Employment Adjustments at Undertaking Level

and Changes in the Japanese Industrial Relations

by Takamasa NakashimaResearch AnalystJTUC Research Institute for Advancement of Living Standards(RIALS)

 (Contents)

1.   Current Employment Situation in Japan
2.  Reality of the Japanese Job Security System
3.  Recent Developments in the Management Side
4.  Responsive Stance of the Trade Union Side
5.  Structuring Social Safety Net (for Reference)

1.   Current Employment Situation in Japan
Japanese economy, once stalled and recorded zero growth in the aftermath of the collapsed economic "bubbles" in the early 1990s, showed signs of slow recovery in 1995 stimulated by public expenditures, including public investment, which induced positive effects on private demand centered on consumption expenditures and plant and equipment investment to result in real economic growth of 2 .8% in fiscal 1995 and 3.2% in fiscal 1996.

However, led by claims of the bureaucrats in the Ministry of Finance who sticked to balanced budget, the Japanese government increased tax payment and social security insurance burdens borne by Japanese people and industry up to \9 trillion since the fall of 1996, and moreover in April 1997 the government raise d consumption tax to 5% from the previous 3%. As a result, business plunged again into a serious setback, and real economic growth in fiscal 1997 (the year ending March 1998) plummeted down to minus 0.7%, the first negative growth in  23 years since the first oil shock in 1974, and the worst since after the war.

 Looking to contributions of Gross Domestic Expenditure components to the negative growth in the year, household expenditures substantially declined with personal consumption expenditures at -0.7% and housing investment at -1.1 to bring overall domestic demand to a 2.2% drop. On the other hand, overall demand from abroad grew at 1.1%, because contributions of imports turned positive for the first time since five years, and because contributions of exports amounted to 1.1% as the yen/dollar rate swung to depreciated yen around \120 to \130 for the dollar.

In the course of those economic turmoils, credibility to the Japanese government bond, financial institutions and individual firms continued eroding, and moves to downgrade Japan by Moody's and other U.S. credit rating organizations helped further steepen the quagmire mired the Japanese economy already suffering financial crunch. In the summer of 1997, Sanyo Securities, a broker house next to the leading securities corporations, went bankrupted, and in the fall of the same year, Hokkaido Takushoku Bank, one of the major city banks, failed, and further in the spring of 1998, Yamaichi Securities, one of the four major broker houses, went insolvent, and in the summer Okura & Co., an established trading firm, and Mita Kogyo, a major manufacturer of copier followed suit. The threat of collapse of companies and destruction of employment raged itself throughout Japan still prevails, and there is a serious concern about ill fate f or the clouding financial plights of the Japan Long-Term Credit Bank and some major city banks, and about possible financial difficulties spreading over general construction contractors,  because banks are restraining from lending the construction industry in order to defend themselves from liquidity insufficiency.

The mounting sense of crisis seized corporate management, keenly impressed the m with the necessity for employment restructuring, and as a result generated t he never experienced level of unemployment through unemployment in the younger age bracket by employers' restraint of recruiting new graduates, and through unemployment among the white-collars in the middle and elderly age brackets by employers' offer of voluntary retirement accompanied with cunning measures to force employees to retirement. The wholly unemployment rate which showed  slight improvements in the June to August period in 1997 was then steadily worsened to have renewed the worst record since after the war in later months to reach 3.59% in February 1998, 3.87% in March, 4.13% in April, and 4.3% in June this year. The worst unemployment rate was temporarily improved to 4.1 % in July, but in August it again worsened to 4.3%.

As a result, the unemployed have reached nearly 3 million. By "age bracket", unemployment rate is sharply on the rise among the middle and elderly age brackets, and by "reason for quitting", those voluntarily left increased by 70,000  over the previous year, against an unusual increase of 350,000 who were forced to leave their jobs (as of July 1998). These figures suggest that unemployment is getting serious in terms of not only its levels but its qualitative aspect. Trends of employment level by industry indicate that in the construction industry where substantial reductions in employment had been concerned due to restraints on public construction works and decline in housing construction, employment decreased by 150,000 in fiscal 1997 from the previous year, while in April 1998, the decline of employment stood at 20,000 from the same month a year earlier, and with the rewriting effort on the Finance Reform bill and resumption of the suspended public construction works, the decline of employment in this sector shows a sign of leveling. In the manufacturing industry the decline h as been continuing since June 1997 and proceeding into 1998, the monthly decline from the same month a year earlier has been widening to record a decrease o f 580,000 in April. Partially absorbing jobless workers from these industrial sectors, employment in the wholesale/retail and service industries has been in creasing. Thus, the worsening employment situation poses a particularly severe upwind against the manufacturing industry which is directly exposed to international competition.

