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Whatever happened to the Goldman Sachs union?

Story lapped up by the media vanished without a trace as sacked Japan employees cut a deal

by Patrick Budmar

In February 2012, a small band of sacked workers in Japan took on one of the world’s biggest investment banks, Goldman Sachs, unionizing in a bid to keep their jobs and win a better deal from a firm they believed had treated them unfairly.

It was a story that struck a chord far beyond these shores, making headlines and sparking water-cooler debate as the world reeled from a financial crisis blamed on corporate greed and reckless risk-taking.

There were those who sympathized with the employees for taking action after Goldman Japan attempted to cut them loose and leave them at the mercy of an unforgiving job market.

Others had little compassion for workers they viewed as overcompensated and over-coddled. In their line of business, some would argue, the risk of losing your job came with the territory — particularly in the wake of the “Lehman shock” and the subsequent Great Recession.

Regardless of which side of the fence you were on, the story disappeared off the media radar shortly after it broke, and a year on, whether the unionization had any effect at all on labor relations and the finance industry in Japan is still up for debate.

When the story of the new union broke last year, Jun Kabigting, managing director of HR Central K.K., a human resources consultancy based in Tokyo, was far from surprised by the ensuing furor.

“Goldman Sachs is such a big corporate that its actions are closely watched by other firms,” he said recently. “In addition, the mere fact that it was the first time for Goldman Sachs to have a union in its entire history made it a very newsworthy story.”

The public face of the Goldman Sachs Japan Employee Union was Timothy Langley of Langley Esquire, a former U.S. lawyer who consulted the laid-off employees.

He now admits that generating interest and public support was a “specific element of the negotiating approach to a reluctant Goldman Sachs.”

“The arrogance and bluster of Goldman was overbearing,” he said. “One or two, even a roomful of employees would falter and run away under normal circumstances, so a different game had to be played with this huge gorilla.”

After the collapse of Lehman Brothers in 2008, Japan Inc. joined the rest of the world in reducing head counts to cope with the difficult economic conditions. The finance business was hit particularly hard, with both Japanese and international institutions trimming their Japan-based workforces amid the downturn.

While the sacked Goldman Sachs workers were mainly fighting to get their jobs back, another key complaint was the manner in which the company laid them off.

According to union members, targeted workers were called in for meetings with management, told that their position no longer existed — through no fault of their own — and asked to pack up their belongings. Access to the company computers was cut off and they were told to hand over their employee IDs, keys and security tokens for remote computer access to an HR representative (see “Threatened Goldman Japan workers unionize,” Zeit Gist, Feb. 28, 2012).

Such treatment may appear abrupt at best, brutal at worst to those outside the industry, but Kabigting calls it “nothing extraordinary” in the financial sector.

“There is a need to protect the privacy and confidentiality of their clients very dearly,” he explained. “Imagine if a recently fired employee became rogue and misused the confidential info of their clients — it would create a financial crisis in Japan.”

Louis Carlet, executive president of Zenkoku Ippan Tokyo General Union (Tozen), however, says behavior such as Goldman Sachs’ in this case is almost unheard of among Japanese companies, which are expected to feel certain responsibilities to society — and in particular to their employees.

“It is considered irresponsible to just throw an employee out without notice, even if the employee is at fault, if it is simply a matter of redundancy,” he said. “By law management must give one month notice or the equivalent in pay, but in reality most companies give more notice and do everything they can to try to avoid dismissal.”

Langley says that Goldman Japan’s approach is standard practice not only at foreign financial companies based in Japan, but also worldwide — and this, he says, grates against Japanese sensibilities.

” ‘Standard operating procedure’ is usually defined by ‘what can I get away with,’ and since the employee is so vastly overlorded by employers in Japan, a foreign company like Goldman Sachs can negatively infect the entire atmosphere of firing employees, which they in fact did in this entire episode,” he said.

When it comes to the nonfinancial industry, Kabigting admits that the way employees are dismissed is not as immediate or “unhumane” as it was in the Goldman Japan episode, though it can depend on the circumstances.

