The Future of the Japanese Labor Movement

C.D.A. Evans: Japanese Labor

FOR THE last one hundred years, Japan has experienced one of the most unusual organized labor movements in the modern world. Triumphing despite fierce oppression in the decade before the Second World War, the modern Japanese labor movement has been at once wildly successful and deeply coopted. Its history shows how principles of shared governance and social harmony work in practice, and the consequences of a labor movement strategy that seeks, above all else, to avoid confrontation.

The roots of the movement are in the early 1910s, during the Taishō Democratic Era. Disillusioned with what they saw as the false consciousness of the principles of racial hegemony and common divine descent, labor activists fought to establish democratic socialism and universal suffrage. Strikes and protests soon became commonplace, including large but peaceful protests in 1919 and 1920. Despite police efforts at suppression, by the mid-1920s Japan seemed on its way to a functional two-party parliamentary democracy. But Japan then suffered what is now called the Shōwa Financial Crisis. In an effort to bolster a struggling economy, the Japanese government issued discounted bonds to banks throughout the country. When the government tried to redeem the bonds in January 1927, fear that the banks would default spread panic throughout the system. The Japanese economy collapsed, and the country plunged into depression.

In America, the Great Depression gave new life to a labor movement that had suffered in the booming 1920s. While American labor won organizing rights with the Wagner Act passed under President Roosevelt, Japan experienced the rise of a militaristic, state-capitalist oligarchy unfriendly to unions. Drawn from the conservative elite, these new, unelected leaders set Japan on a course that would eventually lead to the War in China and the Second World War.

It is difficult to overstate the devastation that the Second World War wreaked upon the Japanese economy. Extensive allied strategic bombing campaigns completely destroyed the nation’s industrial capacity. Throughout the difficult early rebuilding process, Japanese scholars and old heroes from the once-active Left came to enjoy a new prominence, using their position to advocate a new type of economic order, rooted in a long-standing Japanese aversion to social inequality. If Japan was to rebuild, wrote these professors, public intellectuals, and essayists, the Japanese people needed to unite. All economic actors, from laborers to investors, had to work together. This intellectual movement had a profound impact on subsequent Japanese business culture, leading Japan toward a labor renaissance.

From the early 1950s to the late 1980s, Japan experienced a period of rapid economic growth. Because of the postwar commitment to work together, labor had a seat at the table for every corporate decision. As a result, Japan enacted the world’s most generous pension program in the 1950s and secured a kind of life-tenure system for workers.

From the 1950s through the 1980s, the Japanese workforce was highly unionized, but the unions that it belonged to would seem unusual to Americans used to thinking of the relationship between unions and management as adversarial. The strike has, at least historically, been one of American unions’ most powerful tools. Unions in Japanese companies, on the other hand, functioned as a second branch of the HR department; one of their fundamental missions was to avoid strikes. American labor unions are supposed to advocate for a fair share for workers, and to prevent corporate decision-makers from enacting policies that fill their own wallets at the workers’ expense. The role of the Japanese labor union is, roughly, to ensure that a firm’s labor force smoothly contributes to the company as a whole. Corporate decision-makers who don’t work with unions appear alienated, resulting in negative consequences for the firm.

The collaborative model of Japanese unions contributed to their early success in securing benefits. But this kind of cooperation, unsurprisingly, retarded the development of an independent labor movement.

THERE HAVE been times when the cozy relationship between labor and business has led to tragedy, as in the case of Minamata disease. In 1908, the Chisso Corporation opened a chemical factory in the small coastal city of Minamata. The factory’s rapid expansion spurred the local economy, and both town and company prospered. With little other industry in Minamata, Chisso developed great social and political influence.

