No.23,Jul.1998

Struggle against the Destruction of Local Economy
and Employment by Financial Big Bang

Hisashi Oki

Secretary General, ZENROREN-National
Union of General Workers Union(NGU)

1. Unemployment Problem and the State and Local Political System

After the collapse of the bubble economy in Japan, the globalization and deregulation have rapidly been promoted, accelerating while big companies' restructuring, realignment and reduction of small and medium-sized companies, hollowing out and exhaustion of local economy. Mega-companies are the only winner, and the polarization of economy has expanded. The economic growth in fiscal 1997 marked below zero for the first time in twenty-three years since the first oil shock. Japanese economy today faces the longest, worst recession in the postwar period, financial crisis and the serious situation arising from the economic crisis in Asian countries. Consequently the first half of the year 1998 experienced the worst unemployment rate and the biggest number of bankruptcy ever recorded in the postwar period. The number of people in the unemployment and precarious employment is making a sharp increase. In a public opinion poll, 70 percent thinks that gJapan is heading for a wrong directionh, and 80 percent feels ginsecurity for employmenth and ganxiety for future.h

An enormous amount of bad loans born from the collapse of the bubble economy has led thirty-six financial institutions to bankruptcy, causing an unprecedented situation with the bankruptcy of the Hokkaido Takushoku Bank, Ltd. and Yamaichi Securities Co., Ltd. in 1997. This has also plunged the people into a financial panic. To prepare for the financial big bang, banks have taken early adjustment measures represented by reluctance to lend money and fund recovery, which have rapidly increase bankruptcy in number and accelerated the industrial reorganization and realignment and reduction of small and medium-sized companies.

With the financial big bang starting on full scale in April 1998, the second round of the realignment and reorganization of financial structure began, entering an era of the grand competition, that is, under a law of jungle. The employment situation is becoming even worse. The question of employment is not only a matter of life and death to workers but also a matter of what the state and local political system should be. It is a task of the utmost urgency for the people. To get a breakthrough in the employment crisis, it is a pressing for trade unions to extend cooperation with all the unions that try to find solution to the crisis based on the struggle in the workplace and cooperation with the people, until such cooperation develops into cooperation with local governments. In this way, they can change the actual stance and position of the state and local political systems. It is no exaggeration to say that such cooperation holds the key to future of the trade union movement.

1) Financial Big Bang Destroying Small and Medium-Sized Enterprises and Local Economy

The financial big bang intends that Japan's financial capital, the core of the state monopoly capital, should win the international competition. For this, it tries to abolish fences among the banks, security firms and insurance companies to accelerate the concentration and reorganization of financial institutions and promote realignment and sifting of small and medium-sized financial institutions. Through this, they can use private financial assets, which are estimated at 1,200 trillion yens (or US$85 billion) in total, as a business chances for a handful of major financial institutions.

At the strong demand of the financial circles, financial holding companies became legal in July 1997. The Antitrust Law, which used to be called the economic constitution, because its Article 9 stipulates the "prohibition of holding companies," had been the most important legal provision along with Article 9 of the Constitution that declares the "renunciation of a war." However, just like in the United States, the major financial capital now has access to concentration and domination through keiretusu-ka, namely vertical affiliation of enterprises in form of financial holding companies. The financial big bang and the opening of holding companies will lead to the realignment and sifting of small and medium-sized financial institutions as well as local financial institutions, which will as its consequence give a serious blow to small and medium-sized enterprises and local economy.

The financial crisis facing Japan today is a structural problem arising from the nature of society. It contains widespread speculation, a law of jungle, and a cozy relationship among the political, bureaucratic and financial circles, extreme supremacy of big business and maintaining subordinate relations with the United States. The government and financial circles say that gwe are living at a time when enterprises have their option of state or district to do their businessh, but this will only result in expanding the cancer cells. It is necessary to get the state and local governments to take a stand to serve the interests of the people. Too obvious is the fact that it is difficult to revive Japan's economy and create jobs by depending exclusively on major companies. What is important is to promote small and medium-sized enterprises and local economy. In this, local governments and local financial institutions have an important role.

2) Role of Trade Unions Tested

The number of unemployed due to bankruptcy in 1997 was 160,000, the worst ever recorded. In the securities industry that bears the full brunt of the financial big bang, has been exposed to a storm of restructuring, and by the end of April 1998 Yamaichi Securities Co. and other six securities companies had gone bankrupt. The number of workforces in this industry had been reduced from 160,000 of 1991 to a little less than 100,000 of 1997. In spite of such a situation, major companies' trade unions affiliating with the Japanese Trade Union Confederation (Rengo) have taken the side of the companies in restructuring and made no resistance against bankruptcy. The business failure of Yamaichi Securities resulted in the dismissal of 10,000 employees, but Yamaichi trade unions did not fight against it and decided its dissolution without holding its convention.

