Working life in Japan

Source: Eurostat – Real GDP per capita (chain-linked volumes [2010], in euro) and percentage change 2012–2017 (both based on tsdec100). Unemployment rate by sex (percentage of active population) and age (youth, aged 15 to 24) – annual average, % [une_rt_a]; Employment rate by sex (percentage of active population) and age (youth, aged 15 to 24) – annual average, % [lfsi_emp_a]. Data for Japan: Statistics Japan – Population aged 15 and older by age (five-year group); Employed people and employment rate by age group – Whole Japan (youth, aged 15 to 24).

Economic and labour market context

The Japanese economy has been stagnant for over two decades, following the collapse of the Japanese asset price bubble in the early 1990s. Despite a significant number of economic stimulus packages initiated between 2013 and 2017 by Prime Minister Shinzō Abe, the real gross domestic product (GDP) growth rate was 1.7% in 2017, compared to 2.7% for the EU. The long-term economic growth of Japan is hampered by an ageing population and the size of its public debt. Still, Japan continues to be the third largest economy in the world.

Similar to the EU, the leading economic sector in Japan used to be manufacturing, and included such sectors as mining, shipbuilding, steel, automobiles and consumer electronics. Although manufacturing still plays an important role, the past three decades have seen the service sector – in particular, wholesale and retail as well as banking and insurance – gradually grow. According to the National Economic Census of 2016, the manufacturing sector’s share of value added was 24.9% of Japan’s total GDP, followed by wholesale and retail (18.2%), and medical, healthcare and welfare (6.8%). The overall value added of tertiary industries stood at 67.4%, compared to 7.7% for primary industries and 24.9% for secondary industries (manufacturing).

Compared to 2012, the total unemployment rate for both genders declined in 2017. Overall, Japan has had a lower unemployment rate than that found in the EU28 countries between 2012 and 2017. The most notable change in the labour markets has been the decline in youth unemployment and the increase in female employment. The unemployment rate for those aged between 15 to 24 was 8.2% in 2012, decreasing to 4.7% in 2017. Regarding women, the employment rate increased from 46.2% in 2012 to 49.8% in 2017. While these numbers are significantly lower than those found in EU28, they reflect the slow transformation of Japanese society and the effects of the stimulus packages delivered by Shinzō Abe. Traditionally, women in Japan stayed at home after marriage; however, due to the fact that the Japanese economy has been stagnant for so long, one aspect of the stimulus packages has been to encourage women to stay in the labour market for longer.

Legal context

While Japan is a civil law jurisdiction, specific labour laws have superseded many of its general provisions. Due to an ageing and shrinking population, as well as stagnant economic growth, Japan’s labour system has long been under pressure. Reforms are necessary for the country’s long-term health, particularly as the working-age population is forecast to decrease from 63.8% in 2010 to 58.1% by 2030.

The main legal provisions for labour relations in Japan are:

• the Constitution (Articles 14, 25, 27 and 28)
• 49 International Labour Organisation (ILO) conventions
• Labour Standards Act
• Labour Union Act
• Labour Relations Adjustment Act
• Labour Contracts Act
• Minimum Wage Act
• Industrial Accident Compensation Insurance Act
• Employment Insurance Act

A singular feature of Japanese labour law is that the related principles and rights are proclaimed in the Constitution. Article 27 was established as a basic principle in the legal regulation of the labour market and states: ‘Standards for wages, hours, rest and other working conditions shall be fixed by law.’ Article 28 outlines the basis for trade union representation and collective bargaining: ‘The right of workers to organise and to bargain and act collectively is guaranteed.’ This is the fundamental provision governing the legal regulation of collective industrial relations.

In 1947, Japan enacted the Labour Standards Act, which provides for the minimum terms and conditions of employment and requires companies to register work rules with the local Labour Standards Inspection Office. This act places regulations on many working conditions, including equality, pay issues, paid leave, working hours, minimum age and maternity entitlements. Article 18 of the act was amended in 2012, granting employees the right to remove the fixed-term condition from their contracts. Other labour-related statutes are found in laws linked to the individual labour relationship, such as the Labour Contracts Act, the Industrial Safety and Health Act and the Minimum Wage Act.

The Labour Contracts Act of 2007 provides for the principle of agreement under which a labour contract is established or changed through voluntary negotiations between a worker and an employer. Article 1 of this act covers basic matters concerning labour contracts in terms of facilitating the establishment and modification of reasonable working conditions. It is noteworthy that this act places a regulation on the grounds of dismissal, since this represents a restatement of case law. The act defines an employee as somebody who is employed by an employer and receives wages. The Labour Standards Act provides its own definition, whereby an employee is an individual employed at an enterprise or office from which they receive wages, without regard to the kind of occupation.

In addition to national laws, Japan has ratified 49 ILO conventions, though it has not ratified the following: No. 105 (Abolition of forced labour convention, 1957) and No. 111 (Discrimination (employment and occupation) convention, 1958).

The Labour Union Act and the Labour Relations Adjustment Act govern the collective labour and union relations. The former defines and governs labour unions and collective agreements. The latter governs public welfare undertakings and mandates the establishment of the Labour Relations Commission to mediate labour disputes and arbitration. Either party to the dispute can make a request to the commission for mediation.

In recent years, there have been no significant changes in Japanese labour laws, although there have been a number of related ongoing developments under Abenomics (the third arrow).^[1] The upcoming negotiated reforms are related to enhancing work–life balance by revising the flexitime system, promoting annual paid leave and requiring small- and medium-sized enterprises to pay overtime. In addition, the government is seeking to enhance women’s participation in the labour market by expanding childcare leave benefits and promoting equal pay, and by creating a legal framework for companies to promote women’s participation and their promotion. However, these reforms have not yet materialised. A major and still upcoming labour market reform (as of February 2019) is related to the Action plan for the realisation of work style reform, published in March 2017.

