International Comparison

The weakening of labor unions has contributed
to Japan’s declining birthrate.

Tell us about your analysis of the rise in non-regular employment in Japan.

Watanabe I analyze labor market reforms in Japan since the 1990s through international comparisons, mainly with Italy.

Japan’s labor market reforms were essentially aimed at enabling the employment of non-regular workers such as part-timers and temporary agency workers, or making such employment easier. Today we take the employment of temp workers for granted, but before the Temporary Agency Work Law was enacted in 1985, it was not permitted in Japan. When the Law first came into effect, agency work was allowed only in certain industries, but the restrictions were relaxed and the list of eligible industries grew, with the manufacturing industry added in 2003.

One of my research areas is the analysis of labor reforms based not only on economic factors but also on political ones. I examine the process of deregulation in Japan and the effect it has had on society.

What was the background of deregulation, and how has it affected Japanese society?

Watanabe The 1990s was the era in which the economic bubble burst, the economy stagnated, and Japan entered a low-growth phase. Through deregulation to make it easier to employ non-regular workers, the Japanese government sought to improve economic efficiency and strengthen international competitiveness in response to the intensifying competition with other East Asian countries. This is because the employment of non-regular workers enables businesses to employ people cheaply even when business conditions are poor, and enables workers to gain employment, even if it is non-regular.

However, the problem is that non-regular work in Japan tends to be precarious, with low wages and the possibility of being laid off at any time. An increase in non-regular workers in the younger generation in particular means that people don’t have the economic capacity to get married or have children, and I believe this is a factor in the declining birthrate.

What can be done to improve these precarious conditions?

Watanabe Usually, improvements in working conditions are achieved through negotiation between employers and labor unions organized by workers themselves. In Japan, however, labor unions have grown weaker and are unable to produce the desired outcomes.

My comparative touchstone here is Italy, where labor market reforms through deregulation were carried out at the same time as in Japan. In Italy, however, labor unions lobbied for protections for non-regular workers, and major restrictions were placed on employers’ use of temp workers.

How did this difference arise? There are several factors, but one of them is that the mainstream labor union model in Japan is enterprise unions, in which workers are organized at the individual company level rather than across the whole industry. Organizing at the company level tends to mean unions pursue harmonious labor relations in order both to secure employment for their members (who, in Japan, are mainly regular workers) and to raise the company’s profits. In this context, non-regular workers—who can be employed at low cost and easily laid off in difficult economic times—are a convenient presence not only for the company but also for its regular workers. Little effort was made to involve non-regular workers in labor unions or to negotiate for improvements in their working conditions. In contrast, workers in Italy joined forces mainly through three major national labor confederations, allowing them to influence the development of government policy on deregulation and continue to counteract employers, ultimately gaining success in the form of restrictions on the use of temporary agency workers.

I think it is important for Japan’s labor unions to understand how unions work in other countries, and do more to fight, mobilizing their members to engage in labor disputes. This will also help achieve an increase in real wages, which continue to stagnate.

Using international comparisons to escape the “taken for granted”
view and achieve proper understanding and insight.

Why do you compare Japan and Italy?

Watanabe Italy’s culture is different from Japan’s, but there are similarities in terms of economic and social conditions. Two examples of these similarities are the high proportion of non-regular workers in the younger generation and the high number of unmarried young people living with their parents: so-called “parasite singles” in the Japanese context. When analyzing reasons for a certain phenomenon that arises in one country, comparing it with another country can produce a more accurate analysis. Through international comparison, you can discover new factors and gain more appropriate insights into things that may be taken for granted if you look at Japan alone.

I hear that you lived outside Japan for many years. Is that right?

Watanabe Yes, I spent more than 20 years living overseas. I earned master’s degrees from multiple universities, then my doctoral degree from the University of Oxford in the UK. At Oxford, you are affiliated not only with a regular academic faculty but also with a college. There are some colleges with long histories such as Christ Church College, which is famous as a filming location for the Harry Potter movies. But the college I belonged to was St Antony’s College, a relatively new and cosmopolitan college that accepts graduate students only. At the time, students held parties at one college or another every week, so there was more to life than just academic research. After completing my studies, I taught in the UK. On my days off, I did things like going to Spain to watch football matches. I also took up visiting professor appointments in Germany, Spain (through the use of EU’s Erasmus Program), and San Francisco in the United States . . . I enjoy being in diverse environments.

Regardless of what your field is, an international perspective is essential in order to understand Japan. There are countless examples where things taken for granted in Japan are far from natural when viewed from an international standpoint. For example, outside Japan, the fax machine is an artifact of the 20th century. The slow pace of digitalization and shift to cashless payments in Japan is something else that’s impossible to perceive from a domestic standpoint alone. These kinds of “Galapagos phenomena” affect economic efficiency and labor productivity, so they are connected to economic stagnation. I would like to share the message that overseas experience is important to understanding Japan better.