In cooperation with financial-related industries' trade unions, we appealed to Yamaichi workers to join the struggle to denounce the responsibility of Yamaichi Securities and the government for the bankruptcy, and to defend workers' life and employment. Through this struggle, they formed an Association to Protect Yamaichi Securities Employees, and together we have carried forward the struggle, winning some achievements in workers' demands.

However, faced with the dismissal of 10,000 workers by Yamaichi Securities, the biggest, unprecedented incident in the postwar period, Japan's trade union movement could not build a nationwide struggle. This is because the trade union concerned took a policy of harmonious labor-capital relations, thus losing its functions as trade union and restraining the workers' struggle. It is also because under the major companies' union-management cooperation policy, trade unions in key industries came to accept the globalization and deregulation, as a result promoting the companies' gstreamlining.h Farther, in national politics all the political parties except the Japanese Communist Party have been absorbed into Liberal Democratic Party's politics, and have at once pushed ahead with the bad politics under a thumb of the United States and major corporations. Japan's trade union movement must overcome this weak point. Now, the National Confederation of Trade Unions (Zenroren) has greatly been advancing the cooperation between trade unions and people, while people in different parts of the country have arisen in the joint efforts under the slogan:gNo to Bad Politics!h and gDefend the Local Economy!h As we witnessed the LDP suffering a serious setback in the House of Councilors Election, July 1998, while the JCP doubling its seats, the Japanese people want a political change and the situation now calls for a leap forward of the movement for finding a way out of the crisis.

2. Struggle against the Destruction of Local Economy and Employment

1) Basic Course of the Struggle

The most important is that trade unions strengthen the struggle in workplaces and districts to block the destruction of employment. However, the root cause of the destruction of employment is the structural reform policy carried out by the government and big business, globalization and deregulation, administrative and financial reform, and gJapanese-style management in the new era.h It is required that trade unions strengthen the struggle in workplaces and in each industry. At the same time it is necessary to carry forward the struggle for finding solution to the critical situation, and for the promotion and reconstruction of local economy, not through a structural reform that serves the interests of the United States and big business, but enough to serve people's interests.

Following are the directions of the struggle:
First, the struggle should aim to block the adverse revision of labor laws, and achieve regulations on dismissal, and establish minimum labor standards including 35 working hours a week, to protect and expand the workers' rights and employment. It is especially important to establish a national minimum wage system across the board, an unemployment security and a minimum standard of living security, as a national minimum system in Japan.

Second, the struggle should win the reduction in the consumption tax rate and a drastic cut down of income tax, and a major increase of public demands for small and medium-size enterprises. It also should change the budget compilation to give preference to the need of the people's life, such as the promotion of small and medium-sized enterprises and improved social security system.

Third, the struggle should succeed in imposing regulations upon the outrage of big business to defend small and medium-sized enterprises and local economy, so that local economy can reconstruct itself without depending on big business. For this, it is necessary to make clear the local financial institutes' purpose and role, and to have a system similar to the Community Reinvestment Act (1977) established in the U.S., which obliges al the financial institutes to offer a certain percentage of investment and lending to local economy.

The realization of these demands requires efforts for overcoming the weak points of the trade union movement. The key words are gLocal Economy and Cooperation.h Trade unions must work for the promotion and reconstruction of small and medium-sized enterprises and local economy. In doing so, they must carry forward the joint struggle with all the trade unions despite their affiliation, with small and medium-sized enterprises and organizations related with agriculture and fishery, and with local governments facing a serious financial crisis at the moment.

‚Qj Further Advance of the Movement that Has Just Arisen

Joint struggles against deregulation in such fields as commerce, transportation and finance, and united efforts for the promotion of local economy have been advancing so far. In 1997, trade unions and small and medium-sized enterprisesforganizations from ten cities, all facing a serious de industrialization, held a gSmall and Medium-Sized Enterprises Private-Sector Summith, where they exchanged the experiences of the struggle for the promotion of local economy. They are planning to hold the second one in October 1998. In cooperation with Zenroren and Zenshoren (the National Federation of Merchant and Industrialist's Organizations), the Conference of Trade Unions of Commerce and ServiceRelated Industries with which our union is affiliated, mobilized all over the country a struggle against the attempts to undermine the Large-Scale Retail Store Law. With the cooperation of the Chamber of Commerce and Industry and retailers' organizations, it won some achievements in the struggle to block the opening of large-scale stores and the New Year's Day Sales. The government forcibly@abolished the Large-Scale Retail Store Law. But we must continue our efforts@to develop gregulation of large-scale stores and town@building movementh, to form a nationwide network for the promotion of local economy,@and to achieve the promotion of small and medium-sized enterprises and@local economy with the creation of employment.