• Document: Action plan for the realisation of work style reform
• Legislation: Constitution , Employment Insurance Act, Industrial Accident Compensation Insurance Act, Labour Contracts Act, Labour Relations Adjustment Act, Labour Union Act, Minimum Wage Act

Industrial relations context

Although industrial relations in Japan can be traced back to the Meiji period in the late 1800s, labour remained mostly unorganised until the end of the First World War. From this time onwards, industrial relations have been stable and can be characterised as decentralised, corporate and consensus-oriented.

Industrial relations in Japan are based on three pillars: lifetime employment, seniority wages and enterprise unions. Unions in Japan are primarily divided into labour federations, trade unions and enterprise unions. In recent years, the power of unions in Japan has been weakened: a trend consistent with other developed countries. Most Japanese trade unions are organised at enterprise level, their main role being to promote security. As such, collective bargaining usually takes place at company level.

Changes in terms of industrial relations first occurred in the 1990s and then later in the aftermath of the 2007 and 2008 financial crisis. There has been growing pressure in Japan to change the lifetime employment model as a response to the economic downturn, and industrial unions have consolidated and reorganised due to the increased number of non-regular workers and the diminished role of lifetime employment. In addition, while there has been a decrease in collective disputes, the number of individual industrial disputes has risen. Japan’s shift towards a service economy – and the resultant increase in part-time employment – goes some way to explaining the declining significance of labour unions in Japan.

One of the most important features of Japanese industrial relations is the Shuntō, an annual round of wage negotiations between businesses and trade unions that takes place every spring. Although the Shuntō spring activities were once quite successful in ensuring incremental pay raises, they have become less effective in recent years owing to Japan’s economic downturn. As such, the annual pushes for pay hikes have almost ground to a halt. Since the 2007 and 2008 financial crisis and the 2011 earthquake in north-eastern Japan, Shuntō seems to have become a thing of the past, with little hope of it returning to its former level of influence.

Trade unions, employers’ organisations and public institutions play a key role in the governance of the employment relationship, working conditions and industrial relations structures. This section looks into the main actors and institutions and their role in Japan.

Public authorities involved in regulating working life

The Ministry of Health, Labour and Welfare is the main ministry involved in social dialogue and working conditions. For collective rights disputes, the Labour Relations Commission, set up under the Labour Union Act, is a tripartite body that acts as an administrative commission to handle labour grievances and uses mediation, conciliation and arbitration to resolve labour disputes. However, civil courts also play a role in labour disputes, with the complainant having the option to make a complaint at the civil court before going through the Labour Relations Commission.

The Ministry of Health, Labour and Welfare is also responsible for legislating, monitoring and promoting health and safety at work. In the ministry, the Industrial Safety and Health Department in the Labour Standards Bureau is in charge of occupational safety. The Bureau supervises two additional independent administrative bodies: the National Institute for Industrial Safety and the National Institute for Industrial Health.

Representativeness

There are no statutory regulations concerning representativeness in Japan, except those governing collective bargaining. Since collective bargaining occurs at the enterprise level, major trade unions and employers’ organisations do not engage in it, but they do regularly get involved in political and public affairs activities. Social partners often come together if they share a policy opinion, which can be submitted to the government councils they serve as advisory members. This means that both employee and employer organisations can have considerable influence on economic policy and employment legislation.

Information on the representativeness of the European main social partner organisations can be found in Eurofound’s sectoral representativeness studies.

Trade unions

About trade union representation

As mentioned earlier, trade unions in Japan differ from those in the EU in that they are organised in-house rather than by sector. Usually, only regular employees are allowed to join trade unions, though the representation of part-time and other non-regular workers is increasing. Multiple unions may exist within one company, each with a right to organise, bargain and act collectively as long as the statutory requirements are met. In fact, some larger companies have multiple unions, including a dominant cooperative union and a few minority radical unions representing a few workers. Plural unionism gives rise to various complex issues in relation to the establishment of uniform working conditions.

The enterprise unions are usually associated with the industrial trade unions – organised as a federation – and the national centres, which are organised from the industry trade unions on a national level. The role of industrial trade unions is to increase the effectiveness of the enterprise unions by consolidating requests concerning working conditions. The largest national labour centre is the Japanese Trade Union Confederation (RENGO); other well-known labour centres are the National Confederation of Trade Unions (Zenroren) and the National Trade Union Council (Zenrokyo). These organisations serve as a voice for members in national politics. They are connected with certain political parties and sometimes affect legislative politics.

Some conditions are different for the public sector. First, each public service act prohibits employees of the police force, fire department, penal sector, Japanese coast guard and Ministry of Defence from forming employee centres. Second, other public officials may form employee organisations, but cannot form labour unions. When a registered employee organisation lawfully proposes a negotiation with the proper authorities regarding staff remuneration, hours of work or other conditions of work in connection to lawful activities, such as social and welfare activities, the authorities concerned must make themselves available for response. However, negotiations between the employee organisation and the proper authorities do not involve the right to conclude a collective agreement. In short, there is no right to a collective agreement. Representing the national government as an employee, officials cannot strike or engage in other acts of dispute against the public, nor can they resort to delaying tactics that reduce the efficiency of government operations. In addition, no person can attempt or conspire to carry out, instigate or incite such illegal acts.

