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$Unique_ID{bob00335}
$Pretitle{}
$Title{Japan
Chapter 4C.   Employment, Wages, and Working Conditions}
$Subtitle{}
$Author{Stephan B. Wickman}
$Affiliation{HQ, Department of the Army}
$Subject{percent
labor
workers
power
construction
energy
nation's
industry
unions
million
see
pictures
see
figures
}
$Date{1981}
$Log{}
Title:       Japan
Book:        Japan, A Country Study
Author:      Stephan B. Wickman
Affiliation: HQ, Department of the Army
Date:        1981

Chapter 4C.   Employment, Wages, and Working Conditions

     Japan's work force grew by less than 1 percent per year in the 1970s, and
in 1980 represented about 63 percent of the total population over fifteen
years of age-basically unchanged since 1970 (see table 5, Appendix).
Unemployment, however, was twice the level of the boom years. Moreover an
increasing proportion of the work force was vulnerable to economic downturn.
Since 1971 the proportion of temporary workers or day laborers has increased
from 7 percent to 11 percent. Counting those of the regular employees who
might be laid off at a moment's notice, especially those in smaller
corporations, a large number of workers clearly would suffer from a protracted
recession.

     Labor force participation differed within age and sex groupings. Well
over 95 percent of all males between the ages of twenty-five and fifty-four
were in the work force. The proportion dropped after the fifty-five-year-old
retirement age. Women, by contrast, participated most actively in the job
market in their early twenties or between thirty-five and fifty-four years of
age (see Women, ch. 2).

     Wages varied by industry and type of employment. For regular workers in
firms with more than thirty employees, those with jobs in finance, real
estate, public service, iron and steel, petroleum, and publishing enterprises
earned the highest wages. The lowest paid were those in textiles, apparel,
furniture, and leather products industries. The receipts of the average farmer
were even lower. The average earnings of female part-timers were about the
same as for textile workers, many of whom were also women. The salaries of
administrative and technical workers were about 20 percent higher than those
of production workers. The wages of women averaged slightly over half those of
men (see fig. 7).

     Apart from wages, most businesses provided extra benefits to workers.
According to a 1979 survey of businesses having more than thirty employees,
the cost of non-wage benefits amounted to about 15 percent of the regular
wage, up from 13 percent in 1972. Of this percentage, benefits required by
law, such as social security and health insurance, represented 62 percent,
retirement and pension witholdings were some 37 percent, and housing funds,
saving plans, recruitment, education, and other costs accounted for the
remainder. Over 86 percent of the firms surveyed had some sort of plan to aid
their workers in purchasing a house, while only 12 percent had some form of
stock-sharing plan. The benefits usually increased with the length of
employment. (see The Aged, ch. 2).

     A major revision of the Unemployment Insurance Law of 1975 benefited the
nation's workers. The law exempted older workers from paying national pension
premiums, while employers were required to finance 62 percent of the national
pension premium. Employers could also receive from one-half to two-thirds of
the salaries paid to laid-off workers if the regional or national economic
conditions turned against the industry. This system reinforced the practice of
laying off workers temporarily at reduced salary levels but was terminated in
1980. Whether this type of support to the unemployed along with the regular
unemployment insurance could counter a protracted recession was in doubt, and
revisions were likely to occur in the basic legislation. The government
managed Public Employment Security Offices throughout the country, but they
processed only 20 percent of the nation's job seekers in 1979.

     Working conditions varied from firm to firm. On average, employees worked
a 43.5-hour work week in 1980; most large corporations gave their employees
two days off each week, while most small firms could manage only one or one
and one-half days off. Safety conditions were favorable by international
standards, as befitted a nation of Japan's technological development.
Nevertheless the advances in industrial technology and management control
systems have caused some workers to experience psychological problems. One
journalist who apparently worked on a production line at one of the most
sophisticated and prestigious of the nation's auto plants noted an abnormally
high incidence of psychological distress and even suicide, which he attributed
to the relentless pressure from the mechanized and computerized production
system. Bonuses and piece-rate wage adjustments were not uncommon, even in the
larger factories, and group output was monitored closely.

     These isolated reports aside, Japanese workers seemed no more, and
perhaps less, distressed with their working conditions than those in other
heavily industrialized economies. Part of their satisfaction may have stemmed
from such practices as "quality control circles," where workers could actively
participate in enhancing their productivity, eliminating product defects, and
sharing decisionmaking with management. More likely the system of incentives
and production seemed equitable to the average worker, who had witnessed a
continuous rise in wages during a remarkably long period of economic growth.

