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Information Technology


Company Profile


Company Profile




Politics & Policy






Japanese style of industrial relations management

Dec 31, 2001 - Jan 06, 2002

Japanese culture has many unique features. The following four being among the most characteristic.

Multi-layered. Japanese Culture is made up of many layers-old and new, foreign and native. Politics is a mixture of old and new customs. The three essentials of food, clothing and shelters are blends of Japanese and Western elements. Japanese practice both Buddhist and Shinto rites, and more than half of the Japanese language comprise of Chinese - derivative words. Japanese culture are the curiosity Japanese Peoples have for other cultures and the historic process of assimilation as Japanese welcome foreign culture elements without discarding indigenous culture and traditions.

Homogeneity. Japanese culture by region, religion and person, is basically uniform throughout the country, which shows the same pattern. Primary importance has traditionally been placed on the group rather than on the individual, and this heritage accounts for much of Japanese society's uniformity.

Japanazation. Japanese have been very adept at making foreign elements their own to create something that is uniquely Japanese. This trait goes back beyond the Honen period when Japanese characters were created out of more complex Chinese characters.

Pragmatism. The Japanese are highly pragmatic, emphasizing specific circumstances more than universal truths. Even in modern science, Japanese show more aptitude for scientific applications than for basic research.


Hardworking Japanese. Japanese economy earlier has grown much stronger, the Japanese People have come to be known the world over as hard workers. The zeal with which Japanese pursue their work is based not so much on the profit motive as it is on the value of working. The act of working is subconsciously accepted as a spiritual discipline, whereas economic gain, is the prize to be gained through selfless devotion to their work. This orientation lives on in the Japanese companies, and this is a major reason why Japanese work so hard. As such the Japanese work ethic differs radically from the modern European attitude that work is basically an exchange of labour and time for money and that neither the work nor the act of working has any inherent value.

This difference is also seen as major cause of the difference between business management in the contractual west and what might be called the distinctively Japanese style of Management.

Changing attitudes. The Japanese work ethic has been undergoing significant changes in recent past. While work is still held in the high esteem, there has been considerable erosion on the motivation side. This is partly because goals have become more elusive. The pleasant slow growth, extra work is not rewarded by a higher income, and the graying of the Japanese population is creating a shortage of upper management posts. Further, that, the Japanese have attained a relatively high level of material affluences, their values have become more individualized, and many peoples particularly young peoples are placing greater emphasis on personal interest activities outside of their work.

Japanese have always put work before pleasure and performed the duties with a touch of spiritual obligations. The working attitudes and disciplines of the Japanese workers itself a model by itself. There is no concept of late attendance and absenteeism from work place. The time punctuality not in work places but in all other public life disciplines also so accurate that it gives a touch of surprise to the outsider/visitor to Japan. There have been some major changes noticed in the way the Japanese view recreation since the mid 1970s and of the economy's rapid growth. While the slower economic growth of the late 1970s people began using their leisure time for what might be called lifestyle enhancement or self-improvement purposes.

LONGEVITY. Japan is rapidly become a nation of old people. About 40 years ago, people spoke of fifty years of life. Since 1988 improvement in the standard of living and advance in medical science had brought about striking reductions in both the birth rate and the mortality rate to lengthen the average life span to 75.5 years for males and 81.3 years for females, making Japan the longevity leader.


The Japanese decision making process differs from the Western process. Decision in Japanese organizations are made from the bottom up. The final and formal responsibility for a particular decision rest with the nominal decision maker in Japan, the actual decision making process itself is a cooperative efforts with the cooperation of everyone involved in or affected by the decision implementation. The good decision making is the one who listen to everyone and leads the group towards a consensus coalescing around the idea that has the broadest support. The Japanese decision makers need to be skilled not so much in problem analysis as in people analysis and negotiating a consensus from among differing viewpoints. The bottom up decision making process entails more than just choosing the best of a number of plans. With several competing plans and many variations of each plan under consideration at the same time, the result is very often an amalgam of elements from many different sources. This amalgamation is done to ensure the best possible decision and the smoothest possible implementations.