According to Survey on Labor Economic Trends published by the Ministry of Labor in July, percentage of the undertakings conducted employment adjustments increased to 25% (in the first quarter in 1998) from 21% at the end of 1997, and to 28% for the second quarter in 1998 (estimate) to show an increase quarter b y quarter. Among the ways to carry employment adjustments, "restrictions on overtime work" is the highest which is followed by "relocation of jobs". Also, applications for the Business Qualified for Employment Adjustment Subsidy have been increasing sharply , and since June 1998 26 additional businesses have be en designated to the qualified business and as of September 1 the qualified business amounts to 97, covering 76,063 undertakings with 1,564,145 employees.

2. Reality of the Japanese Job Security System

It is now often argued both in Japan and abroad that the occurrence of these severe economic environments and the worsened employment situation would present the limit of the traditional Japanese employment system. The traditional Japanese human resources management system was, as generally pointed out, being supported by the so-called "Three Sacred Treasures" -- "the age-honored wage system", "life-time employment" and "company-based unions" according to the analysis and indication of the OECD study report on Japan published in 1970 among others (some argue that the language of "life-time employment" is inappropriate in the light of actual employment practices, and correctly it should be referred to as "long-term, stable employment", but in this report, "life-time employment" is used in respect for its symbolic meaning).

Of these three pillars, the age-honored wage system and life-time employment a re increasingly hated by some managers because they pose major obstacles to competitiveness in terms of labor cost, these managers complain, in getting through the age of global competition. However, Looking to the process in which these systems were widely accepted and firmly settled in major Japanese corporations, there were natural and rational reasons to choose these systems. In other word, these systems which supported the fast economic growth period of Japan closely interacted with each other to help correlate growth of production and corporate performance to improvements in working conditions and living standards for individual workers in the same line, enhance workers' loyalty to corporations, and serve effectively for improvements in productivity and quality. T hey served to reconcile improvements in both corporate performance and living of individuals, and allowed management and labor to reach reasonable deals at least for medium- and long-term.

However, in the wake of the two oil crises, the Japanese economy shifted from the fast growth period to the mild and lower growth, so that Japanese workers' loyalty to corporations they serve was relatively eroded to have trailed their colleagues in the NIES and ASEAN countries, according to several international comparison surveys (at the time, the East Asian countries recorded fast economic growth called as "miracle" and improved living standards of their people ). And, as corporate growth was slowed, discrepancies among individuals in work ethics and loyalty to their corporations widened to the extent that it becomes difficult to retain the "age-honored wage system" and "life-time employment " in their earlier forms, and also there were changes in the sense of fairness in distributing fruits of productivity gains among participants.

Thus, arguments emerged to ask for transformation of the "age-honored wage sys tem" to an "achievement- and performance-based wage system" and "life-time employment" to a "market-oriented employment system" (more flexibility in employment), and they say these are the must for coping with globalization. If any new employment contract is being signed, these proposals for changes might be re viewed on the negotiation table, but, it seems unfair to unilaterally force workers in their middle and elder ages who have been employed under the Japanese employment systems to accept changes in these systems. Rather, approaches to review changes in these systems through phased steps and within the extent the y are understood and agreed on by affected workers are sought for.

In other word, Japanese workers in the middle and elderly age brackets had worked for lower wages during their younger years in anticipation of rewards in later years by the "age-honored wage system", and under the assured "life-time employment", employees believed that their company and employees shared the same destiny and as such they made their endeavors for QC activities and Kaizen (improvements), so that it is hardly equitable to scrap suddenly the promised rewards for employees. Even if these rewards may not have been written into an y explicit contract, any unilateral departure of management from these systems damages the long-established relations in trust between management and labor.