“Goldman Sachs was just acting on their clients’ best interest,” Kabigting said. “Besides, even the Japan labor standards laws give companies the right to immediately terminate an employee without notice, and they only need to pay 30 days in lieu of notice.”

In this instance, workers were given a “mutual separation agreement” that listed severance pay, company offers of support in job hunting, and a notice not to discuss terms of the dismissal.

“Goldman Sachs’ severance package was actually over and above what is required by law,” said Kabigting, disputing the union’s claim that the deal was unreasonable. He added that nondisclosure of details of a severance package is also common practice in Japan, and speculates that Goldman Sachs’ employees may have been misinformed about this.

Carlet, however, sees the up-front offer of a settlement upon dismissal — before an employee has even contested the sacking — as out of the ordinary for Japan.

“Usually, a Japanese company dismisses an employee, rightly or wrongly, with no offer other than what is stipulated in contract or work rules,” he said. “Then, if the employee contests or fights the dismissal, a financial or other settlement might happen.”

The Goldman Sachs Japan union was born out of frustration after the financial institution refused to improve severance packages following discussions with the targeted employees.

The sacked workers first joined an existing union, the National Union of General Workers Tokyo Nambu (NUGW), before taking the additional step of forming their own union under the NUGW umbrella.

The union started with five people and grew to 10, though three dropped out during negotiations and accepted the original settlement.

While officially only three union members were registered — the minimum required by law — ultimately five people would stick out the battle with Goldman Sachs.

Although domestic labor laws are “notoriously employee-friendly,” Langley also believes there are “precious few tools” available to mistreated and/or laid-off employees in Japan.

“If you overlay these limited options with a lack of fluency and an extremely tight time line, foreign employees are one of the most vulnerable [groups] of individuals in Japan when it comes to protecting their rights, to say nothing about simply learning what they are in the first place,” he said.

The Japan Times approached NUGW for comment on the Goldman Sachs case for this article, but all correspondence went unanswered.

The Goldman Sachs union stepped up their activities in March, holding a press conference at the Foreign Correspondents’ Club of Japan and picketing outside the company’s Roppongi Hills headquarters and the home of the firm’s representative director.

To protect their identities, union members wore white face masks and black hoodies, handing out fake money printed with a Vampire Squid character representing the financial institution.

The protesters joined picketing events in Tokyo organized by other unions for laid-off foreign employees of other companies, said Langley. “They always carried the Goldman Sachs Japan Union banner so that people would know who they were at a glance and what they were protesting.”

These actions were certainly eye-catching, and Kabigting admits they were effective in raising awareness of the union and their fight against Goldman Japan.

“The name of the game is mud-slinging, so that the employees can win public support,” he said, “and since Goldman Sachs is in a business where high image-branding is important, the union hit the right chord.”

After garnering coverage in The New York Times, Huffington Post and other high-profile news outlets, the Goldman Japan story faded out of view almost as quickly as it appeared.

“There are much more important stories to cover than a corporate problem with their labor union,” Kabigting said of the Goldman case. For the media and the public, “it was time to move on.”

In July 2012, the unionized employees finally reached an out-of-court settlement with Goldman Sachs Japan, but the deal went unreported.

While news of the formation of the union was publicized by its members, the settlement was kept quiet and the once-high-profile case faded into the background.

A strict nondisclosure clause was included in the deal, in exchange for what Kabigting calls “considerable financial gain.”

“Again, this is normal practice and I would advise both parties to do the same if I was their legal rep,” he said.

Following a cooling-off period set by Goldman Sachs, news of the deal was quietly made available on the Langley Esquire website.

According to the statement from Langley Esquire, employees agreed to withdraw their collective bargaining efforts and halt all union activities. The union’s Facebook page was deleted and both parties agreed to abide by a set nondisclosure period.

“This period of secrecy was presumably to allow the terminated employees to more effectively seek replacement employment,” Langley said in the statement.