In recent years, regional general unions (community unions) have received an increasing amount of attention. These unions typically organise workers across smaller enterprises in a specific region or within the same industry and play a key role in resolving individual labour disputes. More recently, these unions have often sought mediation, particularly in unlawful dismissals or non-renewal cases. In cases where workers join these unions after their dismissal or rejection of an employment contract renewal (known as a ‘last-minute file’), the union usually requires collective bargaining. Moreover, these unions occasionally deal with people who are typically more difficult to organise, such as part-time workers, managers and unemployed people. This type of union has great potential in the future of industrial relations in Japan.

Trade union membership and trade union density

Trade union membership and trade union density, 2013–2017

As of 2017, trade union density in Japan was 17.1% and the number of trade union members stood at 9,981,000, showing an increase of 41,000 members (0.4%). Trade union density has been slowly declining since 1949 for three main reasons: one, the growth of trade union members has been slower than the growth of employees; two, the increase in living conditions has made citizens more adverse to trade union activities; and three, the number of non-regular employees who are not covered by unions has increased. In 2017, the highest coverage by industry was in electricity, gas, heat supply and water (58.5%), followed by finance and insurance (43.5%).

Main trade union confederations and federations

The table below summarises the four main trade union confederations and federations in Japan, in terms of members.

Main trade union confederations and federations

There are three major national centres for trade unions in Japan: RENGO, Zenroren and Zenrokyou. According to the Ministry of Health, Labour and Welfare, RENGO is the biggest union with 6,729,000 members and Zenroren and Zenrokyo are smaller with 542,000 and 99,000 members, respectively. In 2016, RENGO hosted 47 affiliate unions in 47 prefectures in Japan and covered 68.1% of total union membership. For RENGO, the trade union coverage slightly increased from 2010, but the two other centres saw a decrease in membership overall.

The All-Japan Prefectural and Municipal Workers Union (Jichiro) organises local government employees at the prefectural and municipal levels. Japan’s Federation of National Service Employees (Kokoro) organises national government employees.

Employers’ organisations

About employers’ representation

Employers’ organisations involve voluntary membership and are not regulated by labour union law. They are governed through the Act on General Incorporated Associations and General Incorporated Foundations. There are usually membership fees associated with joining one of the organisations. Even though they do not have a right to bargain, some organisations have considerable influence not only on the government and legislation of congress but also on industrial relations.

The main goal of the employers’ associations is to drive regulatory and business reform in Japan as a way of contributing to the economic development of the country. For instance, the objective of the most influential employer’s organisation, Keidanren, is to harness the power of the business world to contribute to the development of Japan’s economy and to improve the living conditions of Japanese citizens.

Main employers’ organisations and confederations

The table below summarises the three main employers’ organisations and confederations in Japan, in terms of members.

Main employers’ organisations and confederations

Source: Keidanren (2018), Keizai Doyukai (2018), JCCI (2018). *As of March 2015, website has no newer information.

Keidanren (the Japan Business Federation) is the most powerful employers’ organisation. It was established in 2002 by the merger of Keidanren and Nikkeiren (the Japan Federation of Employers' Associations). The organisation has 1,376 member companies, 109 nationwide industrial associations and 47 regional economic organisations. Keidanren also has some foreign affiliates.

Keizai Doyukai (the Japanese Association of Corporate Executives) is also a private organisation, formed in 1946 by 83 business leaders who wished to contribute to the reconstruction of the Japanese economy.

Nippon Shoukoukaigisho (the Japanese Chamber of Commerce and Industry) is a network of approximately 515 local chambers of commerce made up of the representatives of some 1.25 million member businesses nationwide, ranging from large- and medium-sized corporations to small companies and sole proprietors.

Tripartite and bipartite bodies and concertation

The main bodies in which representatives of trade unions and employers’ organisations are appointed are presented in the table below. The list is not comprehensive, since the government often appoints representatives of social partners to various government councils. Both employers’ organisations (such as Keidanren) and labour federations (such as RENGO) usually join government advisory committees as stakeholders. While this is different from being ‘social partners’, the two systems share similarities. Prime Minister Shinzō Abe and his government proposed ‘a meeting of labour, management and government representatives’, which was first held in September 2013. The issue of individual companies’ conditions of employment (especially wage levels) was not on the agenda of the meeting; however, the development of the meeting could affect future industrial relations.

Main tripartite and bipartite bodies

Workplace-level employee representation

Many workplaces have some type of workers’ representation, such as joint labour–management consultation. However, there is no legal regulation of these organisations, except for the health and safety committees, which are mandated by the Occupational Health and Safety Act. These systems of representation usually discuss matters related or similar to those covered by collective bargaining. Araki (2002) pointed out that this situation ‘leads to an informalisation of collective bargaining’. In addition, voluntary workers’ representation has been toned down in recent years.

Regulation, composition and competences of the representative body

The central concern of employment relations is the collective governance of work and employment. This section looks into collective bargaining in Japan.

Bargaining system

The principal characteristic of Japanese industrial relations is company-based bargaining, and most collective bargaining takes place at company level. This means that there is no collective bargaining at industry or national level. Industry-level and national-level umbrella organisations do exist, and their primary job during collective bargaining is to coordinate the negotiations. Collective bargaining mostly concentrates on setting wage levels, but other working conditions, such as overtime, are also negotiated. The collective agreements are legally binding for regular employees but often neglect the working conditions of non-regular employees (part-time workers and temporary workers). An employer is not permitted to refuse collective bargaining without a justified reason.

The largest-scale collective activities at national level are known as Shuntō, or the spring wage offensive. These annual wage negotiations aim at securing and equalising pay rises on a nationwide and industry-wide scale. Labour unions from the different sectors first coordinate their wage and salary demands, and then together begin negotiations in the spring of each year.