Lifetime Employment Security. Under Japan's employment system, an employee who does what he is told, gets along with his fellow workers, and makes no major blunders can reasonably expect to be employed with the same company guaranteeing his social standing and income for the rest of his working life, even if he/she is not an especially outstanding performer.

Because the Japanese company guarantees its workers livelihood until retirement, people can concentrate on their work in the realization that they and their company share a common fate. Knowing the company's success will mean enhanced livelihood, security and an improved standard of living for themselves and working for the same company for all of their working lives.

Recruitment and promotions. Most Japanese companies hire new people in once-a-year recruitment drive, during which prospective graduates are tested, interviewed, and finally hired. Each company decides before hand how many people it intends to hire given its business outlook and other considerations.

Candidates are chosen not so much for their professional skills as for their character and academic background. Commonly they are hired, not for specific department or for any specific job but by the Company as a whole for a wide range of work. Once hired, employees are trained on the job and reassigned every few years to give them broad generalist experience and ensure their long run competence.

Most Japanese companies hire women under a separate systems and assign them jobs as assistants to male employees, although, pressure is building up to end this discrimination.

Seniority based rewards

Seniority based rewards with lifetime employment is a distinguishing characteristic of Japanese style of management. Employees receive basic salaries geared to their entry level salaries. Those basic salaries are then supplemented by special allowances for managerial or technical expertise, family size and structure, and other special factors. The seniority based wage system was devised as a means of guaranteeing the livelihoods of all employees through out their lifetime career with the Company. Although the seniority based system worked well by stimulating healthy competition for promotions, the shortage of higher level openings has eroded employee motivation and even company loyalty. Some companies are attempting to maintain employee morale by restructuring their organizations to allow wider investment and by basing promotions more on ability to reward the better qualified people. Then entire system of seniority based rewards is on its way out, and Japanese company employees will increasingly have to face the pressure of performance based competition.


Japan, upto 1988 was the only country where people worked more than 2,000 hours per year, they intend to reduce it to 1880 hours. The labour union intend to have rather shorter hours of work than higher pay, but the strong domestic demand and vigorous economic activity have worked against this idea. More and more Japanese companies are adopting the two days week end.

The average Japanese worker is allowed 15.1 days paid vacation per year, actually takes only 7.6. half of the entitlement. This is partly because people enjoy their work, it is also because there is so much work to do that people can not take all the time off.


Japanese salaried workers normally receive a monthly salary plus two bonuses annually, once in the summer and one at the year's end, beside additional bonuses depending on company's performance. Bonuses are an integral part of Japanese salaried workers earnings.


In 1945 the number of enterprise based unions were about 40,000. The rapid growth in the industry brought a change in Trade Unions, upto 1955 the Trade Unions were reported violent and bad labour management, this was the period when labour did not know how to behave and management did not know how to deal. In 1995 there are about 72,000 Enterprise based Trade Unions in Japan.

The Trade Unions slogans in different periods were:

1957 Wages to eat
1963 Wages just equal to Europe, Wages should attain the larger ladder.
1976 Wages to achieve substantial increase.
1988 Wages - living standard should be equal to Europe

Today Affluence .


Japan's Labour Unions are organized as enterprise base Union with membership restricted to regular, full-time employees of the company. These enterprise unions seek to maintain and improve their member's standard of living by bargaining for pay raises and defending employee's rights within the framework of lifetime employment and seniority- based rewards. The enterprise unions are fully aware and recognize that their survival depends on the company's survival. It is noticed, the union refrains from making aggressive demands at rough times and co-operates to help the company through the crisis and demonstrate sense of reasonability and belonging.

Membership to the union is restricted to lower level management people. If a Union member is promoted to middle management he is no more eligible for union membership. No outsider can be the office bearer or member of an enterprise base union.


The management and union representative negotiate agreements regarding working conditions and other matters, realizing that their long term prosperity to the prosperity of the company where they work.

Japanese union leaders make an effort to be well versed in business conditions affecting the industry and to avoid doing anything that might jeopardize the company's survival, interest or otherwise.

