The Regulation of Irregular Work in Japan: From Collusion to Conflict by Nathan Cisneros B.A., Political Science, Economics, Japanese, University of California, Berkeley, 2005 Submitted to the Department of Political Science in Partial Fulfillment of the Requirements for the Degree of Masters of Science in Political Science MASSACHUST INS E OF TECHNOLOGy At the MAY 19 2014 Massachusetts Institute of Technology LIBRARIES February 2014 C2013 Massacopsett Institute of Technology. All rights reserved. Signature of Author.. Nathan Cisneros Department of Political Science 1 November 2013 C ertified b y .......... ... ..................................... .. ............................. Professor Kathleen Thelen Ford Professor of Political Science 1 November 2013 A ccepted by............................. Roger Petersen Arthur and Ruth Sloan Professor of Political Science 1 November 2013 The Regulation of Irregular Work in Japan: From Collusion to Conflict by Nathan B. Cisneros Submitted to the Department of Political Science on on 1 November 2013 in Partial fulfillment of the requirements for the Degree of Master of Science in Political Science Abstract Japan's labor markets are clearly segmented between regular and irregular workers. Regular workers enjoy employment stability, good wages and promotion, and access to good pensions and health plans. Irregular workers-contract, dispatch and part time workers-can be fired easily, are paid less, and don't have access to fringe benefits. In Japan irregular work contracts have been progressively liberalized since the 1980s, and the share of irregular employment over the same time period has more than doubled to over one third of all workers. However, there are important cases of re-regulation. How can we account for Japan's specific policy path in regard to irregular work contracts? A good explanation ought to shed light on the politics of similar labor market phenomena across the affluent democracies. In this project I argue the policy process by which labor policies are decided substantially impacts whether or not irregular work contracts are liberalized or re-regulated. When labor unions and employer associations bargain over policy in consensus-based deliberative councils housed in the labor ministry the resultant policies are very unlikely to be favorable to irregular workers, though they are likely to be favorable to regular workers. This is the way most policies were decided until the 1990s. In contrast, when labor policies are processed through parlia- mentary politics the content of policy is shaped by electoral competition between the parties of the right and left. Irregular work contracts receive favorable policies only when there is an electorally credible party of the left. When there is not a credible leftist party both regular and irregular work contracts are liberalized. Political competition rather than formal inclusion of labor representatives most often results in favorable policies for irregular workers. Thesis Supervisor: Kathleen Thelen Title: Ford Professor of Political Science, MIT 2 A mes maitres et ma mere ; et amis et mon pere. 3 Contents List of Figures 7 List of Tables 9 1 Introduction 14 1.1 Is Japan becoming a floating crab cannery? . .. .. .. .. .. .. .. .. .. 14 1.2 The argument in brief: policy institutions shape policy outcomes . .. .. .. .. 19 1.3 Lessons from and for Japanese labor policy .. .. .. .. .. .. .. .. .. 22 1.4 T hesis outline .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 23 2 Definitions, measurement and explanations of irregular work regulation 25 2.1 Regular workers and irregular workers . .. .. .. .. .. .. .. .. .. .. 26 2.2 W hat is labor policy? . .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 29 2.3 Japan's irregular work contract policies . .. .. .. .. .. .. .. .. .. 31 2.4 Existing accounts of labor policy making in Japan . .. .. .. .. .. .. .. 34 2.5 Looking ahead: actors and institutions . .. .. .. .. .. .. .. .. .. 37 3 Making labor policy in Japan: institutions and actors 40 3.1 Labor policy: institutions .. .. .. .. .. .. .. .. 41 . 3.1.1 The institutionalization of labor policy .. .. .. .. .. 41 3.1.2 Consensus-based deliberative councils .. .. .. 42 3.1.3 Competition-based party politics .. .. .. ........ 45 4 3.1.3.1 Changes in party politics . ....... ....... ........ 