     Scholars have debated for some time whether Japanese employment practices
formed a system that was unique and, if so, whether this system was based on a
set of underlying social values (see The Japanese Company, ch. 2). Some
anthropologists have argued that the lifetime employment and seniority-based
wages constituted a unique system. Critics of this view pointed out that
perhaps only 30 percent of the labor force worked under such a system and,
furthermore, that the basic methods of management were probably the result of
economic necessities. Whatever the case, it seemed that the average male
graduate of a prestigious university would likely opt for long-term employment
in a large company. Less well-educated workers, female employees, and skilled
workers in high demand were more mobile and played the job market to get the
highest return for their labor.

Labor Relations

     In 1980 Japan had 34,232 independent labor unions organized at the
enterprise level and an additional 30,000 so-called unit unions at subordinate
levels in multi-factory firms. These unions represented about 31 percent of
the labor force-down about 4 percent from 1970. There were three main labor
federations: the General Council of Trade Unions of Japan (commonly known as
Sohyo); the Japanese Confederation of Labor (Domei); and the Federation of
Independent Labor Unions (known as Churitsu Roren-known in English as the
Liaison Conference of Independent Labor Unions). These three organizations
accounted for 37 percent, 17 percent, and 11 percent of union membership,
respectively (see Labor Unions, ch. 6). The only industry-wide unions were for
the nation's government employees, teachers, telecommunications workers, and
seamen.

     Labor unions and unit unions rather than the federations conducted the
major bargaining activities. Unit unions often banded together to conduct wage
negotiations, but the federations did not control their policies or actions.
Federations engaged in political or public relations activities such as the
conduct of the annual "labor offensive" each spring.

     The relationship between the typical Japanese labor union and the company
was unusually close. Both white-collar and blue-collar workers joined the
union automatically in most companies. Temporary and subcontract workers were
excluded, and managers with the rank of section chief or above were considered
part of management. In most corporations, however, many of the managerial
staff were former union members. In general, Japanese unions were sensitive to
the economic health of the company, and company management usually briefed the
union membership on the state of corporate affairs.

     Any regular employee below the rank of section chief was eligible to
become a union officer. Management, however, often pressured the workers to
select favored employees. Officers normally maintained their seniority and
tenure while working exclusively on union activities and being paid from the
union's accounts, and union offices were often located at the factory site.
Many union officers went on to higher positions within the corporation if they
were particularly effective (or troublesome), but few became active in
organized labor activities at the national level.

     During prosperous times the spring labor offensives were highly
ritualized affairs, accompanied by banners, sloganeering, and dancers-aimed
more at being a show of force than a crippling action. Meanwhile serious
discussions took place between the union officers and the corporate managers
to determine equitable pay and benefit adjustments. If the economy turned
sour, or if the management attempted to reduce the number of permanent
employees, however, disruptive strikes often occurred. The number of working
days lost owing to labor disputes peaked in the economic turmoil of 1974-75 at
around 9 million man-days. In 1979, however, there were fewer than 1 million
days lost. The average number of disputes was less than in any other major
industrial nation except West Germany.

     After 1975 when the economy entered a period of slower growth, annual
wage increases moderated, and labor relations were conciliatory. Unlike the
1973-74 period when rapid wage increases exacerbated inflation, the negotiated
raises in 1980 and 1981 were geared toward eliminating possible wage-price
spirals (see table 6, Appendix). Even the more militant unions, such as those
representing the nation's railway workers, were accommodating themselves to
pay increases that were often below the inflation rate. The trend toward
moderation continued in late 1981 as the country's national labor federations
were negotiating a major reorganization. Domei was attempting to band all
moderate unions into a grand coalition to further weaken the more radical
elements of Sohyo.

Infrastructure and Technology

     A mountainous and insular nation, Japan had inadequate natural resources
to support its growing economy and large population. Although many kinds of
minerals were mined all over the country, most mineral resources had to be
imported. Local deposits of metal-bearing ores were difficult to process
because they were of a low-grade quality. Similarly the nation's large and
varied forest resources, which covered 70 percent of the country, were not
utilized extensively. The precipitous terrain, underdeveloped road network,
and high percentage of young trees made domestic sources unable to supply more
than 31 percent of the nation's timber needs. Agriculture and fishing
resources were most favorable but were developed only through years of
painstaking investment and toil. Therefore the economy has built up the
manufacturing and processing industries to convert raw materials imported from
abroad. This strategy of economic development has necessitated the
construction of a solid economic infrastructure to provide the needed energy,
transportation, communications, and technological know-how.