Shuntō is aimed at increasing wages as well as the minimum wage; in fact, a key role of the Shuntō is to annually fight for an industry-wide minimum wage. The minimum wage for some sectors used to be the main issue in collective bargaining. Work hours and leave time are also sometimes addressed in collective bargaining.

Wage bargaining coverage

Collective bargaining of wages taken place between the employer and the representative of the employees, usually the labour union. Collective agreements cover all eligible regular employees, regardless of their union status. Although the Labour Union Act prohibits employers from refusing to engage in collective bargaining, wage bargaining remains largely deregulated. Wage bargaining takes place at industry level but is highly coordinated by both national-level and sectoral-level organisations. The nationwide wage negotiations – the Shuntō spring wage offensive – typically take place in April.

A previous survey on collective agreements was conducted for the 2009–2011 time period. The results of the survey indicate that collective bargaining agreements took place in 91.4% of enterprises, with wages playing a part in 78.6%. Regarding bargaining coverage (including wages), 41.9% of agreements covered all or some of the part-time workers.

Collective bargaining coverage of employees (%), 2012–2017

Source: OECD – Collective Bargaining Coverage (2018)

Bargaining levels

The most important level of collective bargaining in Japan is the company level. The Labour Standards Act defines the legal standards for working time, paid leave and general working conditions. However, derogations to these standards can be carried out at the enterprise level during collective bargaining. In collective bargaining, the role of industrial (sectoral-level) trade unions is to support the enterprise-level unions, which are often limited in their resources. The industrial trade unions support their members by providing information, coordinating negotiating tactics and collecting requests concerning working conditions. National-level unions also support their members’ unions by deciding collective standards for working conditions. However, the most important role of these national centres is to participate in social dialogue and policymaking.

Levels of collective bargaining

Articulation

Collective agreements are negotiated at enterprise level. Wage increases are negotiated between employers and the umbrella organisations for enterprise unions during the Shuntō spring wage offensive. These agreements can be modified at enterprise level.

Timing of the bargaining rounds

Article 15 of the Labour Union Act stipulates that the longest possible length of a collective agreement is three years; most agreements are shorter than that. Revision and renewal of collective agreements are usually discussed at the time of the Shuntō spring wage offensive.

Coordination

In general, the enterprise unions have very few restrictions in terms of collective bargaining and they do not receive power from their mother unions. Shuntō, the spring wage offensive, is the only time when coordination between trade unions exists in Japan.

Extension mechanisms

Extension mechanisms exist in Japan, but their usage is not very common. Collective agreements receive special treatment (normative effect) for any member of the union in a company. In addition, Article 17 of the act stipulates that when three quarters or more of regularly employed workers of the same type are covered by a particular collective agreement, the agreement also applies to the remaining workers of the same type in the workplace concerned. The government grants the extension after a formal request from one of the parties involved.

Derogation mechanisms

There is no derogation mechanism from collective agreements. However, it is possible to derogate from the Labour Standards Act on working time, wages, breaks and annual leave with enterprise-level collective agreements if representatives of both workers and management agree.

Expiry of collective agreements

As outlined in the Labour union Act, if a new collective agreement is not negotiated by the time of the expiry date, and it is stipulated in the agreement, the collective agreement continues in effect until either party gives a notice of its termination (90 days). If the agreement does not stipulate the expiry date, either party can terminate it by giving an advanced notice of 90 days.

Peace clauses

Collective agreements in Japan usually include peace clauses. Strikes are allowed only if new negotiations are underway.

Other aspects of working life addressed in collective agreements

Issues of high importance that are slowly coming to the collective bargaining agenda in Japan are related to better work–life balance, including death from overwork, harassment and the growth in non-regular employment. In 2017, the Government of Japan published the Action plan for the realisation of work style reform. Union and industry representatives have played a key role in the formulation of this reform plan. The two key points of the reform plan are summarised below.

• Reduction of working hours by introducing overtime regulation to limit the number of overtime hours to 45 per month and 360 hours per year, in principle.
• Equal pay for equal work, which aims to ensure balanced pay, training and allowances regardless of the type of employment contract, as well as the working conditions of dispatched workers.

Legal aspects

The right to strike is defined in Article 28 of the Constitution of Japan, which guarantees workers’ right to organise, bargain and act collectively. However, subsequent laws have limited workers’ right to strike: for instance, public service employees have since had their right revoked. Furthermore, striking is only acceptable when collective bargaining has failed.

The three most important industrial actions are: Hannichi ijou no doumeihingyou (strikes lasting over half a day). It should be noted that in Japan, a distinction is made between strikes lasting less than half a day and those lasting more than half a day. Sangyoujo heisa designates workplace closures and taigyou indicates a strategy whereby workers slow down production. Of these, strikes lasting more than a day are the most common. Over the 2012–2017 period, there was no workplace closure and only one case of slowdown – in 2015.

Industrial action developments

Labour disputes in Japan peaked in the 1970s, with 10,462 instances in 1974. This trend has decreased in recent years, from 884 in 2001 to 612 in 2011. Strikes have generally decreased and are becoming rarer, as shown by the following figures: 507 in 2013, 425 in 2015 and 391 in 2016. The higher numbers for working days lost between 2014 and 2015 can be explained by the 47th general election of members of the House of Representatives, held at the end of 2014. In addition, the country plummeted back into recession in 2014, slowly recovering from 2015 onwards. (The numbers for 2017 had not been published at the time of writing). For collective dispute resolution, there is a Labour Relations Commission. Individual labour disputes are resolved by the Labour Tribunal and by civil litigation in court.

Industrial action developments in Japan, 2013–2017

Source: Ministry of Health, Labour and Welfare: Survey on Labour Disputes in 2016 (in Japanese).

