How should we learn from its lessons?
In August 1996, RIALS initiated its Research Committee on the Current Developments of U.S. Industrial Society, chaired by Prof. Naotsugu Suzuki, Senshu University. Assoc. Prof. Hiromichi Shibata, Hokkaido University, and Assoc. Prof. Yoshifumi Nakata, Doshisha University, also contributed to the research as a committee member. The committee investigated the recent developments of U.S. industry mainly focusing on its labor dimension and discussed how we should learn from the American experiences for the strategic choice of the Japanese trade union movement. From 7th to 19th, December, 1996, the committee sent a research team to the U.S.A. to collect the latest information as well as to have discussions with researchers and practitioners. We would like to express our special thanks to Prof. Harry Katz, Cornell University, Prof. Clair Brown and Ms. Mary Kay Stuvland, University of California, Berkeley, who gave many useful suggestions as well as kind arrangements to our research team. And to all those who gave so freely of their time, giving lectures and answering questions to our research team-people in the University, Research Institutions and Trade Unions-we offer our grateful thanks.
The following is a summary of the report based on the above investigations of the Committee.
Introduction
America shines brightly yet at the same time is in distress.
Accompanying an increase in the bright, or positive, aspects - the long-term business expansion and industrial revitalization - is a conspicuous increase in the severity of the shadow, or negative, portions, such as a worsening quality of employment and increasing disparity in income distribution. All across America itself, an introspective debate has been sparked by the fact that the benefits of economic prosperity are not being evenly distributed throughout the American public.
A notable development amidst this debate is a growing common concern to the improvement of employment relations (i.e., human resource management and industrial relations) and vocational education.
Present-day American industrial society should not be viewed simply as a single model because of its diversity and the searching for better solutions that is currently under way. In the search for a better model, various strategic choices have been proposed, and are vying for dominance. Great hope has been pinned on the fact that trade unions are revitalizing their organizing activities to strengthen their countervailing power, which will influence the strategic path from the workers' view point.
The most important advice to heed when attempting to learn from what is happening in American industrial society today is the advice given by Americans themselves: "Beware the U.S. model!" Frequently cited as the proper goal of industrial revitalization through deregulation, the American model in actuality is not always looked upon with favor by Americans themselves.
America is often called the experimental state. It has always been a nation that has shined in certain aspects while other aspects were in distress. What we must learn from is the vigorousness with which the American people continue their search for solutions in the face of these shining and distressed aspects.
1. The light and shadow of American industrial revitalization
(1) The concept of industrial revitalization indicates the improved economic performance both on macro and micro level. On a macroeconomic level, the American economy, though its economic growth rate has not been quite high, is nonetheless in a prolonged economic expansion that is the third longest of the postwar years (76 continuous months as of July 1997) and which has expanded industrial production while maintaining low rates of unemployment and price stability. In every category these indicators have outperformed those of other advanced nations.
(2) America's current economic expansion is characteristically driven by capital investment, particularly investment in information technology. This information-technology-centered upsurge in capital investment is seen as having played an important role in industrial revitalization in that it has allowed industry to expand, made businesses more efficient and increased profits.
(3) At a microeconomic level, costs have been reduced through sweeping downsizing carried which, being carried out during a prolonged economic expansion, has increased corporate profits to record levels - the highest in history - and enabled stock prices to soar so remarkably.
(4) Looking at industry, one notices, first of all, the phenomenal recovery made by key manufacturing sectors, notably automobiles and semiconductors. Also striking is the telecommunication industry's prosperity and the marked growth achieved by new service industries such as office services and medical services. The industrial structure has changed greatly, and both the manufacturing and service sectors, led by information technology, computers and electronics, are growing in unison.
(5) Another major characteristic of America's current economic situation is that growth is being led by high-tech industries. In addition, the so-called venture corporations have been active, important players in the technological innovation that has occurred in high-tech fields. A veritable boom of vigorous entrepreneurial business formation has continued uninterruptedly for the past decades in the U.S., and nearly all new jobs created in recent years are the result of growth in small and medium-sized businesses.
(6) Nevertheless, not every aspect of the current American industrial situation can be called a success. For instance, productivity experts and others have pointed out that the rate of investment has not risen that much, and there is skepticism that insufficient investment is being made for the future. In view of this and the irrefutable effect of exchange rates on manufacturing's resurgence, it may be necessary to discount the strength of high-tech industry in the initial stages of technological innovation.
(7) Second, there are various problems that must be mentioned as the failures of downsizing. These are the shadow portions, so to speak, of the recent industrial revitalization. To begin with, the many reports on the aftereffects of downsizing are nearly all unanimous in the doubt they cast on its negative side. In particular, effects such as low employee morale and signs of diminishing loyalty toward the company among mid-level mangers may prove to be negative factors to American businesses in the long run.