As our new challenge drastically to expand cooperation between trade unions and small and medium- sized enterprises, we started visiting companies, carrying out a gsurvey on the actual situation of companiesh along with the gsignature collecting campaign to protect small and medium-sized enterprises and local economy.h These efforts aim for helping union members to overcome their tendency to limit their activities within their own companies, and to understand the actual situation of small and medium-sized enterprises and the role of trade unions. Through this, we try to promote cooperation between them based on agreed demands. We visited and had talks with 3,400 companies in two years, with very few of them refusing to see us. We came to know that many small and medium-sized entrepreneurs were angry and dissatisfied at the government and big business, while having a great anxiety for continuing their business. 13 percent entrepreneurs who answered in the survey frankly expressed their opinions with their estimation and expectations toward trade unions, saying for example: gI had a prejudice against trade unions, considering them as opponents to the management. They deeply move me about what they think a lot of small and medium-sized enterprises.h

With the recession becoming worse, dramatic changes begin to take place among the management and small and medium-sized enterprises organizations. In Kochi Prefecture, we visited 265 shops and 35 percent of them,@which is quite a high percentage, answered in the survey. In Hiroshima@Prefecture, board members of the Association for Shopping District Promotion@joined our visit to shops and they even helped us with collecting answers.@Such visits to small and medium-sized enterprises suggest the development's big@possibilities of cooperation based on the agreed demand of@gpromotion of small and medium-sized enterprises and local economyh,@between such enterprises and trade unions in a locality, and between small and medium-sized enterprises organizations and management. We must continue these efforts as a basis for a great advance of our movement. 

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Question of Unemployment and the Way toward its Solution

Yoshihisa Tokita

Representative Board Member of Rodo Soken
Professor Emeritus at Rit‚“umeikan University

Japanese Economy at an Impasse and the Unemployment Problem

Japan's gdeadlockedh economy and employment insecurity have gone ahead of its neighboring countries in Asia. The prolonged recession starting from 1991 with the collapse of the gbubble economy,h financial insecurity caused by unpaid loans, accumulated financial deficits, increasing unemployment rates and job insecurity; with all these, Japan's economy becomes all the more stagnant.

Japan's complete unemployment rate in May 1998 was 4.1 percent (0.3 percent over the same month of 1997), with the number of the unemployed amounting to 2.93 million (490,000 more than that of the same month of 1997.) These figures at once broke the worst record ever made since 1953, when statistics began. Particularly, the jobless rate of the youth (at the age of 15 - 24) reached 8.5 percent (1.4 percent over the year ago level), while the same rate of the aged (55 - 64) marked 6.4 percent (1.8 percent over the year ago level), according to Labor Force Surveys by the Management and Coordination Agency.

Moreover, they widely recognize that such statistical figures will be double if recalculated according to the standards of Europe and the United States. On the other hand, the ratio of officially registered openings against officially registered applications made a sharp drop, recording 0.53. The same ratio for the aged in recent years has fallen far short of the average, standing at 0.2 to 0.1. Labor Force Survey of February 1998 showed 510,000 have been without a job more than one year, and a quarter of those at the age of forty-five and over belongs to that part.

Regarding the increase of the unemployment both in the rate and in number, it is notable that gvoluntary leave from a job because of employment insecurity has decreased, while gnon-voluntary leave from a jobh due to the companies' bankruptcy or restructuring has rapidly increased. Just like the European countries and the United States, the decrease in gregular employeesh and the increase in gnon-regular employeesh have come along with such a situation.

According to the Labor Ministry's gMonthly Labor Surveyh of February 1998, the number of gregular employeesh was 47.14 million, 0.1 percent down from the same month of 1997. Contrary to this, gnon-regular employeesh reached 6.09 million, making an increase of 4.3 percent. Part-time workers have also increased by 4.8 percent. The number of dispatched workers in fiscal 1996 marked 18.0 percent up over the previous year's level. All these facts show that the employment forms are drastically changing, becoming more gflexible.h

The direct cause of the aggravated employment and unemployment situation that accompanies the increase of non-regular employment is due to major companies' international-scale restructuring strategy and workforce reduction in the name of gstreamlining,h to deal with the collapse of the gbubble economyh and the economic recession in 1990's. What is more, such restructuring and streamlining are accelerating even further by the following factors: dismantlement of small- and medium-sized management along with the destruction of employment through deregulation that gives its top priority to the market mechanism; an adverse revision of labor laws that will make employment styles and working hours gmore flexibleh; a growing public anxiety toward a livelihood caused by the adverse revision of social security and tax systems. They are drastically promoted by the present monetary insecurity and economic crisis hitting Asian countries.