Dispute resolution mechanisms

Collective dispute resolution mechanisms

Collective dispute resolutions are defined in the Labour Relations Adjustment Act, which describes a dispute as ‘a strike, a slowdown, a lock-out, or other act or counteract hampering the normal business operations performed by the parties concerned with labour relations with the purpose of attaining their respective claims’. The act focuses on voluntary adjustments between the parties of the dispute. Labour union activities, including support for labour disputes, are outlined in the Labour Union Act (Article 7), which also establishes labour relation commissions (Article 19 onwards).

The main bodies providing relief, both at prefectural and central levels, are the labour relations commissions, which are made up of representatives of the employees, employers and the public. The procedure is outlined in the Labour Union Act (Article 27 onwards). After a complaint has been filed, the Prefectural Labour Relations Commission investigates and establishes a hearing if necessary. The process then continues with a meeting with members of the public (for fact-finding or examination of evidence, for instance) before orders are given. If somebody wants to contest the ruling, they may do so by making a complaint to the Central Labour Relations Commission.

Individual dispute resolution mechanisms

In 2001, the Act on Promoting the Resolution of Individual Labour-Related Disputes was enacted. In response to the establishment of various dispute resolution systems, ‘general labour consultation corners’ were set up at labour standards inspection offices and near main train stations. These offices provide one-stop labour counselling services in person or over the telephone. In addition, the Labour Tribunal, housed within the judiciary, resolves individual labour disputes. Parties to the dispute go to this tribunal, where they may proceed to adjudication or go to a non-binding arbitration process overseen by a tripartite panel.

The complainant files a complaint at district court and from there, the process takes place in three steps: developing facts, conducting a hearing and considering an arbitration panel proposal. Mediation is also possible and in most cases is preferred. Acceptance by both parties settles the case; refusal or silence sends the case back to court for a new trial. The tribunal has seen a very high percentage of settled cases. Disciplinary issues, terminations and discrimination cases can all be brought before the tribunal.

Individual labour disputes are brought to court after alternative dispute resolution fails or when the parties decide to forego it. For example, a dismissed employee can file a civil lawsuit to obtain confirmation of his status as an employee under the employment contract (essentially, finding that the employment relationship still exists) and to obtain back pay. An employer can file a civil lawsuit in order to hold an employment relationship in abeyance.

Use of alternative dispute resolution mechanisms

In 2004, the Act on Promotion of Use of Alternative Dispute Resolution (Act No. 151) was enacted. Usage of alternative dispute resolution mechanisms has proven to be popular in Japan, with two forms being most commonly adopted: arbitration proceedings (chusai), governed by the Arbitration Act (Act No. 138, 2003); and mediation proceedings (chotei). These are administered by the Central Labour Relations Commission (Chuo Rodou Iinkai) and, for the construction industry, by the Central Committee for Adjustment of Construction Work Disputes. In addition, after the 2011 Great East Japan Earthquake, the Japanese government set up the Dispute Reconciliation Council for Nuclear Damage.

Mediation and arbitration usually take place outside of the courts system, while traditional dispute resolution mechanisms go through ordinary civil courts or labour tribunals. However, there is also in-court mediation proceedings for some acts (the Civil Conciliation Act, Family Affairs Procedure Act). Sometimes, alternative dispute resolution methods are used to complement traditional means of solving disputes.

Use of dispute resolution mechanisms, 2012–2017

Source: Ministry of Health, Labour and Welfare (2018): Survey on Labour Disputes in 2017 and Survey on Labour Disputes in 2016 [both in Japanese]

*These numbers include cases in which the terms of resolution were not clear, disputes in which political motives were supported and re-examination cases in which the Central Labour Relations Commission was involved.

Start and termination of the employment relationship

Requirements regarding an employment contract

In Japan, labour contracts are created at the time of recruitment and stipulate the working conditions, which must be in line with the Labour Standards Act. The contract must specify working hours, wages and other working conditions, such as place of work. The term is usually not specified unless the work is term-based. In these cases, the term must not be longer than three years. The employer is allowed to set a probation period but if the employee is not hired after this period, the reason for firing must be one stipulated by law.

The Labour Standards Act establishes that employers cannot employ a minor until the first 31 March after the minor in question has turned 15. The employer is obliged to hold a certificate from the child’s school, verifying that the job does not affect the child’s attendance at school, or have a written consent from a guardian. A guardian is not allowed to make a labour contract on behalf of a child, but they are allowed to cancel the employment contract if they deem it disadvantageous for the minor.

Dismissal and termination procedures

Employers’ freedom to dismiss employees is curtailed by Article 16 of the Labour Contract Act of 2007, which requires objectively reasonable grounds and appropriateness in general societal terms, or just cause. If an employer is deemed to have dismissed an employee without a just cause, the employer is obliged not only to pay wages lost during the period of dismissal but to also reinstate the dismissed worker due to the fact that the dismissal has become null and void.

For collective dismissals or dismissals owing to economic reasons, the courts adopt the practices of major companies and their unions as general rules concerning employment adjustment dismissals. Case law dictates that any adjustment dismissal is an abuse of the right to dismiss unless it meets the following four requirements.

1. It is a business necessity to resort to the reduction in personnel.
2. The employer has made efforts to avoid dismissals.
3. The selection of workers is made on an objective and reasonable basis.
4. An explanation about the necessity of dismissal has been provided to the union and the workers.

In the event that an employer wishes to dismiss a worker, they must provide at least 30 days’ notice. An employer who does not give 30 days’ notice must pay the worker an average wage for a period of no less than 30 days, unless the continuance of the enterprise has been made impossible by a natural disaster or some other unavoidable reason or if the worker is dismissed for reasons attributable to the worker (Labour Standards Act, Article 20). If a worker leaving employment requests a certificate stating their period of employment, occupation, position in the enterprise, wages or, if applicable, the cause of their dismissal, the employer must deliver it without delay (Article 22).