(8) The biggest problems engendered by downsizing, however, are employment insecurity, stagnation in real wages, the widening wage differentials and the other phenomena that have occurred as the less visible consequences of the business recovery. If these shadow portions of revitalization are left unresolved, then signs of decline may eventually appear in America's economic future.
2. Policies for reducing the wage differentials
(1) The widening wage differentials are now recognized as a serious social issue in America, generating intense controversy among researchers concerning the causes, and also prompting vigorous debate about which policy response to take.
(2) The opinions of economists concerning the causes of the growing wage differentials are nearly equally divided along two hypotheses: the "technological progress hypothesis," which looks at technological progress for the primary causes, and the "globalization hypothesis," in which the fundamental cause is held to be globalization in the international marketplace.
(3) As for the prescription to remedy this disparity, however, there is surprising agreement, with nearly everyone on both sides of the argument asserting that the three most important policy issues are 1.) increasing the influence of trade unions, 2.) public intervention in the labor market (minimum wage, etc.), and 3.) bolstering education and training.
(4) Of these three policy issues, education and training have been a mainstay of Clinton Administration policy, while the minimum wage was revised in the summer of 1996 after a long interval. Thus, some form of policy response is already being taken. Only the issue of increasing the influence of trade unions remains neglected.
(5) So many researches have already been conducted in the U.S. on the effect of the trade unions on wages. As a result of these researches, it is accepted as a general consensus among the labor economists that trade unions raise wage levels or at least lessen wage disparity among union members.
(6) However, Japan and the U.S. have been equally exposed to the economic environmental pressures of the innovation in information technology and market globalization. Yet Japan has not experienced the kind of glaring wage differentials that is seen in the U.S. It is because of institutional differences in the labor market that the same environmental pressures have had different consequences.
(7) Circumstances involving employment in the U.S. are quite complex, as evinced by a worsening in the quality of employment that is paradoxically accompanying the better employment opportunities that come with industrial revitalization. In short, conflicting forces can be seen existing concurrently. This reality must also be assessed objectively in terms of the light and shadow of modern American industrial society.
(8) America's experience shows that it is important to assess the positive and negative effects of globalization, the information technology, and the responses to each from a comprehensive standpoint, and to survey the future of Japanese industry and employment while promoting the necessary institutional responses that circumstances dictate.
3. The transformation of industrial relations and the workplace
(1) Major changes and new diversity can be observed in American industrial relations since the 1980s. This view, while recognizing the changes brought about by intensifying international competition and other external "environmental pressures," holds that it is the "strategic choices" made by individual unions and corporations that have resulted in diversity in American industrial relations (Katz's model of dynamic industrial relations).
(2) Industrial relations at non-unionized corporations in America are classified as "paternalistic," "bureaucratically rationalist," or "human resource management-oriented"; those at unionized corporations as "antagonistic," "New Deal," or "employee involvement-oriented." Broadly speaking, America is in a period of transition to industrial relations that are "human resource management-oriented" or "employee involvement-oriented," categories that share such common characteristics as flexibility, teamwork, and stable employment. There are also other types of industrial relations that exist concurrently in the U.S.
(3) American industrial relations have generally been undergoing gradual change and diversifying since the 1980s, but the search for solutions by labor and management is still under way, and conditions have yet to stabilize.
(4) At the same time, American workplace, in comparison with Japanese, is also undergoing changes that are complex and diverse. American factories have introduced just-in-time systems, quality control circles and various other Japanese manufacturing techniques in recent years. In three important areas, however, the American workplace not only has failed to approach the Japanese workplace, but also is changing in uniquely American ways.
(5) First of all, with regards to skill formation, American workers are managed under a "split system" in which they are given only general manufacturing skills but not the cognitive skills needed to respond to changes or abnormalities. In communications, "autonomous teamwork," in which workers strive to solve problems on their own without consulting a work supervisor, is employed. Grievance procedures are characterized by the coexistence of both formal grievance procedures, mediated by trade unions, and informal grievance procedures, which are based on consultation with work supervisors (dual grievance procedures).
(6) There are three issues pertaining to such recent trends in American workplaces. First, in skill formation, providing workers with "integrated skills," which as in Japan encompass the handling of abnormalities. Second, improving communications in the workplace. Third, the gradual introduction of workplace reform programs tailored to circumstances at individual workplaces.
(7) There are also two issues pertaining to the Japanese workplace in comparison with the U.S. First, broadening the scope of choice of individual workers in the workplace. Second, making effective use of grievance procedure systems to avert the potential dissatisfaction of workers.