By the way, the "life-time employment system" prevailed in Japan does not have its base directly in labor laws, Rather, the years of experiences through disputes and practices in industrial relations over employment have been accumulated in the form of judicial precedents, which have become as the legally binding rules of life-time employment. In other word, there is no provision in Japanese labor laws stipulating that "unilateral dismissal of employees is inhibitive", nor "life-time employment is a must". Rather, influenced by the U.S. leg al systems, which were modeled after by Japanese legal systems in their democratization and reconstitution process in post war days, Japanese labor laws allow "freedom to quit" for workers, while at the same time assure of "freedom to dismiss" for employers. Under the Civil Law either party involved in employment contract is able to give notice to the other party to terminate contact and such termination takes effect two weeks after the notice (Section 627, CL), and the Labor Standards Law has only partially amended these provisions in the Civil Law, by adding the requirement to give notice at least 30 days before termination of employment, or alternatively to pay wages for the reduced pre-not ice period (Section 20, LSL).

Because of these reasons, for employees at that time the only way to restrict dismissal by the employer was to incorporate provisions of consultation and agreement by labor for dismissal into their labor contract. However, the Japanese labor market in post war days was flooded by jobless workers, so that for employees, to lose a job was the critical problem leading to collapse of means t o live, and cases considered by lower courts began to rule that arbitrary dismissal by management constitutes social unfairness. The problem of balancing in labor contract between principles of freedom and social fairness reiterated advance and retreat in court's cases in earlier days, and by the mid 1950s, based on the right to work (Section 27) stipulated in the Constitution and on the provision of restricting abuse of rights (Sub-Section 2, Section 1) in the Civil Law, a rule (legal principle) was established that "a dismissal without sufficient reason" or " a dismissal denied by commonly accepted idea in society" is "abuse of the right to dismiss" of the employer and is therefore repealed.

If a dismissal is found as "abuse of the right to dismiss" or not was up to the court's decision, and in the course of those legal developments, employment adjustment patterns were sought by employers, and as lawful patterns such employment adjustment procedures as "restrictions on overtime work --> termination of employment contract for irregular employees (temporary workers, part-time jobs, etc.) --> relocation and loaning for regular employees --> suspension to recruit new employees --> temporary closure of work place and lay off" were established. In other word, substantial restrictions on dismissal were imposed on employers, and in return employers were admitted a broader discretion on their right to manage personnel affairs in order to continue employment relation s. When further reductions in employees over the aforementioned procedures were required, such drastic employment adjustment were implemented in the form of "recruitment of voluntary retirement", and in exchange for an increase in regular severance allowance and with use of employer's influence to place the leaving workers in other external jobs.

Employment adjustments followed after these procedures were established as the typical pattern at big corporations and companies in relatively large scale, while at smaller companies which generally lack flexibility in the magnitude o f adjustments and hold few posts available for relocation or loaning often had to resort to drastic employment adjustment measures. But, big and relatively large scale companies included, Japanese companies were attacked by the storm of sweeping employment restructuring in the oil shock period in the 1970s.

In the period, cases brought into court asking rules on what procedures would be required to carry discharge for adjustment due to poor performance in business were sharply on the rise. As a result, by the early 1980s a rule (legal principle for discharge for adjustment) was established which required the employer to meet the following four requirements in order to validate the discharge for adjustment:
(1) the state of business is objectively found that such a discharge for adjustment is necessary;
 (2) other all-out efforts for work force reduction (measures in the aforementioned procedure) have been made to circumvent discharge for adjustment;
 (3) the enlisted employees for discharge for adjustment are selected based on rational and fair criteria; and
 (4) the employer must appropriately explain the contents of the planned discharge for adjustment and consult adequately the trade union and employees.

Any discharge for adjustment that does not comply with the said four requirements is denied its validity as being found the earlier stated "abuse of the rig ht to dismiss" and the employer is obliged to continue paying wage for the affected employees.

3.   Recent Developments in the Management Side

Now, some two decades since after the oil shocks in the 1970s, the Japanese economy is again being rolled in the big wave of collapse of corporations. The n umber of bankrupted companies has been exceeding over that in the same month a year earlier for consecutive 15 months till August 1998, and their outstanding liabilities have swollen to the huge amount never seen in the past. With advanced placements of orders for public works, bankruptcies in the construction industry have begun to level at least at present, while due to the turmoils in Asian economies and the resultant worsening of the export environment, bankruptcies in the manufacturing industry have increased by more than 30% from the level in previous year and in August bankruptcies in this sector amounted to 1 ,534 cases, the worst in post war months of August, with their outstanding liabilities totaled \1,006.2 billion. This tendency is very likely to spread further as banks are increasingly resorting to "the restraint from lending" due to their insufficiencies in financial resources.