Entitlements and obligations

Parental, maternity and paternity leave

Maternity leave in Japan is markedly less accommodating to women than in the EU. The Labour Standards Act only requires that employers allow female workers to take time off work if they make a request within six weeks of giving birth. A female employee can take maternity leave six weeks before the birth and up to eight weeks after. The maternity leave is paid by social insurance up to about two-thirds of the employee’s base salary.

It should be noted that Japan does not have a paternity leave mandated by law. Instead, in addition to maternity leave, Japan has parental leave that can be taken by both parents until the child turns one. This leave is commonly taken by women, with only approximately 3% of fathers opting to do so in 2016. The percentage has slowly increased from the early 2000s and the goal of the government is to increase the percentage to 13% by 2020.

Statutory leave arrangements

Sick leave

Companies are not obliged to pay any salary during sick leave as long as the sickness is unrelated to work. There is no law-mandated sick leave in Japan; however, some employers provide sick leave as part of the employment contract. Employees are allowed to use annual paid leave in the case of sickness if they are eligible for annual leave. In the case of long-term illness, the Government of Japan operates an Injury and Sickness Allowance programme, with remuneration being equivalent to two-thirds of the average standard monthly wage. The conditions for receiving the allowance is that the person is out of work due to sickness for at least three consecutive days, that treatment for illness is ongoing and prevents the person from working, and that there is a loss in salary as a result of the illness. Illness or injury resulting from an accident is paid from workers’ compensation insurance schemes.

Retirement age

Japanese people can start receiving pension benefits any time after they turn 60. The mandatory retirement age is established by companies, but the maximum age of retirement is stipulated by the Act on Stabilisation of Employment of Older Persons (Article 8). The mandatory retirement age was set at 55 after the Second World War but has been amended twice: the first revision occurred in the 1970s, when the mandatory retirement age was set at 60; the second revision in 2004 kept the lowest retirement age at 60 but stipulated that employers had to take measures to ensure stable employment until the age of 65. Recently, the government has suggested increasing the age of retirement to 70 as a response to decreases in the working-age population.

Pay: For workers, the reward for work and main source of income; for employers, a cost of production and focus of bargaining and legislation. This section looks into minimum wage setting in Japan and guides the reader to further material on collective wage bargaining.

Wages in Japan are negotiated at enterprise level during Shuntō, the spring wage offensive. This means that salary increases in Japan usually happen once a year. Because of the spring wage offensive, there are no large differences between companies in the same sector. Despite the 3% annual wage increase target of Abenomics, the past five years have seen minimal wage hikes: a result of a lack of inflation in Japan and an unwillingness on the part of companies to increase wages due to fears over significant jumps in costs.

Since 2012, the hourly wage rate has increased approximately by 2% per year. Pay in Japan is based on a ‘seniority-based system’ (nenkō joretsu chingin), where an employee’s salary is increased in proportion to their seniority and years of service. In 2017, the average monthly wage for a person with 12.1 years of experience and an age of 42.5 was JPY 304,300 (€2,432 as at 31 January 2019). For men, the average monthly wage was JPY 335,500 (€2,682) and for women JPY 246,100 (€1,967).

The starting salary for recently graduated is similar across sectors. This base pay is complemented with summer and year-end bonuses, and overtime salary if applicable. In 2012, the starting salary for a university graduate (undergraduate level) was JPY 199,600 (€1,595.47 as of 31 January 2019), and in 2017 this was JPY 206,100 (€1,647.43 as of 31 January 2019). Across all educational levels, wages have seen an overall increase.

Minimum wages

A minimum wage law is in effect in Japan. This statute is unusual among Asian jurisdictions in that it takes into account regional variations on the cost of living as well as differences between different sectors and types of working conditions. Employers must pay employees in Japanese yen at least once per month. In recent years, there has been growing pressure to increase minimum wages by an annual rate of 3%.

Mandatory regional minimum wages are separately established in each prefecture and, according to the Minimum Wage Act, the minimum wage can be set on an hourly, daily or monthly basis. The Ministry of Health, Labour and Welfare, together with the directors of labour bureaus in each prefecture, agree on the level of minimum wages based on guidelines set by the Minimum Wage Council. The minimum wage is comprehensively applied to all types of workers in each prefecture. The nationwide average hourly minimum wage rate was JPY 749 (€5.99 as of 31 January 2019) in 2012. By way of comparison, the wage had increased to JPY 823 (€6.58 as of 31 January 2019) in 2016. In addition, another standard for industrial jobs applies to employees working in a particular industry or occupation (specified minimum wages). Regional minimum wages by collective agreement were abolished by the 2007 revision of the Minimum Wage Act.

Working time regulation

In the past, it was a relatively unexceptional phenomenon for some Japanese employees to work themselves to death; at one point, this was a wide-scale issue, known as karoshi. To address this issue, working hours in Japan have gradually decreased in recent years. The monthly average working hours were 175 in 1988, 159 in 1993, 154 in 2003, and 147 in 2012. The Labour Standards Act stipulates appropriate working time and days off in Articles 32 to 38. Statutory working hours are 40 hours per week, excluding breaks. An employer is not allowed to have an employee work more than eight hours per day. Any exceptions to statutory working hours, such as derogation on overtime and work during the statutory days off, are negotiated at company level, either through the enterprise unions or between the employer and an employee representing the majority of employees. In addition, the Act on Promotion of Preventive Measures against Karoshi and other overwork-related health disorders (Law No. 100) was enacted in 2014 specifically to counter long working hours and issues arising from karoshi.