Union are given importance and considerations in management participation during the postwar and labour-management consultive committee existed to participate in management decision, mainly in such areas as production schedules, employee welfare and personnel policy etc.

The trend of the union of the union demand, is for single digit wage increase, but with more emphasis to job security and shorter working hours, this helps the companies to over come on recession and slower growth.

Agreement negotiated with the union has a validity of one year and it is customary that union's agreements are negotiated and commonly settled each year in spring time.

Japanese Industrial Relations fundamentals are:

1. Labour + Management should trust each other.
2. Labour + Management should realize each other.
3. Better and free communication with each other.
4. No ideological confrontation.
5. Prompt solution of grievances.


1. Trade Union should have their own policy.
2. It should be on equal footing.
3. Democratic in character.
4. Attitude should not be of a dictator.
5. Decisions should be made in work place
6. Fair relation between management and labour.


Japan's Ministry of Labour aim to Promoting Workers Welfare and Contributing to the Stability of National Life. Their mission is to build a society in which all workers and their families can achieve better and more affluent lives, along with jots satisfaction, with emphasis on the following:

1. Improving workers livelihood so that people can lead more pleasant lives,
2. Responding appropriately to trends in the labour force and changes in the employment structure,
3. Training workers and Development of Human Resources which can promote the development of Japan's economy and society,
4. Creating an environment in which older people can give full play to their various abilities,
5. Implementing measures to employ disabled persons and other requiring special consideration,
6. Making active contribution to the International Community.


Under the constitution, worker are guaranteed the right to organize, to bargain collectively and to strike. The labour union Law exempt Labour Union from civil or criminal responsibility when a strike is justified, and protects against and offers relief in the cases of labour practices. The number of disputes, the number of workers involved in disputes, and the number of working days lost in Japan has been very low compared to other countries for the past decade or more. This is because, after the 1973 oil crises, workers realized the importance of having jobs, and other wage hikes were concerned, began considering economic conditions and corporate performance trends. Management in response to this did as much as it could to keep jobs secure, and this fostered a relationship of trust between the workers and management.

The labour union law specifies no particular topics to be discussed during collective bargaining, but according to the survey in 1992, collective bargaining issues from 1989 to 1992 included not only working conditions like wages and working hours but also employment and personnel and management policies which fall under so called Management Authority.

Japan Major National Economic Organizations

Japan has four major economic organizations. each with own particular role.

1. KEIDANREN (Japan Federation of Economic Organization) works to bring together the opinions of business circles on fiscal, trade and industrial policy.
2. NISSHO (The Japanese Chamber of Commerce and Industry) represents the position of local business and small medium enterprises.
3. DOYUKAI (The Japan Association of Corporate Executives) is an employer's research forum which studies political, economic and social issues.
4. NIKKEIREN (The Japan Federation of Employers Association) the central organization of employer's associations is a body specializing in labour matters. NIKKEREN was formed to bring order to the chaotic labour movement immediately following World War II and to foster the industrial harmony and democratic labour relations. Nikkeiren meets regularly with RENGO, Labours national center, to discuss not just working cond, land and housing issue etc.

Position of Nikkeiren and Rengo Wages Negotiations

Nikkeiren has constantly adhered to the productivity standard principle: domestically generated inflation can be prevented by keeping the nation wide average wage increase in line with the real rate of increase in national economic productivity. Nikkeiren has encouraged individual enterprise to set wage according to their ability to pay total labour cost compatible with their management plans. This is because wage increase higher than the rate of increase in real national economic productivity will not only trigger inflation and negatively affect sound national economic management policies, high wages and high prices will cause difficulties for corporations and workers alike.

The 1994 spring wage negotiations were conducted against a background of a lingering economic downturn, sudden and sharp Yen appreciation, declining corporation profits for the fourth consecutive year. It urged management and labour to protect enterprise and to protect employment. and stated that realistic approach of placing a priority on securing employment rather than raising wages was needed.

Mr. A. Aziz Arain is the Manager Human Resources Company Secretary. Forbes Forbes Campbell Co. Private Ltd. and has been on study mission to Japan twice nominated by EFP.