Japan's labour unions eye resurgence

by Miwa Suzuki Miwa Suzuki – Sat Oct 17, 11:45 pm ET

TOKYO (AFP) – After decades of decline, Japan's labour unions are looking to flex their new-found muscle in the wake of a historic power shift that handed them unprecedented close ties with the government.

The unions were a crucial support base for Prime Minister Yukio Hatoyama, whose centre-left Democratic Party took power last month, ending more than half a century of almost unbroken rule by the business friendly conservatives.

"We are mates, comrades. We have the same thinking," said Tsuyoshi Takagi, who recently finished a four-year term as head of the Japanese Trade Union Confederation -- better known as Rengo -- which represents 6.8 million workers.

"The issue of employment is the most urgent problem we are now facing in Japan," he said in an interview with AFP before stepping down.

Hatoyama has pledged to create a more "fraternal society" and has attacked what he sees as the excesses of US-style capitalism.

His cabinet includes former labour chiefs and vocal opponents of free-market reforms that were stepped up during Junichiro Koizumi's 2001-2006 premiership and put another nail in the coffin of Japan's traditional job-for-life culture.

The recently ousted Liberal Democratic Party was close to big business so the current situation "is very new," said Yoshinobu Yamamoto, a politics professor at Tokyo's Aoyama Gakuin University.

"But we still don't know how far trade unionists can influence policies that were not in the party's manifesto," Yamamoto said.

Hatoyama's Democrats aim to hike the minimum wage to a national average of 1,000 yen (11 dollars) an hour, up from the current 713 yen, and ban the use of dispatch workers, or temporary workers, at manufacturing firms.

Such employees are easier to fire than regular workers and bore the brunt of a recent wave of layoffs.

Dispatch workers "have a lot of trouble" with companies where they work, said Takagi.

"We should prohibit those dispatches to the manufacturing factories," he said.

Economists, however, warn such a ban could burden companies and ultimately lead to fewer jobs.

Some firms may just reduce their workforce to lower labour costs, said Hiroshi Watanabe, an economist at the Daiwa Institute of Research.

"This could jeopardise jobs for 'the working poor,' making them just 'the poor,'" he warned.

As in many other countries, Japan's labour unions have endured decades of decline as its economy matured.

Only 18 percent of workers were union members in 2008, sharply down from a peak of 56 percent in 1949 and matching a record low seen in 2007, according to the government.

Labour market deregulation has caused the number of dispatch workers in Japan to more than triple to 1.4 million in 2008, from 430,000 in 2002.

Rengo's members are mostly regular workers at big companies who generally earn more and are granted many fringe benefits, said Tetsuro Kato, a politics professor at Hitotsubashi University.

If the new government becomes serious about addressing the problems of dispatch workers on insecure job contracts, at the expense of regular workers' welfare, it might cause "friction" with Rengo, Kato said.

Workers at Japan's biggest companies won an average wage hike of just 1.8 percent in the spring wage offensive this year, according to the business lobby Keidanren, down from 1.95 percent in 2007 -- the first decline in five years.

But the unions' close ties with the government do not mean they will secure a good wage rise next year in their annual bargaining with companies, said Hideyuki Araki, an economist at Resona Research Institute.

"It's a separate issue because what companies are watching is how government policies would affect their earnings," he said.