shutdown union voice almost completely. Overall it provides a well-written, chronological story of Japanese unionism and very descriptively outlines how unions have overcome the extreme pressures and utilised strong economic growth to re-establish themselves as a more prominent voice in the Japanese system. By outlining the six non-wage approaches that unions are currently successfully using provides a useful insight into alternative method, which other countries employment relations systems can possibly learn from.

REFERENCE

Weathers, C 2008, ‘Shunto and the Shackles of Competitiveness’, Labor History, vol. 49, no. 2, p. 177-197.