A government advisory group recommends that Japan consider legislation to establish standards and rules for layoffs. A report to Prime Minister Junichiro Koizumi by the Council for Regulatory Reform covers a wide range of subjects, including medical care, welfare and education. However, resolving the labor issue, which affects workers' basic rights and has stirred intense management-labor disputes, is likely to take a long time.

The report said proposed standards and rules, if established, would make it easier for management and labor to determine the legality of dismissals in advance. Existing labor standards require the employer to give a 30-day dismissal notice to employees. They also ban firing employees who are pregnant or who are recovering from injuries suffered on the job or from an infectious disease. No stipulations exist regarding dismissals for corporate job cuts.

Court rulings since the mid-1970s have established that dismissals are invalid unless (1) job cuts are deemed necessary, (2) sufficient efforts are made to avert dismissals, (3) employees targeted for dismissals are selected in a fair manner, and (4) management conducts adequate consultations with the labor union.

Some employers argue that present restrictions on dismissals have discouraged companies from expanding employment and caused the nation's unemployment rate to remain high.

Last July, the Tokyo Chamber of Commerce and Industry asked the health, labor and welfare minister to establish new rules for dismissals that would relax existing restrictions. The American Chamber of Commerce and Industry in Japan is critical of court rulings that have restricted employers' right to lay off workers, arguing that efforts by foreign companies to make inroads into the Japanese market have been impeded as a result. The ACCI has urged the government to enact a law setting clear standards for dismissals.

The report by the Council for Regulatory Reform does not make specific proposals, but the group presumably hopes to see looser restrictions on firings.

I disagree somewhat with the view that Japanese restrictions on dismissals are unreasonably strict. According to the Employment Outlook 1999 published by the Organization for Economic Cooperation and Development, Japan ranked No. 13 among the 26-member states in providing employment protection -- lower than France, Germany, Italy, Sweden and South Korea.

It is widely believed that U.S. workers get the least employment protection, but many U.S. companies have seniority systems -- the longer a worker stays with a company, the less chance he or she will have of getting laid off. When business recovers, workers with seniority are allowed to return first. This is vastly different from the common Japanese practice of dismissing senior workers first.

As Japan lacks a workable system for resolving disputes over firings, it would be unfair to rush through a relaxation of restrictions on dismissals. Japan averages only about 2,000 court disputes over labor problems a year, a far cry from the 600,000 in Germany, for example.

Unlike France and Britain, Japan has no labor courts in which management and labor officials serve as arbiters. As a result, court proceedings on labor issues are extremely slow and affected workers are reluctant to initiate legal action. Many displaced Japanese workers likely feel resigned to their fate.

In its final report, meanwhile, the government council on legal reform has recommended halving the amount of court time spent on labor-dispute hearings. It also urged the establishment of a mediation system regarding labor issues and the participation of management and labor representatives as mediators. However, it is unclear when the recommendations will be implemented, due in part to budgetary restrictions.

Another pending issue is discrimination against older workers. Under the employment promotion law, implemented in October, companies must not discriminate against job applicants because of age. While the law does not provide penalties for noncompliance, it does list 10 reasons for noncompliance that employers may cite. The effectiveness of the law, therefore, is in serious doubt.

The Japanese Confederation of Labor urges enactment of a labor contract law that establishes rules for dismissals as well as rules for hirings, transfers, job rotations and retirement. It also says the four principles for dismissals established by past court rulings should be put into law. Employers are likely to strongly resist the demand. A subgroup of the Health, Welfare and Labor Ministry's advisory panel on labor policy is expected to discuss specific rules for dismissals in the coming months. Heated debate is likely, involving both management and labor representatives.

In October, the unemployment rate surged to a record high of 5.4 percent. In the years ahead, Japanese are expected to undergo further pain associated with the structural reforms being pushed by Koizumi. I have strong reservations about plans to legislate rules that would make it easier for companies to dismiss workers. Instead, the government should do more to promote employment of older workers who face possible job losses.