HOMESpecial TopicsJTUC-RENGO’s Opinions and Opposition against “Report of the Committee on Management and Labor Policy for 2008” of Japan Business Federation (NIPPON-KEIDANREN)

JTUC-RENGO’s Opinions and Opposition against “Report of the Committee on Management and Labor Policy for 2008” of Japan Business Federation (NIPPON-KEIDANREN)

20th December 2007

1.General Comments

“The Report of the Committee on Management and Labor Policy” (hereafter the Report) announced by Japan Business Federation (NIPPON-KEIDANREN) on December 19th, 2007 raises those problems like promotion of productivity, strengthening of international competition and the necessity of building up a all-the-members participating type of society, as the problems which now confront us and should be settled as early as possible,in the economic and social circumstantial changes such as further progress of the globalization and a trend towards declining birthrate. JTUC-RENGO can own this way of thinking jointly as a common recognition.

However, in the concrete policies for employment and wages, although the Report points out the limitation of market supremacy saying that “market mechanism is not almighty”, it still insists that “it is necessary to promote reform of the regulations” and that “competitive pressure in the cost has increased”. Moreover, there is no change in their traditional way of claim that for that purpose it is necessary to encourage the growth of companies by promoting further deregulation and further reduction of the cost, thus conclusively, throughout the Report, emphasizing “the restraint of the total sum of personnel cost” of the industries and companies for “strengtheninginternational competition”.

Although the Report argues that it is necessary to realize a domestic demand-led economic structure which regards the companies and the family expenditures as both wheels for a stable growth of Japan, no reference is made either to the drop of disposable income of workers or to aggravation of the problem of the disparities, and no posture to face up to and overcome the serious difficulties which the Japanese economy and society are confronted with is seen. Such an argument that the disparities of wages would be lessened if the economic growth rate could become high can be said nothing but a claim that does not reflect the present reality that the family income is decreasing in spite of economic growth. Moreover, in the present situation where there is unevenness in profit by company size and by industry and region, the Report points out that “there are not a few companies which feel difficulties in raising the wages” and then says that “pay-scale increase across the market is a past thing”. This argument is not only too scrupulous about the management logic but also it does not show any consideration for those people in a weak position who moan expansion of the disparities caused by excessive extortion of income distribution. The argument will never receive any social confidence. From the viewpoint of developing negotiations in a concrete manner in the coming Spring Struggle, some comments on the points which cannot be overlooked should be referred to as follows:

Firstly, a comment should be made on the point that it is essential “to realize a fair distribution” for the present Japanese society. The Report argues, on one hand, that “the common problem for both the employers and the workers is improvement of the productivity of the individual company”, but it claims, on the other hand, that “the amount of increase in the total sum of personnel cost should be determined right within the limit of productivity improvement, in consideration as well of interest payment, dividends, internal reserves and so forth.” This means that Japan Business Federation (NIPPON-KEIDANREN) denies by themselves “Productivity Standard Principle” which they had continued to claim to enable wage raises within the limit of productivity increase. Moreover, the claim ignores the employees as a stakeholder. JTUC-RENGO is not arguing that the workers’ relative share for gains and the wages should be raised through reducing dividends and/or internal reserves. What JTUC-RENGO is pointing out is only that it is necessary to review the distribution which has lost its balance so as to establish a just and fair distribution.

The Report also states, on one hand, that “the amount of increase in the total sum of personnel cost should be determined through negotiation by individual company” but, on the other, it argues that there are not a few companies which feel difficulties in raising wages”, thus developing the claim for restraining wage raises as a whole. However, in the present situation where there are many industries and companies which have recovered and improved earnings remarkably, is it not a big role of “NIPPON-KEIDANREN” to encourage positive measures to rouse domestic demands from a broad viewpoint? It should be pointed out that so far, only micro logic has stood out, and as a result of “error of synthesis” there is a great concern that the macro-economy may be hindered.

In addition, during the period from the late 1990s to these days, each industry and company took various steps for change of its business operational structure at the risk of its survival. In the meantime, it is recognized that “the portfolio of employment” which was made public by the former Japan Federation of Employers’ Associations (NIKKEIREN) in May 1995 spread to each industry and company and became a major factor to increase non-regular workers thereafter, thus leading to the birth of present day problem of serious disparities. The Report, however, takes no account of “disparity-widening society” or “expansion of the working poor” and does no more than state that “the Japanese style of employment system functions soundly as a whole” and that “we are burdened with an unfortunate history that the refrainment of new hiring after the collapse of the bubble economy has expanded to the glacial epoch of employment”. Far from reflecting upon the past management posture, the Report does not give the slightest consideration about it. We can never accept such an attitude. It is natural to do its duty as one responsible party for settlement of the problem of “youth employment”. JTUC-RENGO has already started its activities to tackle this issue by setting up “Center for Non-Regular Employment”. JTUC-RENGO will promote its activities at a close cooperation with its local RENGOs. Management side is also expected to take such positive measures as to change non-regular workers to regular employment.