As was common at the time, the waste products resulting from the manufacture of the chemicals were released into Minamata Bay. On April 21, 1956, a five-year-old girl was examined at the Chisso factory hospital. The physicians were alarmed at her severe symptoms, including convulsions. After eight other patients showed similar symptoms, researchers from nearby Kumamoto University were invited to investigate. The researchers almost immediately suspected that wastewater from the Chisso factory was the source of the illness. In response, Chisso redirected its wastewater upstream to confuse the researchers, poisoning hundreds of other people. The company suppressed all internal research and refused to cooperate with the research team. It wasn’t until 1965 that the issue was really addressed. Today, despite class-action lawsuits and enhanced regulation, many victims of Chisso’s gross negligence have never been compensated, nor has the significant environmental damage to the Minamata area been adequately dealt with.

Sadly, Chisso’s Workers’ Union did not emerge as a protagonist in these events. Chisso’s employees were deeply loyal to the company throughout the crisis, and even today Chisso has a favorable image amongst many residents of Minamata. When the Minamata Fishermen’s Union began to protest against Chisso for damages to fisheries, Chisso union employees held counter-protests. The union strongly backed Chisso, and, with a few exceptions, other unions were either invisible or actively opposed investigation throughout the crisis.

Unused to operating in a confrontational relationship and unprepared for the kind of broad general strikes that would have been necessary to achieve results, workers’ unions in Minamata became a complicit partner in a humanitarian tragedy. The same system that secured the rights of Minamata workers to life-tenure backfired in this most important of moments.

Another cautionary tale concerns the cozy relationship between the Tokyo Electric Power Company (TEPCO) and its workers’ union (a part of the Federation of Electric Power Related Industry Workers’ Unions, or FEPRI). TEPCO and its union formed a kind of unholy alliance in Japanese politics: TEPCO executives donated generously to high-level members of the right-of-center Liberal Democratic Party (LDP), while FEPRI brought in money and votes to the left-of-center Democratic Party (DPJ).

FEPRI has been particularly active in supporting DPJ Upper House Member Masao Kobayashi, donating 30 million yen (roughly $300,000) to his campaigns. With the support of Kobayashi, FEPRI has worked hard to derail numerous efforts by the administration of Prime Minister Naoto Kan (DPJ) to improve the regulation of TEPCO and other major utilities—efforts that might have averted some of the worst parts of the Fukushima nuclear disaster. In 2008, rumored legislation would have set aside a trust fund for disaster recovery paid by TEPCO and other utilities, but plans were shelved after spirited legislative opposition. Once again, a major crisis illuminated the failings of a cozy relationship between company and union.

NOTWITHSTANDING THE example of TEPCO and FEPRI, the labor-as-HR-department model began to change in the late 1980s. In 1988, the Japanese Nikkei index hit its all-time peak; the following year, the stock market and real-estate sector crashed. A broader economic depression had set in by 1995, severely depleting the resources of the Japanese economy. Over the last two decades, Japan has seen almost no economic growth and wages have stagnated. This economic collapse has crippled labor benefits.

The boom years were powered by keiretsu, large corporate conglomerates with extensive vertical and horizontal integration. A keiretsu corporation might own a bank, a series of mines, an import-export division, factories, retail outlets, rental properties, and even vacation resorts. These tightly interwoven companies are so massive that they require a steady flow of incoming workers and can offer them a variety of benefits at a discount—like worker housing (from the excess capacity of the company’s housing division), insurance and credit (from the company’s bank), and vacation options (from company-owned resorts).

As the economy overheated in the 1980s, keiretsu alliances increasingly came to rely on their financial and property divisions to generate profits. When the market crashed, keiretsu were left with hollowed-out balance sheets, sometimes including the infamous “zombie banks”—banks that appeared in good health on paper, but in reality were bankrupt. Large companies were forced to spin off their many divisions and focus on cutting costs. As a result, the tenure system that characterized the lives of most salaried Japanese workers has become less common

Case law (especially what is called the just-cause case law, or kaikoken ranyou houri) continues to make it very difficult for a Japanese company to fire regular salaried employees: a company still must first prove that there are no other means, including suspended hiring or firing temporary workers. However, as a result of increasing economic pressure, Japanese companies have turned to hiring more and more workers as arubaito—part-time workers. Unlike the regular salaried seishain employees, arubaito workers are easy to dismiss and suffer from very weak job security. This has created a separate “second-class” track of arubaito workers who remain “part-timers” even if they work more than forty hours per week. According to the Survey of Young Employees, the number of workers reaching seishain status and the life-tenure it brings straight out of school has been declining for years, although the figures are still high by American standards.