Basic Points for Getting a Breakthrough in the Unemployment Problem

The above-mentioned factors that determine Japan's present situation concerning employment and unemployment seem common to the cases of European countries and the United States. Then, I would like to look over these factors again and present basic points regarding solution to today's unemployment problem.

In doing so, it is essential to take into account that though the situation may differ from country to country, gtwo alternatives,h which rival with each other, are assumed everywhere about finding a way out of today's unemployment problem. One comes from the financial circles and government, and the other, from workers and other people.

1. Financial Circles and Government's Strategies for Solution

The financial circles and government consider that the fundamental course toward a solution of the economic gimpasseh and the unemployment problem is to vitalize the economic activities of monopolistic major companies, though its process will involve gpains.h In accordance with such a concept, they have actually set forward the following strategic frames:

First, major companies that have become multinationals are actively pushing ahead with realignment and reconstruction of their business both at home and abroad. They aim for ginternational division of labor within the enterpriseh based on the principle of gdoing business in the most favorable places in the worldh in order to obtain the maximum profit. Also, they have been promoting the all-out streamlining, which actually means the dismissal of personnel, to face the gera of grand competitionh arising from the geconomic globalization.h

Second, the state's deregulation policy based on the neo-liberalism and principle of attaching top priority to market mechanism has been a positive supporter to such monopolistic major enterprises' international-scaled restructuring strategy and gstreamliningh through workforce reduction, which means the reconstruction of conditions for accumulation with preference given to profit-making.

The planned adverse revision of labor laws intends to make gemployment and labor markets more flexible,h namely privatization of placement business, gliberalization in principleh of workforce dispatch business, flexible employment of terminable and part-time workers. It also aims for gflexible working hoursh by enlarging the coverage of variable working hours system and arbitrary work schedules. The medical treatment and pension systems have been changed for the worse to reduce the benefit while raising the premium. In this way, social regulations to defend the right of workers have been eased, supporting in turn the reduction of the general labor cost based on diversified non-regular employment and working hour planning.

A broader-scale of economic deregulation based on the principle of giving top priority to market mechanism has led many small- and medium-sized enterprises to bankruptcy, resulting in the loss of employment and job. This in turn offers to major companies a basis for low-wage workforces and new business chances.

Third, apart from its deregulation policy, the state has been implementing measures to deal with the economic slump, in such a way as to support and vitalize major companies' economic activities. Such measures include the extraordinary low-interest policy, investment of taxpayers' money into offsetting the banks' bad loans, public investment that serves the interests of major general contractors, etc.

The state has taken such measures to deal with the depression in the interests of big companies within the financial restrictions, while imposing additional burdens on people through the consumption tax rate increase, adverse revision of medical insurance and pension systems, and the hike in public utility charges. These extra burden on family budget, combined with the gdestruction of employment and wages,h have led to a drastic decline in people's consumption, caused a retrograde, vicious spiral of recession, and worsened even further the unemployment problem.

2. Workers and People's Strategies for Solution

The monopoly capital and financial circles think that the key to restoring Japan's economy is to liberalize and vitalize the economic activities by big companies with the support of the state's deregulation policy. They advocate this will be in the end the way toward the solution of the unemployment problem. However, in their logic they take up the problem absolutely in the wrong way, and the result is the aggravation of unemployment problem and the further retrogression of the gdeadlockedh Japan's economic situation.

Workers and people, who take the completely opposite stand, have proposed a way to grestoreh Japanese economy and to find a solution to the unemployment problem. To oppose major companies' restructuring and gstreamliningh through workforce reduction and the deregulation policy based on the market mechanism principle, and instead to put major companies under democratic control on the basis of defending the people's right to live, right to work and right to trade. They think this is the only way to get a breakthrough in the present situation. On top of this, what is a task the trade union movement must tackle with to follow the path proposed by workers and people?

1) For workers and trade unions, the first thing to do is to say no against the increase of jobless and the employment insecurity due to the gstreamliningh in the name of@restructuring.

gStreamliningh carried out by major enterprises today in the name of restructuring is characterized by substantial dismissal of personnel in forms of move, loaning or assignment to other workplace (trade or transfer) of workers. These kinds of dismissal are going on along with the streamlining of clerical sections, realignment of related subcontractors and outsourcing of business. Trade unions should block by power of unity the restructuring and gstreamliningh through workforce reduction, while making efforts to establish a rule that they will not accept any move or Lending of workers without consent of the worker concerned and the trade union, or without a thorough consultation.