Overtime regulation

Overtime is regulated by Article 36 of the Labour Standards Act, which states that, if the employer has agreed with the labour union (if such a union has been organised) or with an employee representing the majority of employees, the employer is allowed to have the employees work overtime or on days off. Conditions must be stipulated in an agreement between the employer and employee, and the employer must notify the relevant government agency.

Compensation for overtime is paid as percentage increase of the wage rate, depending on the extent to which the overtime exceeds the statutory working hours and whether the work is carried out at night or during the statutory days off. For instance, for work exceeding statutory working hours, the employee is entitled to a 25% increase on their wage rate.

Part-time work

Part-time work is defined and regulated in the Act on Improvement, etc. of Employment Management for Part-Time Workers. The act was amended in 2014 to ensure equality between part-time and regular workers, and to encourage part-time workers to become regular workers. The main purpose of the act is to prevent discrimination between full-time and part-time employees. In Japan, part-time workers are classified as ‘non-regular employees’. In terms of the law, a part-time worker is defined as ‘a worker whose prescribed weekly working hours are shorter than those of ordinary workers employed at the same place of business’. However, it should be noted that, in statistical surveys, three different definitions can be observed. One definition of a part-time worker is based on the job title of the worker, the second definition is based on the lower number of working hours a part-time worker does compared to a full-time worker, and the third definition classifies a part-time worker as somebody who works less than 35 hours per week.

• Legislation: Act on Improvement, etc. of Employment Management for Part-Time Workers

Part-time work is prevalent in Japan, especially among women, middle-aged men, and younger people. According to OECD data, 22.4% of employment in 2017 was on a part-time basis. The Labour Force Survey of 2017 by the Ministry of Health, Labour and Welfare states that 11,980,000 employees work part time, including 9,670,000 women. The sectors where part-time employment is most prevalent are wholesale and retail, hospitality and food, and medical and healthcare.

Involuntary part-time

In Japan, involuntary part-time workers are defined as those who wish to work longer hours but cannot. These workers are usually considered together with involuntary non-regular workers.

Involuntary part-time employment, by sex and age (%), 2012–2017

Note: involuntary part-time employment is indicated as a percentage of the total part-time employment

Source: OECD (2018), Incidence of involuntary part-time workers

Over the period 2012–2017, involuntary part-time work slowly decreased in Japan. In general, it is especially high among middle-aged males who had to choose non-regular employment because full-time employment was not available. In 2017, the share of men aged 25 to 52 in involuntary part-time work was 28.7%, whereas the same number for women was 23.6%. The incidence is higher among less educated people.

Night work

According to both the Labour Standards Act and the Industrial Safety and Health Act, night work is defined as work carried out between 22:00 and 5:00, while the Ministry of Health, Labour and Welfare define it as work carried out between 23:00 and 6:00.

Shift work

Shift work is regulated by Japanese law.

Weekend work

Japanese law does not differentiate between work from Monday to Friday and weekend work. According to the Labour Standards Act, the employer must allow for one day off per week, but the day is not specified. Furthermore, employees are not paid more for weekend work.

Rest and breaks

The employer must give workers at least one day off per week, or four days in a four-week period. The Labour Standards Act defines rest periods as mandatory breaks offered during working hours. According to Article 34 of the aforementioned act, employers must provide workers with at least 45 minutes of rest if the working hours exceed six hours. If the working hours exceed eight hours, the mandatory rest period is one hour. The employer can negotiate different rest periods with the labour union or with a person representing the majority of employees.

Working-time flexibility

The Labour Standards Act also includes arrangements for irregular working hours, including flexitime. Uptake of working-time flexibility is low. According to the Working Conditions Survey by the Ministry of Health, Labour and Welfare, flexible working time is available in just 5.4% of Japanese companies. Uptake is smallest in companies with fewer than 100 employees (3.7%), and highest in companies with more than 1,000 employees (23.6%).

Maintaining health and well-being should be a high priority for workers and employers alike. Health is an asset closely associated with a person’s quality of life and longevity, as well as their ability to work. A healthy economy depends on a healthy workforce: organisations can experience loss of productivity through the ill-health of their workers. This section looks into health and safety and psychosocial risks in Japan.

Health and safety at work

The Industrial Safety and Health Act of 1972, in conjunction with the Labour Standards Act, ensures the health and safety of workers, and facilitates the establishment of a comfortable working environment by promoting comprehensive and systematic countermeasures concerning the prevention of industrial accidents. This includes taking measures for the establishment of standards for hazard prevention, clarifying the responsibility of health and safety management and promoting voluntary activities with a view to preventing industrial accidents (Article 1). There is also an ordinance for enforcement of the Industrial Safety and Health Act and three other supporting laws that work in conjunction with the act: Working Environment Measurement Act, Pneumoconiosis Act and Industrial Accident Prevention Organisation Act.

Based on the aforementioned act, the Ministry of Health, Labour and Welfare regularly issues an occupational health and safety programme, the most recent covering the period 2013–2018. The purpose of such a programme is to pre-emptively create and implement health and safety programmes that decrease the number of occupational accidents and fatalities.

Compliance with the law is the responsibility of the Ministry of Health, Labour and Welfare. It is supported by the Japan Industrial Safety and Health Association and the Japan Organisation of Occupational Health and Safety.

Accidents at work, 2012 – 2017

Note: Only accidents resulting in four days’ absence or more are counted.

