Comparative Labor Relations: Inc. Germany & Japan

What is the value of comparative labor relations analysis

• Learn more about our own LR system by contrasting it with other systems

• Can test theories or propositions with comparative analysis

• Other countries are important in their own right

• Key LR system differences: US v. most other countries

Why do we focus on LR in Japan & Germany?

• Each country has been economically vibrant

  • Japan had rapid growth in the 1970s and 1980s

  • Germany has had vibrant economic growth and is a strong exporter

• The US LR system is becoming somewhat like the Japanese and German Systems

• The Japanese and German LR systems have some distinctive features very unlike the US LR system

What are the key features of Japan’s LR system?

Lifetime employment principle

Nenko pay system

Broad job definitions

Union structure

Participation

Japanese LR System: Lifetime Employment Principle

• Not contractual, only a promise, firms work hard to support

  • in extreme times, firms do lay off (ex: steel and shipbuilding)

• Retirement traditionally 55, now at 60

• Covers 1/3 of workforce

  • Suppliers and temp workers serve as buffers to the system

Japanese LR System: Nenko pay system

• Pay tied to seniority (age): workers performing similar jobs can receive very different rates of pay

What are other aspects of Japan’s pay system?

• Worker pay also varies as a function of performance appraisals

  • Blue-collar workers receive regular appraisals (rare in the US)

• Large companies also offer a bonus: often 1/3 of total earnings

  • Pay increases in union contracts following the spring wage offensive (wage bargaining)

Japanese LR System: Broad job definitions

Relatively few classifications

Job rotation and mobility

• high corporate investments in training

Japanese LR System: Union structure

Unions organized at firm level in private sector

• White collar staff included

• Militants purged in the 1950s → less confrontational unions

Japanese LR System: Participation

• Quality circles at the shop floor level

  • Supervisors are in the union and often at union stewards (reps)

• Participation through labor management committees

• Few written grievances

  • settled through worker-supervisor discussions, or passed at labor-mgt committe if the issue affects many workers

When did the Japanese LR system take full form?

Post WW2: 1940s-1950s

What led to Japanese LR system?

Cultural factor: emphasis on harmon, role of emperor

Historical factor: purging of militant unions, unsuccessful strikes

What are the key features of German LR system?

• Dual system

  • Co-determination

  • Union structure

• gov labor courts

• immigrants used as cyclical buffers

German LR System: Codetermination of Dual system

• Employee representatives elected to “supervisory board” of the company (one less employee than management)

  • specified in federal law, white-collar votes with blue-collar staff

• Work councils: employee representation on committee concerned with personnel/workplace matters

  • Required by national law

  • Elected by all employees (not just union members).

  • Management must meet and confer with works council

  • Parallel forum to union representation

  • “Social Plans” for layoffs (specify who gets laid off and the compensation to be received by laid off workers)

German LR System: Union structure of Dual system

Industry or sectoral-wide bargaining is common

Links to work councils

German LR System: Government labor courts

Individual “owns” the grievance

• ind. workers bring cases to labor court

• unions help members in court (incentive for people to join union)