The document discusses relations between the government, labor, and business in Japan. It summarizes that after the 1973 oil crisis, Japan adopted a new system of cooperative labor unions and industrial policies that promoted steady economic growth with low inflation and unemployment. The "shuntou" system of annual nationwide wage negotiations was transformed from 1974 onward to emphasize moderate and stable wage increases. Labor unions focused on maintaining real wages and securing policies around employment stability rather than trying to change the overall political system. Meanwhile, networks of retired government bureaucrats on corporate boards, known as the "Old Boy Network," helped facilitate information sharing and cooperation between government, industry, and business.

1. Relations among the
government, labor
and business
Topical Seminar in Japanese Political Economy
Hang Nguyen – I32031

2. Oil crisis of 1973
 Japan: survived
 Enjoyed steady economic growth without serious
inflation or high unemployment
 Second oil crisis 1979: less troubled than the first
one
Cooperative and ‘rational’ labor unions,
industrial policies and corporate strategy
Transformation of the Shuntou (春闘) system

3. Shuntou (春闘) system (to 1974)
 Shuntou: the spring labor offensive – wage negotiation system
 A concerted campaign by workers in all industries
 National level
 Originally proposed in 1954, by K. Ohta (later chairman of
Sohyo)
 The most booming industries would lead the year’s
bargaining, the rest would follow the pattern
  1969-1974: wage increases by a considerable margin

4. After oil crisis
 1974: 32.9% nominal wage increase >< average profit rate of
individual firms decreased drastically.
 Typical trade-off: unemployment and inflation
  LDP’s study: wage increases (32%) <-> CPI increases (10%)
 A new pattern of wage determination and industrial relations
 1975: 15 percent of wage increase
 1976: less than 10 percent
  create favorable economic circumstances + persuasion

5. Labor – politics
 Sohyo (General Council of Trade Unions of Japan): try to
change the existing political system as a whole
 Domei (Japanese Confederation of Labor) and IMF-JC
(International Metal Workers’ Federation-Japan Council):
approach to change policy within the existing political system
 Achievement:
 Real wage continuity through tax reduction and anti-inflation
policies
 Full employment

6. Labor – politics
 Concern employment security
 Employment Insurance Law (1974)
 Measures to Halt Layoffs in the Structurally Depressed
Industries (1977)  Failed, criticized Sohyo’s ‘political’ strike
 Employment Stabilization Funds (1977)
 Labor Standards Law revision (1984)
WHY?

7. Labor – politics: Explanation
 Sohyo: public sector and services industries
 Domei & IMF-JC: private sectors -> heavily dependent on export
 Wage increases = threaten international competitiveness
 Disillusionment with socialism
 Support from LDP
  moderate in wage demands and active in policy demands

8. The “Old Boy” Network
 ‘Old Boy’ : retired government officials  boardrooms of private
corporations
 Network  phenomenon
 Hypothesis:
 “bureaucrat-led economic growth’ mechanism
 Small firms need OB for governmental information & lobbying

9. OB standard career path
 Bureaucrats: long-term civil servants
 Employed annually, ‘vintage’ groups with close contact
 Low salary -> dependent on employment after retirement
 ‘Amakudari’: appointed by National Personnel Authority
 Alternatives:
 Head of public corporation
 Private non-profit associations
 Politics
 Transfer to further government agency

10. OB mechanism
 Personal connections and seniority hierarchies
 ‘vintage’ meetings
 Smooth flow of information
 Remain loyal to government
Hypothesis:
 Preferential treatment
 Government ties with business
 Prospect high-paying motivation of second-employment
 Power equalization

13. OB network
 Distribution:
 Commercial banking, investment banking, insurance: <50%
 Electronics, automobiles, steel and construction: >75%
 Factor: ‘trade industry’ (trade restraints)
 VERs in TV sets (1977, U.S.)
 VCRs (1983, EC)
 Semiconductors (1986-91, U.S.)
 Automobiles (1980s, U.S. and EC)
 Steel (1980s)
  MITI advocated “export control scheme”

14. OB network
 Purpose:
 Quotas information
 Industry competition
 Construction case: secret bidding procedures  acquiring
information and government price ceilings
 Other industries: lobbying is the restrictions imposed by the law
  notion of Japanese “consultative capitalism”.

15. Thank you!