Source: The Ministry of Health, Labour and Welfare (2018): Roudousaigai hassei joukyou – Occurrence of occupational accidents (in Japanese)

Approximately 120,000 workers suffer from work-related death or injury per year. Even though the number of incidences shows a decreasing trend over time, in the last three years the number of work-related deaths and injuries has increased slightly. To counter work-related injuries and deaths, the Ministry of Health, Labour and Welfare publishes an action plan, entitled Industrial accident prevention plan, every five years, the most recent covering the period 2013–2018.

Psychosocial risks

In recent years, psychosocial risks have gained more attention from Japanese policymaking as the country becomes more aware of the consequences caused by overworking and psychosocial risks. However, legal regulations are still scarce: for instance, there is no specific law on harassment and bullying at work. Some legislation regarding psychosocial risks is outlined in Article 62 of the Industrial Safety and Health Act, but this concerns only middle-aged and older workers. Article 66 stipulates that employers must provide workers with access to a doctor, who can assess their physical and mental well-being.

In 2014, the Japanese government passed a law aiming to prevent death from overworking (karoshi) and mental stress (Law No. 100 of June 27, 2014). The law stipulates that employers must work in cooperation with the state and local government to prevent death from overworking through the sharing of information and by providing opportunities for at-risk people and their relatives to discuss ways to prevent karoshi. This legislation is a step towards better work–life balance.

• Legislation: Promotion of Preventive Measures against Karoshi and other overwork-related health disorders (Law No. 100 of June 27, 2014 ) (in Japanese)

Work intensity

Over the past seven years, the number of hours and days worked in Japan has slightly decreased. In 2016, the average number of hours worked per regular employee was 143.7 per month, with an annual average of 1,724 hours.

Skills are the passport to employment; the better skilled an individual, the more employable they are. Good skills also tend to secure better-quality jobs and better earnings. This section briefly summarises Japan’s system for ensuring skills and employability and looks into the extent of training.

National system for ensuring skills and employability

In Japan, the identification, development, validation and recognition of skills is done by both public and private organisations. Most of the work executed by the Ministry of Health, Labour and Welfare, and the Ministry of Education, Culture, Sports, Science and Technology (MEXT).

Some social partners, such as Keidanren, provide members with their own training programmes and actively participate in policy development and formulation by including skills development into their long-term strategies. The biggest private service provider is Hello Work, which functions under the Ministry of Health, Labour and Welfare. It offers personal guidance and information on vacancies and courses for individuals. There are also specialised service providers, such as the Japan Organisation for Employment of the Elderly, Persons with Disabilities and Job Seekers, which offers employment support and human resource development (vocational training) for their target groups.

In addition, employers are required to provide their employees with the necessary vocational training and to assist in ensuring they have the opportunities to develop and improve their vocational abilities (Human Resources Development Promotion Act, Article 4(1)). Another related law is found in the Employment Measures Act (Articles 16 and 17) which emphasises the responsibility of the national government for ensuring workers have adequate skills and access to public vocational training. The main responsibility for formulating the basic policy lies with the Ministry of Health, Labour and Welfare. These laws also highlight that the current employer is responsible for the employability of their employees, including those who are made redundant.

Training

Most training in Japan is carried out by the Ministry of Health, Labour and Welfare, and concentrates on vocational and on-the-job education and human resource development. Such training is often complemented by MEXT, which is responsible for primary and secondary education, as well as higher education and lifelong learning initiatives. Depending on the policy, the implementing institution would be an agency connected to the Ministry of Health, Labour and Welfare, or a company.

On-the-job training

On-the-job training is a special feature of Japanese labour relations. Employers are mandated by law to provide all employees with on-the-job training, which takes one of three forms: company-led education and training, off-the-job training, and personal development activities. On-the-job training takes place by learning from more senior employees through daily communication between manager and employee, and through planned on-the-job training with an instructor involving measurable targets.

In 2017, the number of companies that had established an on-the-job training system was 63.3%, a 3.7% increase compared to the previous year. Uptake of on-the-job training is most common in multi-service sectors, where 92.9% of companies have on-the-job training programmes, followed by finance and insurance (88.6%), and electricity, gas, heat supply and water (88.3%). These numbers include only regular employees and are smaller for non-regular employees. In terms of company size, the survey commissioned by the Ministry of Health, Labour and Welfare states that 78.5% of companies with more than 1,000 employees have on-the-job training programmes for regular employees.

Government

Ministry of Education, Culture, Sports, Science and Technology

Ministry of Health, Labour and Welfare

Trade unions

Council of Japan Construction Industry Employees' Unions (in Japanese)

Japan International Labour Foundation

Japanese Association of Metal, Machinery and Manufacturing Workers (in Japanese)

JBU – Japan Federation of Basic Industry Workers’ Unions (in Japanese)

JCM – Japan Council of Metal Workers Union (in Japanese)

Jichiro – All-Japan Prefectural and Municipal Workers Union

JTU – Japan Teachers Union (in Japanese)

JTUC–RENGO – Japanese Trade Union Confederation

UTU – University Teacher’s Union

Zenrokyo – National Trade Union Council (in Japanese)

Zenroren – National Confederation of Trade Unions

Employer organisations

Doyukai

JCCI – Japan Chamber of Commerce and Industry

Keidanren (in Japanese)

Other links

Japan Institute for Labour Policy and Training

JEED – Japan Organization for Employment of the Elderly, Persons with Disabilities and Job Seekers

JISHA – Japan Industrial Safety and Health Association

JNIOSH – National Institute of Occupational Safety and Health, Japan (in Japanese)

JOHAS – Japan Organization of Occupational Health and Safety (in Japanese)

Research Institute for Advancement of Living Standards

RIETI – Research Institute of Economy, Trade and Industry

Statistics Japan (in Japanese)

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