Construction

     The mainstay of infrastructure development was the construction industry,
which employed about 10 percent of the labor force in 1980 and contributed
some 9 percent of GDP. The industry was recovering from the recession that
followed the first energy crisis, primarily because of the expansion of
government expenditures on public facilities. Government and public enterprise
projects accounted for over half of new construction orders in 1979, compared
to about 39 percent in 1973. Growth has fallen, however, since the boom years
of the mid-1960s, when investment in construction grew by over 20 percent per
year. Still the 20 percent of GNP devoted to fixed investments was higher than
the average for the United States and Europe. The large domestic market
therefore was sufficient to maintain a profitable and productive construction
industry, even without the substantial exports of construction services, which
have also increased the industry's revenues.

     In terms of total floor area, private-dwelling units made up 49 percent
of all new construction in 1980, compared to 47 percent in 1973. About 10
percent consisted of combined residences and business facilities; industry
accounted for the remainder. Mining and manufacturing facilities represented a
quarter of all industrial construction started in 1980, and government
projects (including school facilities) were 27 percent of this total. Since
1973, however, the share of mining and manufacturing had fallen by 10
percentage points while that for official projects rose by the same amount.
Other construction projects in the private industrial sector in 1980 included
commerce (19 percent of industrial floor area), services (14 percent),
agriculture (9 percent), and utilities (6 percent). In terms of value,
construction for commercial and service enterprises was substantially more
expensive than for other sectors.

     Japan's construction technology was among the most developed in the
world, although in this respect the largest enterprises were substantially
superior to the many smaller construction firms. The major firms were
competing to improve quality control over all phases of design, management,
and execution. Research and development efforts were geared especially to
develop improved technologies for building energy-related facilities, such as
nuclear power plants and liquid natural gas storage tanks. The largest firms
were also improving their underwater construction methods.

Energy and Power

     As one of the world's largest consumers of energy, the nation was
vulnerable to international shortages. In 1979 some 86.3 percent of the
nation's needs came from imports, primarily in the form of petroleum (see
table 7, Appendix). Crude oil and liquid natural gas accounted for over 70
percent of the estimated 7.2 million barrels per day of oil-equivalent energy
demanded in 1981. Japan's domestic production of crude oil, liquid natural
gas, and natural gas, however, provided less than 1 percent of the needed
supplies. Most of these types of primary energy were imported and refined or
processed by the nation's trading companies and oil firms. Japan's refineries,
of which there were thirty-two at the end of 1978, produced over 187 million
kiloliters of petroleum products in 1980. Nuclear, hydro, and geothermal
sources of energy contributed about 10 percent of the nation's total
requirements, but the most abundant domestic form of energy was coal.

     Coal accounted for some 13 percent of the energy needs. Domestic
production, however, declined from a peak of about 55 million tons in 1961 to
less than 20 million tons in 1980. This was not adequate to meet the expanded
demand as industries substituted coal for oil. Total demand reached 79 million
tons in 1979 and was rising. Hampered by high costs at home and competition
from cheap supplies of foreign coal, the major coal companies operated at a
chronic deficit. The larger firms, usually those affiliated with industrial
groups, were moving overseas to form profitable joint ventures with foreign
governments or corporations. Even if the Japanese government bailed out the
domestic producers, however, it was not likely that the industry could
maintain the government's planned output level of 20 million tons per year.
Younger workers and technicians were less and less attracted to a life in the
mines. Furthermore the nation's 1 billion tons of reserves were almost all
hard coal used for coking, and steam coal imports for power generation were
likely to increase throughout the 1980s.

     Industry's share of total energy consumption declined from about 56
percent to 53 percent during the 1974-79 period, which was still higher than
in other industrial countries. The amount of energy needed in the
transportation and communications industries continued to be lower than
elsewhere. The major energy conservers were the iron and steel, petrochemical,
cement, pulp and paper, aluminum smelting, sheet glass, automobile, and dyeing
industries. Together they reduced their dependence on oil by about 23 percent
in the 1973-79 period, while their overall consumption of energy per unit of
output fell 14 percent. The leading savers were the sheet glass and
automobile producers. At the same time, the power industry has reduced its
dependence on oil by 16 percent. The dependency on oil was expected to
decrease to about 47 percent of all energy by 1990. In the meantime the
nation's refining corporations were actively seeking long-term supply
contracts with oil-producing nations.