Lastly, we would like to touch upon the importance of “industrial relations”.
In the Report, it is stated that “a company is a community of the employer and the employees bound together by common fate” and that “our activities for improvement of productivity based upon close communication between management and employees is an asset to be proud of to the world”. JTUC-RENGO does not dare to deny this recognition. However, we cannot but feel that the Report develops an argument that places importance only upon individual labor-management relation. It should bepointed out here that, needless to say, industrial relationship is made up of three levels, i.e. enterprise or company level, industry level and national level, and it is built up by the way how these levels relate and connect with each other in one way or the other. Moreover, the present industrial relationship has been established with strenuous efforts of our predecessors as well as with accumulation of their activities made on the basis of “three principles of productivity”. Referring the view that a good relationship is established only upon continuous efforts of both the management and the workers for a just and fair distribution, our general comments on the Report are concluded.

2.Concrete Opinions

1)On the decline of labor’s relative share
In the Report, the argument to retrain wages is developed as before, and an intention to deny such wage raises that one is on the same level with the other, in order to try to restrain wages as a whole, can be seen through it. In addition, the Report states that “it is natural that labor’s relative share declines in the situation of economic expansion”. No mind is felt to correct distorted structure of the share. However, the present situation in which labor’s relative share does not rise even if the period of economic recovery has passed for five to six years is inexplicable only with the theory of business cycles. And as was done last year, the Report asserts the argument of its own convenience, distorting the fact by insisting that “labor’s relative share is at a high level even if it is seen historically and internationally” (wages have indeed declined in both nominal and real terms and the international comparison of wages made by NIPPON-KEIDANREN is inappropriate in its way of getting data). Where has “the three principles of productivity” gone? How long do the companies keep management posture to restrain wages? They should start with properly responding to the perseverance of workers.

2)On the expansion of domestic demand
In the Report, it is stated that, viewing the present state where the service industry and small and medium-sized enterprises both of which are domestic demand-oriented industries are in a long slump or in the decline, it is necessary for them “to make independent and autonomous management efforts” so as to improve their productivity. However, it is clear even from the result of a research conducted by JTUC-RENGO that there are many small and medium-sized enterprises which confront reduction of unit prices forced by their client companies or suspension of business with them. Therefore, it is important to demand fairness in business relations among companies and so forth. It is difficult for small and medium-sized enterprises to improve their earnings without establishing fair business relations. If the same stance is taken as before without putting out any particular policy, it will be absolutely impossible for the service industry and small and medium-sized enterprises to recover. While the Report states that “in order to secure a stable growth of Japan, it is needed to assume the companies and family expenditures as both wheels”, but it lacks consciousness of the importance to expand consumption by positively improving wages. With this, we cannot possibly expect any economic recovery through the growth of personal consumption or any domestic demand-led economy.

3)On equal pay for equal value work
The Report states that “it should be made clear that NIPPON-KEIDANREN is not in a position to make an objection to the idea of equal pay for equal value work”. If this statement is a serious one, it is heartily welcomed. But the Report states following this statement that “equal value work is the work which brings equal value-added to the company, taking also into account the factor of expectation for the future”.The argument to see the factor of expectation as value-added is an argument which is accepted nowhere in the world. The Report itself flatters “a wage system based upon job, role and contribution” in its section on “Improvement for an open wage system” and states that by arranging such a system “the opportunity when everybody can challenge fairly is opened”. To regard one-sided expectation of the enterprise as value is to deprive of “the opportunity to challenge fairly” which the Report itself mentions. Still more, in the Report, it is stated that, even if there are differences in treatment, they should be regarded as “reasonable” if they derive from the differences in “the degree of skill or the level of occupational ability”, “responsibility or expected role” or “working hours or the possibility of transfer”. If so, when there is no difference in them, equal treatment for the work of equal working hours should be immediately realized.

Moreover, the Report states, on the argument about equal wage by the type of job, that “if the location or the timing is different, the demand and supply of labor are different. Therefore, to demand equal treatment for those works of the same type of job beyond the framework of enterprises or companies lacks reasonable grounds”. It is natural to say so. But, if that is the case, “if the location or the timing is the same, equal treatment for those works of the same type of job beyond the framework of enterprises or companies” should be realized. Still more, the Report refers to the differences of productivity among companies. But, if there are differences in productivity, is there any difference in purchasing price of raw materials? It is not acceptable to bring forth the differences of productivity among companies only for the wages and treatments which are the purchasing prices of labor force.

Then the Report claims that, as it is impossible to convert all part-time workers to full-time long-term employment, “wage system should be so changed as to be based upon job, role and contribution”. This is nothing but a claim made for its own convenience to adapt “the wall between ‘regular’ and ‘non-regular’ work” to the course of non-regular work. As a matter of fact, this is considered to be the claim to realize standardization of the wage level at a lower level.