Regular-salaried seishain employees do still tend, for the most part, to stay at one firm, but the rate of movement has been increasing. Years ago many professional Japanese didn’t know anyone who had transferred in successful positions at more than a few firms, but now that career track has become much more common. As workers see themselves more and more as contracted labor and less and less as part of a corporate community, it seems natural that they would begin to feel less interested in becoming involved with shared governance or union organizations at their workplaces.

Because of a deep cultural respect for the elderly, the Japanese pension system has remained intact and is still the most generous in the world. However, even pensions have occasionally come under political attack. Flush with popularity after a successful fight for bank transparency, the conservative Koizumi administration turned to cutting pension costs in the early 2000s. Their efforts were rebuffed, but under continuing tough economic conditions, they might not be next time.

THE DECLINE in benefits for Japanese workers is troubling, but there is a silver lining. Just as the postwar boom created a well-cared-for, well-organized, but non-adversarial labor movement, the post-crash economy is beginning to create a labor movement that is newly dynamic.

Rengō, the largest Japanese labor federation, was founded by the merger of several smaller groups in 1989, and over the last two decades it has steadily gained political power. In 1993, with the broader Japanese economy stagnant and the stock market still struggling, noted behind-the-scenes power broker Ichirō Ozawa separated from the ruling center-right LDP to form the Japan Renewal Party (JRP). A primary engine for Ozawa’s political success during this period was his close connection with Rengō and the organized labor movement. By bringing labor with him, Ozawa’s new party rapidly became an important political force, and its success slowly began to destabilize the LDP. By the mid-1990s, the LDP had lost its thirty-eight-year grip on the majority leadership in both houses of parliament, and it appeared that organized labor might help to usher in a competitive two-party electoral system for the first time in Japanese history. Progress was derailed in the mid-1990s by political infighting, but the reunited Democratic Party of Japan (DPJ) finally succeeded in ousting the LDP in the historic 2007 general election. Rengō became the largest single supporter of the new DPJ coalition, giving labor immense and active influence.

A particularly emphatic symbol of the new power of Rengō came in a policy struggle fought in the late 1990s. The Japan Medical Association (JMA), the Japanese equivalent of the American Medical Association, was once of the most powerful supporters of the LDP government, dominating health policy from the 1950s through the early 1990s. The JMA lobbied successfully for special tax benefits for doctors and against introduction of the birth-control pill.

But with the rise of Rengō’s political influence, JMA has lost its health-care policy monopoly. In 1998 and 1999, Rengō, allied with Kenporen, the Japanese Federation of Health Insurance Societies, successfully led parliament to reject JMA efforts to increase fees for doctors and to approve greater regulation over medical spending.* Health policy has swung between JMA and Rengō policy ideas since then, but the victory of a union group over a well-connected professional organization in the lobbying networks essential to Japanese politics represents a major step forward.

There are signs of renewed labor influence for Japan’s smaller parties as well. The Social-Democratic Party of Japan (SDPJ) won the governorship of Shiga prefecture, a province of over 1.3 million people, in a shocking 2006 election. The SDPJ’s candidate, a professor of environmental sociology at Kyoto Seika University, defeated an incumbent backed by both major parties by a robust 7 percent margin. There are also reports that the Japanese Communist Party (JCP) is seeing a surge in membership and support following the global financial crisis. The JCP, which advocates for nonviolent revolution, currently boasts over 400,000 members represented by six councilors (2.5 percent) in the upper house and nine representatives (1.9 percent) in the lower house of parliament.

Additionally, recent social changes are eliminating alternative ways of securing cooperation against the best interests of workers. The Yakuza, a collection of Japanese organized crime syndicates, have been involved in strike-breaking and stock manipulation for decades. The Yakuza are not anti-labor per se, but have worked in the past to suppress labor conflict. As a consequence, the Yakuza have historically had a neutral (or even positive) effect on securing labor objectives but a chilling effect on strikes or protests.

