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.

Week 6 Blog: Still Married After All These Years? Union Organising and the Role of Works Councils in German Industrial Relations

Still Married After All These Years? Union Organising and the Role of Works Councils in German Industrial Relations

With union density being a problem that has hindered labour organisations all around the world over the last few decades it now becomes important to look deeper into the German industrial relations system where union density has fallen from 11.8 million to just 6.4 million between 1991 and 2007 (Behrens 2009). At a certain point declining union density becomes a problem that interferes with the successful representation of employees interests in collective bargaining standards for wages, hours, working conditions and other benefits. With Germany being a Coordinated Market Economy Behrens looks into how the so-called ‘dual system’ works towards representing employees interests in the workplace and how unions work together with works councils in attempt to reverse the declining union density that is becoming ever apparent in the German economy and the whole globe.

In North America particularly there is strong debate that unionism can take only one of two forms, being either ‘organising’ or ‘servicing’, and that the inability to cover both has led to the massive scale of union decline over the last few decades. However in Germany the existence of works councils has provided an extra string in the bow for representing workers interests in the workplace, which is known as the ‘dual system’. This ‘dual system’ sees a division of labour between the two labour movements, with collective bargaining at the workplace-level being assigned to the unions, and larger company-level negotiations being handled by the works councils. Behrens suggests that German works councils have an important impact on union density in that they have pursued active membership on their behalf (Behrens 2009). He outlines four factors, which help to explain why, or why not, works councils will engage in recruitment activities on the union’s behalf.

1.    Servicing and Social Exchange

-       Behrens suggests that works councils commit to active union membership recruitment only if they believe that the services unions provide them with are worth the effort (Behrens 2009). The services that he refers to are reflected in the training and support that unions are able to provide works council members with, in order for them to successfully fulfil their duties.

2.    Works Councillors Union Attachment

-       By this Behrens is suggesting that there is a direct relationship between the union statuses of works council members and their interest in pursuing membership recruitment activities on behalf of the unions.

3.    Union Strategy

-   There appears to be a lack of coordination from Germany’s peak federation body, The Confederation of German Trade Unions (DGB). With recruitment seen to be the individual responsibility of each union body, there is little convergence, which has resulted in different members adopting different recruitment strategies. Some utilise the influence available from works councils, however some attempt to utilise more traditional attractions in the form of lower prices and special incentives (Behrens 2009).

4.    Professionalization and Resources

-     The process of decentralising collective bargaining has burdened works councils with even more of a workload than before. This in itself creates a situation where there is a trade off between the priorities of works council members. Behrens suggests that under this pressure works council members will not give priority to union membership recruitment activities.

This article takes a really in depth look at the industrial relations system of Germany, and in particular it assesses how unions are able to utilise this system in attempt to try and slow down the declining union density that itself is experiencing. It is important to understand that this problem is not only local to Germany but is extremely prevalent in countries all over the globe. The article provides a vital comparison between what is perhaps the polar opposite of industrial relations systems, being that of North America’s. North American union strategies, which are typically very traditional in nature, have over the past few decades been rendered extremely ineffective. We can know see in the coordinated German system, which has the presence of works councils, that union influence is much stronger than that of North America. With works councils acting as another party in collective bargaining and workplace interest issues it highlights that a more cooperative approach, in respect to both employers and their employees, rather than a typically aggressive and hostile approach is beneficial to all involved and also to the German economy as a whole.

REFERENCES

Behrens, M 2009, 'Still Married After All These Years? Union Organising and the Role of Works Councils in German Industrial Relations', Industrial and Labor Relations Review, vol. 62, no. 3, p. 275-293.