Looking at these circumstances, many managers and analysts both in Japan and a broad say with one voice that "management by Japanese local standards is no longer effective, so that they must run their companies based on global standard s", and assert the necessity to adopt American management style, while discarding the traditional Japanese management style. Their claim includes the arguments for supporting management's retreat from the age-honored wage system and life-time employment in favor of employees rather than dividends of their share holders, and they ask a management policy to lavishly appropriate more money from profit to dividends for the interest of shareholders, and lay off workers more flexibly as does in the United States. According to Professor Dore at London University, the language of "global standards" is a kind of Japanese English, while in these days there is a significant tendency in Japan to transpose the "global standards" with "American standards" and try to adopt wishfully expedient portions of American standards for their own sake (ironically, in the United States, too, the "excellent companies" respecting to job security are not rare).

On the other side of the scene, for long-term debentures issued by Toyota Motor Corporation, one of the excellent Japanese companies boasting the most stable business performance, Moody's, an American credit rating company, announced in August downgrading of their "rating" on the astonishing plea that "the comp any still retains a life-time employment system, which may delay its rationalization efforts". Against this, Mr. Kosuke Yamamoto, the executive vice president for TMC contested, saying: "it's a totally non-sensical and unacceptable ac count", and he resentfully stated that "life-time employment serves to enhance employees' loyalty to their company. Furthermore, within Toyota's corporate organization, personnel affairs are run flexibly and our in-house education to run personnel affairs smoothly is adequately implemented. It does not make sense for the rating company to criticise any possible delay in our rationalization effort".

In the Japanese electric machinery industry, too, Hitachi, Ltd., the leader, and other major corporations are suffering difficulties and reporting deficit on their operations, while they all retain employment through strenuous effort s. Against this, Mr. D. Strasseim, director for Milken Institute, a U.S. economic research think tank, criticized, asserting: "in spite of such a difficult situation, Japanese electric machinery firms retain their domestic employment, and instead they have been practicing restraints on capital investment and closing their strategic operation bases overseas. These conducts disregard profitability and affect interest of their shareholders". A staff correspondent for Nihon Keizai Shimbun in Los Angeles who reported criticism by Mr. Strasseim, followed the criticism reporting that "it is matter of course that the mode of corporate governance varies country by country, but it is an international rule for management to make all-out effort for the interest of shareholders, and retreat from his office when he is no longer able to delineate a strategy for corporate growth". The correspondent's biased claim sounds as if the objective of a business corporation is limited only to "profitability" and "efficiencies" (he would have forgotten, blown by the heat of the U.S. economy, the fact that "social responsibility" and "humanity" are also included in the corporate objective).

Against these and other criticisms from abroad, Mr. Kentaro Aikawa, board chairman for Mitsubishi Heavy Industries uttered that "we think first to secure jobs of our employees in order to enhance their loyalty to the company. Their loyalty is the source of our competitive power, and then take a good care of our customers, thus, profitability will be improved autonomously. Improvements in ROE are the result from these efforts, but not an initially set goal. We take care of our shareholders, but it is our basic policy to reward our shareholders as a result of our effort to make much of our employees and customers". His statement provoked total opposition from foreign correspondents and investors.

Certainly, there are not a few corporate managers, professors of business administration and journalists loudly claiming "the end of the Japanese management ". On the opposite side of this spectrum, there are some unionists who are deeply chagrined at the current situation and rehash the militant but obsolete argument, envisioning a second advent of the labor/management confrontation era.

 This is a move to deny the idea that labor and management are the crew of a ship sharing common interest with each other, and try to pull back labor and management into antagonistic relations with conflicting interests. These people may believe that current transition period from "secured employment" to "an in creasing mobility in employment" provides opportunities for them either to take active part in labor movements, or sell their written works, their organs an d newsletters. But, they lose the viewpoint of workers who work hard at their work places, fighting against uncertainties in the future while still believing in the co-existence between "the corporate growth and their well-being in the future". They are indeed indulged in irresponsible idea, while  not assuming responsibility for the on-going events. The ideology of labor/management confrontation has never brought about the creative tomorrow in the past, too.