Judicial precedents set for regulations based on four requirements on dismissal that reduces personnel on the excuse of business curtailing or closing of factories for which they hold the management responsibility. Namely, to check the necessity of cutting workforces; the necessity of choosing the alternative of business curtailing; the properness of selecting specific workers as objects of dismissal; the validity of dismissal procedures. It is a matter of course that trade unions should make best use of these four requirements as a means to prevent dismissal by cutback on personnel.

These move, lending and transfer of workers, or dismissal through workforce reduction are under restructuring and gstreamliningh based on personnel cut as backed up by State's deregulation policies in the background of recession. The question is how to counter these restructuring and gstreamliningh displaying the power of unity and making use of judicial precedents.

In this respect, the postwar trade union movement has learned lessons concerning the struggle to oppose the grationalizationh through workforce reduction. The movement has set out a fundamental direction that it should carry forward this struggle centering on the united struggle in each industry based on workplaces. At the same time, the struggle should aim to develop and strengthen the progressive united front, by developing united actions both at local and national levels. We can emphasize the validity of this fundamental course in today's struggle against dismissal and unemployment, and the struggle against the gstreamlining.h

2) The struggle against dismissal and unemployment and against gstreamliningh should be based first of all on the offensive in the workplace, establishments concerned. However, such a counterattack cannot overcome the limitations of a competition between companies for profit making or competition for labor cost reduction. In this respect, as the fundamental course of struggles mentioned above shows, it is necessary to organize a united struggle according to the types of business or industry to oppose the gstreamlining,h or joint struggle within the district.

Particularly, the ghollowing outh of local industries and employment due to the gstreamliningh carried out by major companies in the name of restructuring, calls for the task to organize a struggle for reviving local economy through a joint struggle in the district that involves the small- and medium-seized enterprises and local governments.

Major companies are promoting gstreamliningh in the name of restructuring along with the reduction in regular workers and the diverse utilization of non-regular workers. In this regard, the task for trade unions whose members are mainly regular workers is to organize part-timers, contract employees, dispatched workers and other types of unstable employees and to launch a joint struggle. 3) Individual struggles against gstreamliningh based on personnel reduction, the united struggle at each business or industrial type, and the joint struggle in the district, once combined, will possibly merge into a nationwide joint struggle, which puts forward further advanced common demands:

First, the opposition to the adverse revision of labor laws which intends to abolish the women's protective provision, expand of the application of the variable working hour system and arbitrary work schedule, increase and diversify non-regular employment such as contract employees, part timers and dispatched workers, and privatize placement business.

Second, maintaining and creation of employment through reduction of legal working hours with the European Union level as its target. The establishment of a national minimum wage system and standard of minimum living.

Third, improvement of the unemployment allowance in accordance with the worsened employment situation, substantial vocational education and training, and establishment of a necessary public employment service.

Fourth, imposition of regulations on the excessive advancement of multinationals abroad, which has led to the ghollowing outh of local communities, and to freeze the economic deregulation which serves the interests of big companies while threatening the business of small- and medium-sized management. Implementation of urgent measures to boost economy that include the immediate income tax reduction, a decrease in the consumption tax rate, public investment with its priority to living basis, aid measures for small- and medium-sized management, and the suspension of adverse revision of medical service and pension systems.

These series of systematic, political demands are the concrete indices to the solution of today's unemployment problem. Such a united struggle in each industry based on workplace and district, unified actions at local level and a nationwide joint struggle, which call for the realization of those demands, will be the way for the struggle in each workplace, establishment and company against restructuring and the gstreamliningh based on workforce reduction to overcome its difficulties and limitations.

4) It is no need to say, however, that the advance in the struggle for realizing systematic, political demands that will pave the way toward solution to the unemployment problem profoundly calls for a progressive change of politics both at national and local levels, from the one that serves the interests of major companies to the other that gives priority to people's interests. Democratic control of multinationals' outrageous economic activities based on the gprinciple to do the business in the most favorable place in the world,h should also deeply involve political changes that go along with the development of international solidarity activities of labor movement.

Taking all these objective conditions into account, the trade union movement today is called to unite the economic struggle with the political one, and to become proficient in how to unite them, in order to materialize the way toward getting a breakthrough in the unemployment problem. In this regard, it is necessary to learn much from the struggle against unemployment carried forward in European countries today.