4)On minimum wage system
The Report states that “the raise of minimum wages that neglects productivity will definitely aggravate the cost structure of small and medium-sized enterprises” and then asserts that “the minimum wages by industry which have become like adding unnecessary things should be abolished”. This assertion neglects the result of the discussions made among the representatives of public interest, the workers and the employers, which reached to an agreement after one year discussion last year. It also neglects the course which led to the approval of the Minimum Wage Law (Revised) in the Diet. We cannot but say that the assertion is completely irrational. Not advocating that the competition can be maintained only by restraining minimum wages, should it not be sought how to realize the profitability of the companies concerned?On the basis of the purposes of the Revised Law, we will strive for reinforcement of our involvements in the minimum wage agreement at companies and for a new establishment or revision of the minimum wages by industry.

5)On the management attitude to try to make workers convenient for its usage

i) The Report states, in its section on “Establishment of Work-Life Balance”, that “it is important to place emphasis upon ‘result of the work’, namely how much work the worker has done, not upon “process of the work’ of ‘how longer the worker has been at the workplace’,” and then asserts that “with this, the overtime work of no use can be restrained” and that “the Work-Life Balance will be established through the improvement of productivity”. The Report catches the idea of Work-Life Balance only as one of the means to restrain wages.

ii) Moreover, as to “independent and autonomous way of work”, the Report states that “it is necessary to examine the introduction of a system which will enable independent and autonomous control of time without being seized with existing laws on working hours or intended jobs, …by admitting not a certain type of time control but a way of work which enables to control time autonomously”. This is the same way of thinking with the idea of “the White Collar Exemption.” Moreover, the Report states that “fully basing upon the past criticism and problem indication, it is necessary to explain it carefully to people”, indicating that as to the White Collar Exemption it was not its contents but a lack of explanation to people that mattered. There seems no repentance at all.

iii) The Report develops the same claim as before that it is necessary to promote deregulation in order to increase those workers who are easily used, through reviewing the job seeker’s fee referred in the Employment Security Law and through reviewing the Worker Dispatching Law, as well as by accepting foreign workers. It is demanded that this claim be reviewed from the view point of protection of the workers.

iv) In addition, the Report indeed touches upon the Work-Life Balance, but it does not refer to either long working hours or extra wages. However, correction of long working hours is an important subject, from the point of establishing the Work-Life Balance. One of the issues is the rate of extra wages for overtime work. The rate of extra wages here in Japan is at the lowest level internationally. If the management side advocates global standards, it should naturally accept the global standard for the rate of extra wages as well. JTUC-RENGO will actively tackle the issues of correction of long working hours, the rate of extra wages and so forth in the coming Spring Offensive.

v) In the Report, it is stated that a constructive attempt is being made to harmonize and balance non-regular employees with long-term employment (regular employees)”. But, in reality, when we think of the present situation where the job-openings-to-applicants-ratio for regular employees is low and where the issue of the so-called “freeter” remains unsettled, we cannot but have doubt over “a constructive attempt”.

6)On international competitiveness
The Report states that “in order for our country to realize economic growth and affluent life, we have to maintain and strengthen our international competitiveness” and then says that “the working conditions including wages of our country are still at the top level in the world and it is necessary to keep this in mind when the negotiation on wages is conducted between the employers and the workers”.

But, the reason why distortion of the shares and hanging low of the consumption have been caused is the wage restraint that has been insistently continued in spite of good or bad conditions of business results with a simple idea that the reduction of cost is equivalent to the reinforcement of international competitiveness. It is needed to change this attitude to try to restrain wages. Moreover, the Report states that “the most precious asset we have is human resources”, but the fact that “human ability on the spot” at many workplaces has deteriorated derives from the bad effect of personnel policies which have looked down “the investment to human resources” based upon a long-term perspective. It is needed to positively invest in human resources and bring up “the person” properly.


It is only by establishing a society where those who work seriously are remunerated and where employment insecurity or fear for the future is overcome that the company can become a safety belt of the society. The argument to restrain wages that forgets this can be judged as nothing but an argument which causes “dangers and insecurity” to the society. Both the employers and the workers should play their respective positive roles for establishing socially fair shares and for making rules. JTUC-RENGO, with a recognition that “1% or more of achievements should be distributed to the workers in a macro point of view”, will aim at the raise of disposable income and demand that the distribution of achievements commensurate to economic growth be made to the workers including non-regular workers. At the same time, in order to break away from the gap-widening society, JTUC-RENGO will aim at the raise of living standard of all workers including unorganized workers and the raise of the rate of extra wages for overtime work, through strengthening the activities of “the Part-time Workers’ Joint Struggle Conference”, “the Joint Struggle Committee for Small and Medium-sized Enterprises” and “the Joint Struggle Committee for Raise of Extra Wages”.