As several cases presented earlier indicate, many managers still retain the belief that mutual trust between corporate management and their employees is the prime mover to bring about higher productivity and the quality of products and services. A questionnaire survey on managers commissioned by the Japan Federation of Employers' Associations (Nikkeiren) also revealed the fact that a majority of respondents answered that they would continue retaining life-time employment for cadre workers at production line and corporate staff departments.

 Different from their positive attitude toward reviewing the so-called age-honored wage system, the argument for securing corporate profit by discarding the life-time employment system is not the mainstream in Japanese business community at least at present.

As the organization of employers representing Japan in the area of human resources management, Nikkeiren sponsors a seminar in every summer inviting top management of its member companies. Last August, the 30th top management seminar was held, and in his greeting address there Mr. Nemoto, chairman of Nikkeiren made his remarks as follows: "The Japanese economy is now on the brink of deflation spiral and is experiencing a negative growth. Unemployment exceeds over the 4% level, and triple hardships of "lower growth", "high unemployment level " and "deficit in government's budget" are going on. Behind the scene, there exist such factors as (1) globalization of economies and deepening of mega competition, (2) the advent of information/communication revolution, (3) effects o f swelling world population, and (4) aging with less children (in the Japanesepopulation). In the midst of these circumstances, we must mind the "shadow" area implied in the market economy and the information/communication revolution , that is the problem of how to overcome people's alienation from society. In order to avoid ill effects of the market-almighty principle, it is essential f or us to have a resolution toward integrating market, moral and orders into a trinity. .... As a measure addressing employment/unemployment, the development of vocational education infrastructure is necessary to improve employability that facilitates in social scale the creation of jobs and helps the unemployed take jobs again. Also, we ourselves must mind that creation of new jobs is responsibility for managers and that it is a challenge of their own to make further effort in this particular area. Through collaboration between labor and management, we ought to seek after a third way toward making "a dynamic nation with moral excellence"".

In response to the greeting remarks extended by the chairman of Nikkeiren, Mr. Okuda who chairs the ad hoc committee on employment at Nikkeiren (he is also the president of Toyota Motor Corporation) stated in concentrated discussions that "the utmost responsibility for managers is to secure jobs for their employees, but in these days individual firms have exhausted their corporate resources, so that their ability to retain redundant workers within their organization is approaching the limit. Thus, in the future, while observing basics of the life-time employment system that is one of the salient advantages of the Japanese management, we have to learn about excellent practices in the labor mark et in the U.S. and Europe, such as smoother mobility of labor. In coming years , corporate management will be required to retain employees in life-time employment and mobile work forces at an appropriate ratio, and at the same time develop an environment in which workers can select a variety of working modes and are not restrained by their corporation against their will".

In order to bring such a view into practice at individual company levels, with out ending up with an argument for general principles at the business circle, it is necessary for labor/management relations at the undertaking level in individual firms to function effectively. Based on this standpoint, it is increasingly important for trade unions to watch management's employment policy and participate in the management (to speak for the interest of labor).

4.   Responsive Stance of the Trade Union Side      

Of course, against the worsening environment for employment at present, trade unions do not stand idle in silence. Rengo (The Japan Trade Union Confederation), the national center, has requested, jointly with Nikkeiren, the government to create jobs, and has called for "setting up a Congress on Employment Policy" constituted by the government, labor and management. However, Mr. Sasamori, the secretary general for Rengo believes that the most important thing in union's effort to defend employment rests on accumulating individual efforts to protect jobs by member unions, and emphasizes that "now union members, in particular big labor, are requested to contemplate seriously they should not be all owed to respond to management's proposal of restructuring with an attitude of protecting working conditions for remaining workers at the cost of their colleagues leaving from work places, as was the case in the past recessions". He urges to build rules between labor and management addressing job security at individual undertakings.