(8) An urgent task in the American workplace is to improve productivity in the workplace while protecting individual choice. In Japanese workplaces, the issue is expanding individual choice while maintaining the advantages of organized decision-making (the middle-up-down approach) in which workplace managers and supervisors act as mediators. Although facing different issues in different places, Japan and the U.S. in a certain sense are both working toward the common goal of harmonizing the needs of the individual and those of the organization and workplace.
4. The revitalization of trade unions
(1) The role of the trade unions is also increasingly important from the viewpoint of rectifying the shadow portions of American industrial society, for the trade unions can influence the strategic choice in employment relations as well as industrial policy on behalf of the workers it represents Despite this, the power of U.S. trade unions in actuality continues to diminish: by 1996, the union density rate had fallen to 14.5%.
(2) The major factors behind the weakening of trade union power in the U.S. include external factors such as lower employment in manufacturing, formerly a traditional union stronghold, and increasing antiunion sentiment in business management and public policy. At the same time, however, there are arguments that one cannot ignore the strategic failures by the trade unions themselves.
(3) Nevertheless, new trade union strategies designed to escape this organizing stagnation began to appear in the late '80s, and a revitalizing trend among trade unions has notably gained momentum. The AFL-CIO launched a renewed movement focused on organizing to win since 1995 under the leadership of new president John Sweeney. Interestingly, the strength and ideas of younger people have been actively applied toward the revitalization of numerous trade unions.
(4) These new trade union strategies were born of efforts specifically aimed at increasing trade unions' organizing power. These efforts are characterized by a propensity for "social unionism," , emphasizing mass movements on the local level and focusing on solidarity with communities, and also by the pragmatism of "strategic planning," one aspect of which is the strategic reallocation of union resources (i.e., budget, fund and manpower) to bolster organizing efforts.
(5) Noteworthy approaches that stress the launching of movements from a workplace level include efforts to establish workplace trade unions through diligent, meticulous organizing activities in which the focus of trade union advocacy is defined as assuring fairness and dignity issues in the workplace. Another such approach is the volunteering in such activities by a broad range of rank-and-files.
(6) With respect to the reallocation of union resources, there can be observed in the activities of AFL-CIO headquarters and influential national unions a tendency to concentrate budgetary resources and manpower on organizing activities.. AFL-CIO headquarters has greatly enlarged its budget for organizing and renovated its headquarters staffs; similar actions can be seen with increasing frequency among the national unions as well.
(7) As for solidarity with communities, efforts are under way to launch various types of joint projects with local nonprofit organizations (NPOs). In addition to being noteworthy in the sense of establishing the societal role of trade unions, this should also help generate favorable public opinion for trade unions.
(8) Whether or not current efforts to revive American Trade Union movement will succeed in increasing the unions' organizing strength is, unfortunately, unclear at present. Nonetheless, there is much to learn from the sincere efforts of the American trade union movement to independently establish its own strategic choice in industrial relations.
5. How should we learn from the current developments in American industrial society?
(1) Notwithstanding the argument that holds America as a model of industrial revitalization in the face of globalization and the information technology revolution, in actuality the most important characteristic of current developments in American industrial society lies in the diversity and search for solutions behind which are a variety of conflicting models. By no means is there a single, paramount "American model."
(2) If we seek something to learn from the current U. S. experiences, it is precisely this diversity and searching and the vitality that they engender. This is the first step for the true understanding of the American experiments in industrial revitalization.
(3) America's nature as an experimental society -something that has been pointed out from the beginning - allows society to be vitalized through change, diversity and determination, but at the same time frequently overamplifies the transitory friction generated by the magnitude of change, and also tends to engender maldistribution of the fruits of prosperity under a philosophy of "winners take all." The worsening in the quality of employment and income distribution during the current industrial revitalization can also be understood in this context.
(4) Rectifying the shadow portions of industrial revitalization, however, is the most important political issue in America today, and we must also turn our attention to the fact that actual policy responses are beginning to be implemented. America is not ruled by an absolute belief in the market solutions, and we must remember that various institutional efforts are being made to control the market forces to maintain social cohesion.
(5) That employment relations (namely, human resource management and industrial relations) and education and training are being emphasized for their strategic importance and promoted as a concrete means of improving employment quality and income distribution is something from which Japan, too, could learn much. Notably, in the field of education and training, considerable attention is being focused on adapting technical education to the information revolution, and remarkable progress is being made in connecting primary- and secondary-level schools to the Internet.
(6) As for improving employment relationships, employees are becoming more and more involved in various ways and forms, but it is the trade union, as a voluntary association of workers, that more than anything else is giving life to this involvement. Despite American trade unions' pronouncedly diminished organizing power, the fact that a "new spirit" of trade union revitalization has emerged and is steadily driving the movement. This is encouraging news for the future of working America and also the most important lesson for Japanese trade unions.