Jongwon WOO

1. Some changes after 1990s 2. What happens in each firm? 3. The case study of Company A

The bubble economy collapsed in 1991 and Japan entered a long period of economic stagnation called the “lost 20 years” in which the average real GDP growth rate between 1991 and 2009 was a mere 0.8%

Globalization also started becoming more rapid and prevalent, causing further pressure for change.

Both the stagnation of the economy and globalization meant that the burden of the seniority system became dire for the firms. Hence, there is a pressure to shrink the number of permanent employees and replace them with cheaper workers employed on a non-permanent basis.

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Since late-1990s the number of non-regular workers, especially male non-regular workers rapidly increased.

As of now, the rate of non-regular workers is above one third.

http://www.mhlw.go.jp/stf/seisakunitsuite/bunya/0000046231.html

The wage regular workers is increasing until mid-50s, based on seniority.

Contrarily, the age-wage profile of non-regular workers is rather flat.

http://www5.cao.go.jp/keizai2/keizai-syakai/k-s-kouzou/shiryou/houkoku/sankoushiryo5.pdf

Q) (Asking enterprise places) Are you practicing the systematic OJT and Off-JT?

A) About 60%, and 70% of enterprise places answer that they are practicing the systematic OJT and Off-JT respectively to the regular workers. Contrarily, only about 30% of enterprise places answer that they are practicing the systematic OJT and Off-JT to the non-regular workers.

MLHW (2014) "Survey on Ability Development"

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厚生労働省「平成25年労働組合基礎調査の概況」2014年。

厚生労働省 [2012]『平成24年版 労働経済の分析』p73。

This presentation aims to assess whether or not Japan’s ER (Employment Relations) can be reconstructed in the long-term.

Its target is not on the national level or industry level but on the company level ER.

The facts indicated above show that the durability of ER at the national level or at the industry level may not be so positive.

You may finally judge the durability of ER in Japan by the ER at the company level.

How can you observe the durability of ER at the company level?

This presentation focuses on the Genbaryoku, which means the Kaizen-power of workplaces.

Genbaryoku = “the ability of workplaces to accurately perform daily operations, and find and solve the problems,

which is derived from and changed by the degree of teamwork, the level of discretionary power, and the time to spare, realized on site”

good teamwork: it enhances the skills formation, communication, and leadership building in the workplaces.

proper discretionary power: it stimulates each individual’s motivation and promotes organizational cooperation, on the condition that it protects team members from excessive management control.

time to spare: it not only promotes individual motivation/organizational cooperation in the present, but also secures the growth of individual workers’/teams’ abilities in the future

A shift to a business strategy that highly values short-term profit, which has been accelerated by globalization and changes in corporate governance

The enforcement of efficiency management and related HRM focusing on cost-cutting instead of human capital investment

The two-track employment management which resulted an huge increase in the number of non-regular workers

efficiency

management

skill formation communication

Genbaryoku

short-term

profit

leadership building

teamwork

discretion time to spare

irregular

employment

For the automobile industry, the business environment was favorable in the 2000s, deteriorated since the 2008 global recession, and has recently recovered.

Even during the prosperous times, overseas production has increased while domestic production has decreased on the whole.

Domestic employment of regular workers has also generally fallen.

Meanwhile, any labor shortage has been dealt with by hiring non-regular workers.

Domestic production has not increased, except for Toyota.

Employment of regular workers has not increased, including Toyota.

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Since the mid-2000s, the most appropriate factories for producing a particular model have been decided based on a “competitive procedure.”

As of the model M, cars to be sold in Japan and Southeast Asia have been produced in Thailand, and those to be sold in Europe have been made in India.

Per vehicle costs of production have been represented and compared in a bar graph, and shown to even the foremen.

Each factory has been made to engage in a “Productivity Increase Movement,” with the purpose of raising morale and fostering the spirit of “protecting one’s employment and workplace.”

As the result of this competition, the workplaces have been made very busy and the workers have been over loaded.

A systemized procedure for efficiency setting/checking

started to set/check about 300 core managers’ “commitments/targets” under the direct supervision of the CEO

this process is repeated at the department→division→team levels

Quantification and measurement of a target efficiency

“Before, workers only had to do the tasks given, but now the budget of the division/team must be constantly taken into consideration.”

For example, “7% annual decrease in the

man/hour as well as 10＋α% annual reduction in cost per vehicle” is demanded at the team level.

The goal of annual reduction in cost per vehicle has especially led to the policy of more actively hiring temporary employees.

Monthly meetings have to be held between the division and the team to check the efficiency and to accomplish the target.

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A bumper painting workplace at factory K

The overall number of employees has been reduced to about 1/3 during the last 20 years.