Recently, the author had an opportunity to talk with the president of union at Okura & Co., immediately after the trading house went bankrupted. At the trading house, all union officers used to be shuffled annually, so that it seems f or the author that their effort to develop rules for talks between labor and management and provide information for union members were inadequate. In other word, because union officers always served their inexperienced office for a year only, and because the union did not join at all any upper labor organization (of course to Rengo), they were not able to discuss on an equal footing with management based on their acquired management information, nor check management's business plans. Also, the union accepted, without adequate discussion among its members, not only working conditions to be negotiated but even the comp any-proposed recruitment of voluntary retirees under the conditions as initially proposed by the company. In other word, they did not requested extra money to top the regular severance allowance for retirees, nor opposed the restructuring program (i.e. the company-proposed recruitment of voluntary retirees), an d reiterated compromises in a relatively easygoing way, saying: "when performance of the company is poor, restructuring is inevitable". In the course of the se union practices, the sense of unity as management and labor serving the same company and mutual trust between labor and management were eroded gradually.

 And, at last, "all employees were restructured (discharged), but, currently, restructuring is ubiquitous in the corporate society, so we have to accept the situation. It is no use lamenting", the president of Okura union stated in a resigned tone.

If being allowed to say over again, regarding employment and rationalization issues, the effective counter-measures for union are essentially to check problems of management routinely. Among companies, whose employees are represented by Zensendomei (Japan Federation of Textile Workers' Unions) member unions, applications for the employment adjustments subsidy amounted to 93 cases in the July 1997 to June 1998 period, 4.2 times those in the same period a year earlier. There, rationalization programs, involving bankruptcies, closure of undertakings and voluntary retirement, increased by 14 cases from 93 in the previous year to 107 in this year. Zensendomei explains that "any union's response to rationalization problems is subject to approval of the central executive committee at Zensendomei headquarters, and for serious cases such as bankruptcies and closure of undertakings, Zensendomei headquarters in tie-up with the affected union calls for collective bargaining with the employer, and negotiates to secure wage obligations for employees". Also, Zenkin Rengo (National Confederation of Metal Industry Unions) has prepared for action regarding employment problems and the chairman of Zenkin Rengo leads a committee on employment. "Recession prevails in all industry sectors and reductions in industry output are much serious than anticipated. Now, it is essential for labor and management to talk with each other about performance of the company routinely. It would be too late for union to be told suddenly of the management's rationalization proposal on some day. The faster union response is the better to secure wage obligations",  Zenkin Rengo official states.

Jidoshasoren (Confederation of Japan Automobile Workers' Unions), one of the largest industrial organizations in the private sector in Japan, has adopted the following "basic ideas" as a guideline to manage employment problems: (1) labor and management reconfirm "the utmost priority is to secure employment", an d strengthen mutual efforts to facilitate communication and develop consensus; (2) in promoting structural reform programs, their implementation must be taken adequate time in rule to avoid their adverse effects on employment, and also presentation of implementation programs in advance and agreement on these programs by labor and management must be the rule; (3) regarding "change-over of working days" and "lay off" due to temporary production adjustment, management must make such notice as early as possible in rule to develop agreement at s hops and limit adverse effects on suppliers and related companies to the minim um; (4) regarding closure of undertakings or mergers of companies listed on stock exchange, management must pay particular attention to "fairness of information disclosure" and "restrictions on insider trading" which are stipulated in the Securities and Exchange Law, and (5) regarding "the matters relating to protection of rights of individual workers", they must be incorporated into lab or contract as much as possible.

Moreover, Jidoshasoren's guideline stipulates the pre-notice period for the affected worker and requirements of acquiring consent by both the affected worker and his union, for each of "going to assistance work in-house", "going to assistance work at external facilities", "relocation", "transfer", "loaning", "voluntary retirement" and "dismissal". For example, the guideline sets up the following procedures and requirements for "voluntary retirement" and "dismissal ":

[Voluntary retirement]

o Under the circumstance where the environment surrounding the automobile industry has changed substantially and the industry and individual companies as well are forced to carry structural reform, there is a threat of emergence of a serious employment problem, so that union must make strenuous efforts to improve communication between labor and management routinely, and union itself must strengthen its efforts to help reform the company.

o In the case where in the light of current performance of and future prospect for the company, it becomes difficult, in spite of preventive measures by labor and management, to retain jobs for all employees (union members), and when labor and management inevitably agree to recruit voluntary retirees, the following guideline must be observed by both labor and management:

