The change of leadership last week at Nikkeiren, the Japan Federation of Employers’ Associations, comes as Japan’s worst post-World War II recession is pushing unemployment to an all-time high. It is only natural, therefore, that in his inaugural address, Chairman Hiroshi Okuda, president of Toyota Motor Corp., should have given top priority to “stabilizing employment and creating new jobs.”
The jobless rate for March, the last month for which official statistics are available, reached a record 4.8 percent with 3.4 million people out of work. With businesses in a broad range of industries stepping up restructuring efforts, it is only a matter of time before the rate tops 5 percent. It could hit 6 percent by the end of the year.
High unemployment is a fact Japan must face as it tries to reshape its industrial structure. With domestic industry increasingly exposed to the rigors of global competition, there is no way to avoid restructuring. For all the pain it entails, it is indeed the way to regain international competitiveness. But this does not mean that businesses have a license to cut jobs as readily as they sell off their superfluous properties.
Private-sector employers in the midst of downsizing would do well to remember that securing and creating jobs is primarily their responsibility. While the government needs to do everything it can to improve the job picture, businesses should make their own efforts to protect jobs. Then — and only then — should they ask for government help, if need be. It is reported that some profitable businesses are cutting jobs under the pretext of restructuring or shaving their operations to dress up their balance sheets.
For workers, nothing can be more unsettling than losing a job. High unemployment, combined with diminished incomes, is a recipe for an economic slowdown because consumer spending accounts for the bulk of gross domestic product. Simply put, that is the major reason why the economy is stuck in a protracted slump.
Mr. Jiro Nemoto, at his last press conference as Nikkeiren chairman, called for 2 trillion yen in additional government spending to secure jobs through retraining and other programs. The government’s fiscal 1999 budget already earmarks 1 trillion yen for similar purposes. That will help, but there are limits to what the government can do. The jobless problem cannot be resolved without conscious efforts on the part of individual employers.
Nikkeiren says Japanese businesses should pursue “Japanese-style management befitting the new age” with an emphasis on “long-term perspective” and “respect for human beings.” Its latest annual report on labor issues, announced in January, stresses the “corporate responsibility of maintaining employment.” To live up to these slogans, employers will need to take a second look at their job-cutting plans. Labor and management should work jointly to figure out ways to secure jobs, including work sharing.
At his first press conference as Nikkeiren head, Mr. Okuda made it clear that cutting jobs should be a “measure of last resort.” He is perfectly right. While urging the government to create jobs through deregulation, tax reform, startup support and other steps, he stressed the importance of private corporations making their own efforts to resolve their employment problems. Self-help is the name of the game.
A recent Nikkeiren report on labor-management relations correctly points out that the era of collective bargaining aimed chiefly at raising wages and bonuses is coming to an end. In the future, says the report, labor and management will be concerned more with nonwage questions, such as those related to workers’ ability and performance, the diversifying job market, pensions and social security, and even with such catchall issues as industrial waste and environmental destruction.
A shift away from the wage-centered “shunto” (spring labor offensive) will inevitably change Nikkeiren’s role as well in the shunto. In the negotiations of recent years Nikkeiren called for an effective “wage freeze,” citing the deep business slump. In future bargaining rounds, however, it should allow individual companies to make their own wage decisions, instead of setting across-the-board guidelines.
In other words, companies with an ability to pay should reward their workers by raising regular wages, not just bonuses, by reasonable margins. There is no convincing reason why well-off companies should unnecessarily limit their wage increases in line with poorly-performing ones. The lesson for Nikkeiren is that its emphasis on the “theory of wage restraint” has tended to put a material and psychological damper on the Japanese economy.
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