     The efficient supply of high-quality electric power having little
frequency fluctuation has helped industry to develop better products. The
nationwide network of power companies has also reduced the occurrence of
blackouts and brownouts to a minimum. Altogether some 3,300 power plants had a
capacity of 590 million kilowatts in 1980. Three quarters of this available
power was controlled by the ten major regional power utilities, of which Tokyo
Electric Power Company was the largest in the world. With the exception of
Okinawa Electric Power, these utilities formed the Federation of Electric
Power Companies. The group calculated power rates one or two years in advance,
but subject to the approval of MITI. The electricity rates were among the
highest in the world.

     Japan's nuclear power industry played an increasingly important role in
power generation at the start of the 1980s. Although a late starter, the
nation now had three firms which, while licensing technology from the United
States, were expert at power plant construction. Still public opposition to
the construction of new reactors soared after the Three Mile Island accident
in the United States. It was very unlikely that the industry could build the
25-million-kilowatt capacity scheduled to be completed by 1985. The need for
public hearings, approval from the Electric Power Development Adjustment
Council, and inspection from the Nuclear Safety Commission has prolonged the
lead-time for new reactors to ten to fifteen years.

     In 1980 there were twenty-two reactors in operation with a capacity of
15.1 million kilowatts, and fifteen additional reactors with a total 13.2
million kilowatts were planned or under construction. The disclosure that one
reactor operated by the Japan Atomic Power Company had leaked radioactive
water in December 1980 and March 1981 revived public opposition to the
program, but government and business seemed dedicated to expanding the
industry. Apparently unmoved by the popular outcry, the government in March
1981 announced plans for three additional reactors. The utilities federation
planned to develop a uranium enrichment plant to begin production in 1990 and
produce 30 percent of the nation's needs by the year 2000.

Transportation and Communications

     Railroads have been the most important means of passenger transportation
in Japan since they were established in the prewar era, but road
transportation has come to dominate the nation's freight traffic. Furthermore
because of the expansion of automobile traffic, the relative share of
railroads in the total passenger-kilometers has been falling, decreasing to 42
percent in 1978. By contrast passenger cars and domestic airlines were
carrying ever-larger shares of the passenger traffic. Sea transport was
important for domestic bulk freight cargoes.

     Road traffic expanded at a rate of 8.7 percent per annum during 1960-78,
and the rate of paving and road improvement was keeping pace. Thirty percent
of the nation's roads had been improved by 1978, and 40 percent were paved,
including almost all national highways; less than a third of the local roads
were so well constructed. As a result many critics have argued that the
national highway administration has been neglected in favor of industry. Other
controversies have occurred over the disruption caused by highway
construction, and there have been attempts to ban private cars from heavily
touristed areas or to temporarily close some areas to road traffic.
Nevertheless by 1982 over half the government's final goal for 7,500
kilometers of trunk highways were expected to be completed (see fig. 8).

     Railway traffic has increased almost imperceptibly since 1960. There were
some 26,880 kilometers of railroads in operation in 1978, about 1,000
kilometers less than in 1965. Some 21 percent of these lines were run by
private enterprises, most of which ran efficient and profitable services in
the metropolitan areas around Tokyo, Osaka, and Nagoya. The rest were operated
by Japanese National Railways (JNR), which has come under attack for serious
management inefficiencies, profit losses, and even fraud. The passenger and
freight business of JNR has declined significantly, while fare increases have
failed to keep up with higher labor costs. Management was planning to close
the least profitable local lines, automate many of the train runs, and open
two new shinkansen ("bullet train") lines in the early 1980s. The plan,
however, was criticized by labor groups, who wanted to nationalize all the
railways, and by conservative politicians, who wished to turn the whole
enterprise into private hands. About 330 kilometers of subways served Tokyo,
Kobe, Osaka, Nagoya, Sapporo, and Yokohama, which connected to the major
railways.