(1) To the full degree, the affected worker's free will must be adequately respected, and act of extortion or persuasion is strictly prohibitive.
(2) Recruitment of voluntary retirees that involves any element to specify particular persons, including the setting of criteria for retirement, is denied.
(3) For retirees, union must require the employer, by its own responsibility, to take necessary measures to offer them new external jobs, and let the employer make efforts to implement training programs necessary for retirees to change job.
(4) For severance allowance, let the company pay extra money on the severance allowance for the company-forced retirement (the retirement allowance equal to that for a retiree reached the retirement age), and such an extra money should be 5 months or more of the basic pay for the affected worker.
(5) When the retiree needs to move from the present dwelling, let the company pay the expenses necessary for such a moving.
(6) For the retiree dwelling in a company house or company dormitory, let the company provide a grace period for dwelling of 3 months or thereabout for the head of family and 2 months for others.

[Dismissal]
o Dismissal of employees are denied, except the case of corporate bankruptcy.
o Under the circumstance where structural adjustments of the automobile industry are inevitable, the threat of company-forced dismissal exists always, so that individual unions are requested to closely watch developments of objective situations and act upon the management asking to take necessary measures as early as possible to circumvent bankruptcy.
o Because union's efforts after the company policy for discharge of employment announced due to bankruptcy or liquidation are very difficult and in most cases unsuccessful, unions are requested to incorporate the prior consultation requirement on curtailment of operations, transfer of business, sell-out, corporate merger, and divestiture into labor contract.
<Note> This guideline addresses the company-forced dismissal, so that dismissal according to union shop agreement or dismissal attributed to the affected worker's failure is excluded.
These provisions have been set up as the guides for unions responding to a situation where corporate activities are slipped into a crisis and employment restructuring becomes inevitable, but, more essentially, before employees are faced to these tough choices, labor and management as well as the entire members at a work place must provide in a concerted effort every wisdom to secure jobs and protect their work place from collapsing, and manage day to day situation s properly with foresight and bravery. To this end, it is required for both labor and management to usually exchange and share information with each other, and respond to the changing situations based on mutual checking with an earnest attitude, rather than through a labor/management nexus.

This collaboration between labor and management is supported by relations of mutual trust and mutual concession between labor and management which have been fostered strenuously by workers and managers at shop floor since after their fruitless confrontation based on the class theory raged in post war days had been finally overcome. A mechanism to assure of opportunities for two way talks between labor and management in managing daily operations at shop floor, and their toil and trouble not sparing consultations to reach understanding and consent on fairness in distributing productivity gains have helped sustain the labor/management collaboration. And, importantly, "life-time employment" has enabled both labor and management to seek after solutions providing merit for both parties over medium- to long-term, let alone immediate gains in short-term. By extending the accounting period for losses and gains, the "zero- sum relations between the employer's share and labor's share" have been overridden, which have made it logical and rational to "live and let live the strengthening of corporate growth base and improvements in living standards of its employees", and which at the same time have enhanced employees' loyalty to their company, and thus  high productivity and high quality have been assimilated to employees' own goals.

For this very reason, unions must warn that throwing aside "stabilization of employment", or the basis of mutual trust between labor and management, even in a severe business circumstance, is the worst management decision to deprive employees of their hope for the future and their sense of assurance and thus bury a salient advantage of the Japanese management by themselves. In many cases , a management decision made driven by distress is apt to wrongly incline to look at immediate losses and gains, but the creative viewpoint leading to a prosperous future is essential in any management decision, so that it is really absurd for management to use "employment" as a bargaining chip.

5.   Structuring Social Safety Net (for Reference)

In the earlier part, the author has discussed that the key to defend employment in Japan rests with the battle for sustaining mutual trust at the undertaking level between labor and management. However, it is true that their efforts a t individual firms alone have an apparent limit. A practice of retaining redundant workers within corporate organization to avoid employment adjustments results in the increase of the so-called "the unemployed within the company", and as Mr. Okuda, chairman for Nikkeiren's committee on employment pointed out, those exhausting companies whose capacity to retain redundant workers is approaching the limit are on the rise.