In return for dissolving the union, members were promised undisclosed annual payments for several years, an improvement over the severance packages originally offered by the firm, which paid out for four to 10 months.

When word of the formation of the Goldman Sachs Japan union spread in February last year, some industry observers suggested that the labor issue would be closely monitored by other companies, who might adapt their playbook based on the outcome of the case.

A year on, Langley says that negotiating in Tokyo on behalf of employees since the Goldman Sachs fight has become more difficult.

“I suspect all foreign financial houses’ HR department heads got together to devise a more effective way to cut head count, since the closely watched Goldman Sachs ploy failed,” he said. “The change was across the board, immediate and identical.”

However, if Goldman Sachs’ tactics had been successful, Langley says “everyone would have followed them in turn” — and that “would have been nasty.” In the event, however, the opposite was the case, and the “black eye received was fairly well-pronounced.”

The reality now, says Langley, is that companies are increasingly unwilling to negotiate and are more inclined to force the situation into litigation.

“This is precisely the place no one wants it to go,” he said. “The best recent gamble by companies seems to be a bigger payout to victorious employees in an almost certain losing prospect, but little or none to those who give up prematurely.”

In a nutshell, companies have adopted a “sue them, take them to court” approach toward employees who refuse to go quietly, Langley says. “The deficiencies are still on the employee side. Without some adroit help, the employee is severely, almost fatally, disadvantaged in this kind of fight.”

Carlet, on the other hand, has not noticed any fallout from the Goldman Sachs case in terms of the overall labor market or employer-employee relations.

“These workers joined a union after being fired, thereby weakening their potential union strength,” he said. “The real changes will come when workers in steady jobs that they are dedicated to come together, unionize and fight long-term to improve things.”

While the Goldman Sachs case may not have brought about the significant changes in the labor market some were expecting, Kabigting says the one thing it did show is that Japan’s labor laws apply equally to companies across the board, whether small or large, domestic or global.

“People realized that not even a giant company like Goldman Sachs is above the law,” he said.

Send comments on this issue and story ideas to community@japantimes.co.jp .

  • http://www.sheldonthinks.com/ andrew Sheldon

    This is how the finance industry needs to function; indeed most industries. You can’t have workers hanging around betraying your trust, least of all if they have the capacity to rationalise all-manner of nefarious ways to get back at you, because they have a grievance against someone or the company. Remember your immediate boss is not the company, its passive shareholders. Employees need to sue to take cases. The problem is not company sacking procedures, its the cost of access to justice. I might add that most workers slack off after giving notice. You want to hurt a boss? Leave en-mass with your fellow workers. Nothing causes bosses to loss faith in their middle managers than that. Worked for me.

    • phu

      Definitely agreed on how layoffs work. In tech as well, when someone’s being shown the door, your safest course of action is to cut their access and immediately tell them they’re done. It’s not unfair or bad business, it’s just practical.

      I’m not sure what kind of people you work with, or what kind of person you are, but “most workers slack off after giving notice” suggests a very poor work ethic.

      Hopefully there was more context in your situation, though, as your description of “hurting your boss” comes across as very petty and harmful to not just the boss but the company.

  • LeRoy Richard Gatch

    read this twice! A respectable showing, Timothy Langley! Very good outcomes in this big-corporate affair for the ” … back office techie-types earning regular-joe salaries …,” who in the end received a bit of the civility and respect working folks are due, whether situated in Japan or any other nation which is projected (and accepted) a “developed” nation! Reassuring to know that someone of quality based in Tokyo is capable of rendering “androit” assistance, and achieving good outcomes for the abused 24/7.

  • LeRoy Richard Gatch

    read this twice! A respectable showing, Timothy Langley! Very good outcomes in this big-corporate affair for back office techie-types earning regular-joe salaries who in the end received a bit of the civility and respect working folks are due, whether employed in Japan … or any other nation projected (and accepted) a “developed” … civilized … one. Reassuring to know that someone of quality based in Tokyo is capable of rendering “adroit” assistance, and achieving good outcomes for the abused 24/7!