     Sea transportation was particularly important for the basic industries
because of the large amount of international as well as bulk domestic trade.
In 1979 the nation had more than 8,830 vessels of over 100 gross tons each,
for a total of 38 million gross tons. The international fleet was the third
largest in the world after Liberia and Greece, and 50 percent of the import
and export traffic was transported on Japanese lines. The nation's shipping
lines had been in recession since the first oil crisis, but after cutting
losses from their tanker and tramp ship business, they were again profitable
in 1980. Meanwhile the shift to steam coal as a source of energy heightened
demand for large coal carriers. There were eleven major ports, which handled
over 50 million gross tons of ships, the three largest being Kobe, Osaka, and
Yokohama.

     Japanese airlines have enjoyed a steadily increasing number of passengers
since the 1960s, often by more than 11 percent per year. Escalating fuel
prices, however, have cut the profits of the three major lines, Japan Air
Lines (JAL), All Nippon (ANA), and TOA Domestic (TOA). The major domestic air
routes connected Tokyo with Sapporo, Osaka, and Fukuoka. There were fifteen
major airports, and Tokyo's Narita International Airport, which opened amid
opposition from local farming and environmental groups in 1978, was one of the
world's most modern facilities.

     The communications system was also extremely well developed. NTT procured
more than 3 billion Yen worth of equipment to maintain and expand the fully
automated telephone switching system each year. At the start of the 1980s NTT
was developing non-telephone services to link computer data systems. Whether
NTT would dominate this new industry was still in doubt, inasmuch as private
firms wished to take over this market. A unique communications experiment was
taking place under NTT auspices in the western section of Tokyo, where two
small communities were linking their homes and offices into a computer
network. Many shopping services, as well as office communications, could be
handled from the privacy of each home in this area.

     Apart from telephone communications, the media included Japan
Broadcasting Corporation (Nippon Hoso Kyokai-NHK), which operated two public
television and three radio networks through 6,680 country-wide stations; over
one hundred commercial television and radio companies operating several
national and many local stations; technically sophisticated and
well-circulated news journals and magazines; and a national postal service,
which not only transmitted increasing amounts of mail but was a depository for
a large share of household savings.

Research and Development

     Japan's research and development system has expanded its capacity
significantly since the end of World War II. Although the nation remained a
net importer of technology licenses and patents, and though the number of
basic research discoveries was low by world standards, Japan's capabilities of
innovation and adaptation were estimable. The number of new patents registered
in the 1970s doubled the average of the 1960s and exceeded 45,000 per year.
The number of researchers per thousand members of the labor force rose from
four to six from 1965 to 1979, and the share of GNP devoted to research and
development increased from 0.7 to 2.0 percent.

     Most research and development took place in the private sector, although
government support from universities, institutes, and laboratories aided
industry greatly. Over half of the total expenditure for research and
development in 1979 came from the private sector, an amount equivalent to 1.6
percent of the value of corporate sales. The biggest spenders were the
pharmaceutical, electronics, and precision machinery industries. The most
important government research institutes were affiliated with MITI's Agency of
Industrial Science and Technology. Nine of the agency's sixteen research
laboratories were located at the Tsukuba Science City north of Tokyo, where
the facilities were among the most impressive in the world. Universities,
however, claimed over half of the nation's researchers.

     The thrust of research in the 1980s was to develop technologies suitable
for the fields of alternate energy, information processing, life sciences, and
modern industrial materials. The alternate energy program, including the
"Sunshine Project" (non-oil energy) and "Moonlight Project" (energy-saving
methods) began in the mid-1970s and were projected to continue until the year
2000. Projects underway in 1981 included studies of prototype technology for
coal liquefaction, solar cell conversion, hydrogen and wind-power electricity
generation, high-efficiency gas turbines, and methanol power. In 1981 the
government released funds for the development of high-resistance ceramics,
electrically conductive polymers, metallic alloys, and plastics. These
materials would aid the communications industries as well as the government
space program, which although strapped for funds, and plagued by failures, had
launched and orbited several communications satellites in the 1970s.
Biological research was to concentrate on application of genetic engineering
to industrial processes.

     One indication of the sophistication of Japan's technological research
was its robot technology. In 1980 the nation had 75,000 robot units at work on
production lines-75 percent of the world total. In that year 12,000 new units
were produced at a cost of about 10 million Yen each. MITI also earmarked some
30 billion Yen to start a seven-year development project to make more
intelligent robots. Already robots were used in small and large factories, and
there were even instances of completely "unmanned" facilities. As the nation
became short of skilled blue-collar workers, robots were likely to become even
more popular. There seemed to be little resistance from labor unions to the
automation of so much industry.