Perhaps because of their unique history, the Yakuza have been seen as more respectable than their counterparts in other nations. Recently, however, that perception has shifted. Even in traditional bases of support like Kobe—home of the headquarters of the largest Yakuza crime family, the Yamaguchi-gumi—increased civilian involvement and consistent police activity have been successful in pushing organized crime out of many areas of politics. With more freedom of expression, strikes are harder to suppress.

Still, strikes in Japan remain rare. But there are some signs that even this is changing. In 2007 and 2008, language teachers at Berlitz led the most significant union strike since the 1975 strike of the Japanese National Railway Workers Union. Begunto, the union for Berlitz teachers, is a member of the National Union of General Workers (Zenkoku Ippan Roudou Kumiai Zenkoku Kyogikai), founded in 1991 right as the bubble economy began to collapse. The Berlitz strike, which lasted from December 2007 until November 2008, is the longest and largest sustained strike by language teachers in Japanese history.

Motivated by a cut in wages in 2007 and a new policy of assigning teachers thirty-hour-per-week schedules (just below the point needed to secure benefits, a tactic familiar to those who follow the labor practices of Wal-Mart), teachers began to strike in December 2007 outside a posh hotel where executives were celebrating a particularly profitable quarter. Politicians were immediately and strikingly supportive: in March 2008, then-Prime Minister Yasuo Fukuda supported the principle behind the strikes and called for a rebalancing of priorities by Berlitz executives.

By May of 2008, strikes had spread to sixty teachers, and by September over 100 teachers were striking at two dozen schools. Berlitz offered a paltry 1 percent raise, which union officials rebuffed. Begunto’s tactics were also notable: teachers held a wide range of protests and sponsored an advertising blitz across the Berlitz schools network. Over 3,400 lessons were lost due to strikes. Berlitz’s threat of retaliation in November 2008 froze the strikes, but initiated a lawsuit in court over unfair labor practices. Legal action is still ongoing, inflamed recently by an outrageous decision by Berlitz to fire a worker for taking unpaid leave to deal with complications resulting from breast-cancer treatment. The Japanese Labor Commission has recently become involved in the case; their next hearing is scheduled for later this summer.

Finally, the crisis in Fukushima has contributed to a popular pro-labor sentiment that is a breath of fresh air in Japanese politics. Anger at the government in the initial wake of the Fukushima Daiichi reactor disaster was tempered, more so than many political analysts expected. The real outrage was directed at TEPCO, which has been widely seen by the Japanese public as crassly putting the interests of their shareholders above the safety, and even the lives, of their incredibly brave workers.

Although the Kan administration has struggled to hold the DPJ together, outrage at TEPCO has led for the first time to widespread calls to regulate and reorganize the public utilities guilty of some of the worst kinds of labor exploitation. A number of newspapers, including the Japan Times, have floated the idea of a direct government takeover. A developing power struggle in the parliamentary leadership may determine the fate of these proposed reforms—Prime Minister Kan, who has never taken a dime from TEPCO, is facing stiff opposition from a number of politicians with closer ties to the company. Still, the contrast between the callous and incompetent management at TEPCO and the obvious heroism and bravery of TEPCO’s workers seems likely to quicken the pace of pro-labor reform over the next two years.

Since 1945, Japan’s labor movement has been a great experiment in working together. In some ways it has proven wildly successful. Sadly, as Minamata disease and the Fukushima disaster show, it has also led, at times, to tragedy. The key test for the next decade is whether labor leaders can convert traditional Japanese views about harmony and equality into a labor movement that is dynamic but still effective. The economic security of working people throughout Japan hangs in the balance.

C.D. Alexander Evans is an adjunct lecturer in the department of philosophy at Baruch College.

* These complex legislative battles are brilliantly described in the 1999 volume The Art of Balance in Health Policy by John Creighton Campbell and Naoki Ikegami.