The Characteristics of Labor Market Reforms in Japan since the 1990s

• In Event: The View from Work: International Political Economy through the Lens of Labor

Abstract

This paper examines how and why the characteristics of labor market reforms in Japan have changed since the 1990s but also remained similar in some respects. After the collapse of the bubble economy in the early 1990s, Japan began to experience a stagnant economy. In addition, Japanese companies faced intensified international economic competition under the increasing degree of globalization. Against this background, employers increased their demands for a more flexible labor market, and the government of the Liberal Democratic Party (LDP) implemented neoliberal labor market deregulation in the late 1990s and early 2000s despite labor resistance. Later, the LDP government of former Prime Minister Abe (2012-20) initially attempted to continue the deregulation of the labor market. Such deregulatory attempts included proposals to increase the flexibility of regular employment (such as working-time deregulation and more straightforward dismissal of regular workers under lifetime employment) and further deregulation of non-regular employment, such as temporary agency work. However, the Abe administration began to implement several measures aimed at increasing worker protection to some extent later, as seen in the introduction of the Work-style Reform in 2018 (such as the introduction of the “equal pay for equal work” principle and the imposition of the legal limit on the amount of overtime work).
The paper attempts to explain these seemingly contradictory labor market policies of the LDP government from the perspectives of the power resources of labor unions vis-à-vis employers (Korpi, 1983, 2006; Watanabe, 2014) and the incentives for the government to achieve economic growth with various labor market policies (Watanabe, 2020). While neoliberal labor market deregulation in the late 1990s and early 2000s can be explained by insufficient power resources of labor unions vis-à-vis employers and the incentives for the LDP government to implement labor market deregulation as part of the structural reform aimed at invigorating the stagnant economy, the implementation of seemingly worker-protective polices by the Abe administration in the second half of the 2010s, despite the insufficient power resources of labor unions, was aimed at achieving economic growth by benefiting workers under deteriorating and precarious working conditions (for example, by enabling those workers to spend more with the introduction of the “equal pay for equal work” principle as part of the Work-style Reform). However, these policies did not improve the working conditions of many workers as they were not worker-protective enough, and their working conditions remained poor and precarious. While the characteristics of labor market reforms have changed from neoliberal to worker-protective to some extent between the late 1990s/early 2000s and 2010s/2020s, what remains similar is the declining and insufficient power resources of Japanese labor unions and the Japanese government’s continuing implementation of labor market reforms to achieve economic growth rather than increase worker welfare.

Author

• Hiroaki Richard Watanabe, Ritsumeikan University