The numbers of non-regular employees are: -7/7 in the wiping team -4/7 in the shipping team -3/10 in the masking team -1/5 in the packing team -0/10 in the finishing team -Formal training is usually not offered to the non-regular workers.

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Changes in work

intensity

Changes in

workloadIncreased

Increased a bit

Has not changed

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Decreased

No answer

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Reporting or consulting work matters

with the boss

Receiving approval, guidance, or advice

from the boss regarding work matters

Discussing workload and division of

tasks

Dicussing various activities such as QC

circles, etc

Discussing expertise, skills, etc

Satisfied by the

quality of

communication

Needs

improvement

No need for

much

communication

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Work-hours, work-load, number of vacation

days received

Work environment conditions (air conditioning,

lighting, work space, etc)

Other environment conditions (commuting,

parking, restroom and cafeteria quality, etc)

Issues that cannot be resolved solely at one's

workshop

Invigoration of workplace (improving

communication, etc)

Promotion of a safer workplace (worker's

compensation system, mental health care, etc)

%

The majority of workers feel that the workload and the work intensity have both been increasing recently.

Many workers are not satisfied with the quality of communication, even on the matters related to QC circles.

They want the workplaces level labor-management meetings to especially address the issues of work-hours, workload, and the number of vacation days.

Recently, foremen’s management tasks have increased. As for quality control, problems must now be solved within a half day or even within an hour, whereas in the past, foremen were allowed a whole day to solve the problems.

Nevertheless, foremen work “line-on” about half of the time even though they should only work “line-off” as a rule.

Foremen are critical for Genbaryoku, especially with their roles in revising operation standards, attaining workplace flexibility, etc.

However, as the result of heavy workload, not only do foremen lack the time to train and help subordinates develop, but ordinary employees are also starting to lack incentives to become a foreman who are merely “too busy.”

Ｘ

the rapid increase in the use of non-regular employees

the severe reduction in the man-hour the placement of lower class foremen to the

production lines the performance-based compensation

scheme propagating the culture of “overworking”

Consequently, workplaces have lost the time to spare to “enjoyably” address the problems and to “sufficiently” nurture successors.

Time is of importance.

Workplaces need to have the time to spare in order to consider their own ways of problem solving and to invest in their own human capitals.

Enterprise unions also need to have the time to invest in their own human capitals and to enforce their leadership building, especially in the rank and file.

Companies need to shift from cost-cutting strategies to value-adding strategies.

A Company-NPW-Suishimbu ed. (2005), Zissen ‘A Company Seisan Hōsiki’ Keywords 25 (Practices of A Company Production Way: 25 Keywards), Tokyo: Nikkan-Kōgyō-Simbun-sya.

Cappelli, P. and Neumark, D. (2001). “Do ‘High-Performance’ Work Practices Improve Establishment Level Outcomes?”, Industrial and Labor Relations Review, 54: 737–76.

Freeman,R.B. and J.L.Medoff (1984). What Do Unions Do?, New York: Basic books.

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Kato,T. and M.Morishima (2002). “The Productivity Effects of Participatory Employment Practices: Evidence from New Japanese Panel Data”, Industrial Relations, 41(4): 487-520.

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Nakamura, Keisuke et al. (eds.) (2005), Suitai-Ka Saisei-Ka: Rōdōkumiai Kasseika Heno Michi (Declining or Revitalizing?), Tokyo: Keiso-shobo.

Nitta, Michio (1988) Nihon No Rodōsya Samka (Workers’ Participation in Japan), Tokyo: University of Tokyo Press.

Shimokawa, Kōichi et al. (2011) A Company Production Way, Tokyo: Yūhikaku.

Vallas, Steven P. [2003]. “Why Teamwork Fails: Obstacles to Workplace Change in Four Manufacturing Plants’. American Sociological Review, 68: 223–50.

Woo, Jongwon (2010) “Jinji Rōmu Kanri No Henyō: Jidōsha San-Sha No Jirei Wo Chūshin Ni (The Transformantion of Human Resource Management )” in Kikkaw, Takeo, and Fumikatu Kubo ed., Global-Ka To Nihon-Gata Kigyō System No Henyō 1985-2008 (Globalization and The Change of Japan-Style Corporate System 1985-2008), Kyoto: Minerva-Shobō, pp157-197.

Woo, Jongwon (2014a) “Evolution of Human Resource Management in Japan: Continuity, Change, and Enduring Challenges”, in Kaufman, B. (ed.), The Development of Human Resource Management Across Nations: Unity and Diversity, Cheltenham, UK: Edward Elgar.

Woo, Jongwon (eds.) (2014b) For Reconstructing the Japanese Kaizen Power of the Workplaces), Tokyo : Nihonkeizai-Hyoronsha.