To improve such a situation, it is essential and indispensable for Japanese economic society as a whole to help  grow corporations and the nation's economy and create jobs. To this end, there are a lot of tasks to be done at society level, which include stabilization of price levels, review of employment- and labor-related regulations, developments of infrastructures to allow mobility of labor (e.g. satisfying education and dwelling requirements), establishment of vocational education systems to facilitate the unemployed for finding employment, and developments of systems providing information on professions sought b y employers and on  resources of talents, to mention a few. In order to mitigate pains of the unemployed and reduce their burdens as much as possible, the structuring of "social safety net" has been proposed by the standpoint of labor and management, respectively. In the following, an overview of some major proposals is given to conclude this paper.

To begin with, Rengo has so far focused on promotion of labor/management consultation on stability and retention of employment, and on the campaign to prepare for and facilitate concluding labor contracts. And, as a result of its lobbying to the government, "The Congress on Programs for Stabilizing and Creating Employment" has been inaugurated by the government. Also Rengo has proposed recommendations of the "Report from A Joint Workshop on New Industries and Job Creation" to the government. The workshop is a joint study group with Nikkeiren which was launched based on Rengo's "1 Million Job Creation Plan" proposed in 1995. However, at least at present, the government's response has been slow, and the employment situation has been continuing worsening, rather than showing any improvement. Therefore, Rengo is working on its "Guideline for Actions on Employment for Fiscal 1999", and its pillars are consisted of the following four items of major activities:

(1) Activity to stabilize and secure employment,
(2) Activity to create jobs,
(3) Activity to strengthen employment programs in communities, and
(4) Activity to address policies and regulations related to employment.

Nikkeiren has published its "Report on Emergency Employment Programs", which includes the following six-item recommendations, and the employer organization has asked the government to implement these recommendations. However, regarding the 6th item titled "Stabilization of Employment and Collaboration between Labor and Management", Nikkeiren states that the responsibility to carry the re commendations in the 6th item basically rests on industries and enterprises in the private sector, positions its employment programs as not the government-dependent ones any longer, and delivers the following argument for its specific proposals, saying: "retaining the ideals of "respect to humanity" and "management based on the long-term view", Nikkeiren hopefully expects employers to make continuing efforts to stabilize employment", "in order to retain and create employment, as well as to secure a favorable working environment, labor and management are required to make further efforts. Labor and management are the safety zone in society, and the entire Japanese society must aim to stabilize employment. At this very moment, they must recognize again the importance of the labor and management relations in trust which have been fostered for years", "funds for the wage increase must be appropriated for achieving the stability in employment" and "in order to stabilize employment, labor and management must cooperate to reform the existing corporate systems for managing personnel affairs and rewards".

(1)  Action to help early recovery of business;
(2) Reform on public investment and taxation system;
(3) Creation and nurture of new ventures and new industries;
(4) Development of labor market and expansion of information on human resources
(5) Improvements in employability (collaboration among businesses, workers, labor and management, and municipalities), and
(6) Stabilization of employment and collaboration between labor and management. Finally, the items mentioned in the Socio-Economic Productivity Center's "Urgent Proposal on Current Problems of Employment" are as follows:

(1) Creation of new employment through the development of infrastructure and support to self-dependency: 
  o Development of support centers to assist self-owned undertakings; o Government expenditures focused on creation of employment; and o Creation of employment by capitalizing on work-sharing.(2) Establishment of employment policy centered on educational investment:
  o Creation of "tax break for educational investment" addressing the post-graduated in society;
  o Assistance to voluntary education and training of the unemployed; and o Provision of information on employment and education.
(3) Development of rules to establish diverse modes of working:
  o Preparation of employment statistics of diverse styles of working and development of prospect in the future;
  o Provision of information on job opportunities and arrangement of proper working conditions and management of employment; and
  o Development of fair rules for the styles of working which are not classed in employment relations.(4) Provision of safety net for employment:
  o Reorganization of public agencies and strengthening of their service functions;
  o Development of the "one-stop consultation" service; and o Emergency financial support to housing loans and education expenses.

Developments of these social systems for securing employment may become an increasingly important challenge in order not to unilaterally shift the strain of adjustments, caused by promotion of reforms on industrial structure, on to labor and management within individual companies, and in particular to workers standing the weakest position. Retention and improvements in employment and living in the Japanese corporate society require both labor and management to strengthen their ties of solidarity and symbiosis beyond the barriers of individual companies, while their footing still rests on the healthy development of labor/management relations within corporation.