4 5 3.1.3.2 Changes in policy making institutions ...... ... ... 49 3.1.4 A hybrid model? ..... ........... ....... .. ... .. 51 3.2 Labor policy actors ....... ........... ........ ... ... 51 3.2.1 The actors up close .... ........... ....... .. ..... 54 3.2.2 Employer associations .... ........... ..... .. ...... 54 3.2.2.1 General policy orientation ...... ....... .. ..... 55 3.2.2.2 Deregulation ... ......... ........ ... ... 59 3.2.2.3 Workplace diversity and irregular workers . ... .... ... 62 3.2.3 Unions ............................. .. .... ... .. 66 3.2.3.1 Rengb's creation and general policy orientation . ... ....... 66 3.2.3.2 Deregulation .................... .. ... .... .. 70 3.2.3.3 Workplace diversity and irregular workers . ... ....... ... 74 3.2.4 Political parties ........................ ... ..... ... 79 3.2.4.1 The LDP ...................... .... ....... 81 3.2.4.2 The DPJ ...................... .. .. .. ... .. 86 3.2.5 Governmental actors ..................... ..... ...... 91 3.2.5.1 The RRCs ..................... ........... 91 3.2.5.2 The labor ministry ................. ....... .... 95 3.3 Looking ahead ............................ .... ... .... 97 4 The dispatch worker law 98 4.1 Period 1: Consensus-based policy making with strong insider bias . ... .... ... 100 4.2 Period 2: From consensus to conflict ................. ....... .. 105 4.3 Period 3: The capacity for political conflict decreases ........ ...... .... 112 4.4 Period 4: Opposition parties regain the capacity for conflict .. .. ... ... ... 116 4.5 Period 5: Ambiguous policy process under the DPJ ....... .. ... ... ... 119 4.6 D iscussion .... ..................... ....... .......... 121 5 5 The part time worker law 123 5.1 Period 1: Consensus-based policy making dominates . .. .. ... .. .. .. ... 128 5.2 Periods 2-3: Stasis in the deliberative councils . .. .. ... .. .. ... .. ... 131 5.3 Consensus-based policy making dominates but is directed by political parties . ... 133 5.4 Period 5: Ambiguous and contentious political process . ... .. .. .. .. ... 137 5.5 D iscussion .. .. ... .. ... .. ... .. .. ... .. ... .. ... .. .. ... 139 6 Fixed-term contract regulations 142 6.1 Period 1: No clear consensus on reform in the deliberative coun cils . .. .. 148 6.2 Period 2: RRCs target FTC expansion . .. .. .. .. .. 150 6.3 Period 3: Political conflict dominate LSL revision . .. .. .. 155 6.4 Period 4: Politics breaks the consensus norm . .. .. .. 160 6.5 Period 5: Partisan push for re-regulation .. .. .. .. .. 163 6.6 D iscussion .. .. .. .. .. .. .. .. .. .. .. .. .. 166 7 Conclusion: has Japan solved the Goldthorpe Dilemma? 168 7.1 General findings . .. .. .. .. .. .. .. .. .. .. .. ... 168 7.1.1 Has the ship sailed? Prospects for labor policy in Japan ... 171 7.2 Is Japan still Japanese? .. .. .. .. .. .. .. .. .. .. 172 7.3 What do employers want? . .. .. .. .. .. .. .. .. ... 172 . 7.4 What do unions want? . .. .. .. .. .. .. .. .. .. - .. .174 7.5 The Goldthorpe Dilemma: does corporatism kill itself? .. .. .... 176 6 List of Figures 1.1 Total number of irregular workers by contract type . 16 1.2 Percent of irregular employees in the workforce .. .. 16 1.3 Summary of the main argument . .. .. .. .. .. 20 3.1 The normal labor ministry deliberative council process . .. 43 3.2 Chronology of cabinets, coalitions and elections . ... 48 3.3 Unionization rate in Japan . .. .. .. .. .. .. .. 67 4.1 Number of dispatch workers in Japan .. .. .. .. .... 101 5.1 Size of the part time worker population .. .. .. .. .. .. .. 124 5.2 Relative proportions of pnto and arubaito by gender ... ... ... 125 5.3 Article 8 of the revised (2007) PTL . ... ... ... 136 7.1 Regular worker EPL . ... ... 180 . 7.2 Regular worker EPL ... ... ... 180 7.3 Regular worker EPL ... ... ... 180 7.4 Regular worker EPL ... ... ... 180 7.5 Temp worker EPL .. .. ... 181 . 7.6 Temp worker EPL .. ... ... 181 7.7 Temp worker EPL .. ... ... 181 7.8 Temp worker EPL ......... 181 7.9 Vote share of two largest parties, 1956-2012 . ... .. 184 7 7.10 Unemployment rate for selected age and gender groups ... .. .. .. .. .. .. .. 186 7.11 Chronology of cabinets, coalitions and elections .. .. .. .. .. .. .. .. .. .. 188 8 List of Tables 1.1 Why are you in irregular employment? ....... 17 2.1 Description of contract types in Japan .... ... .. 28 2.2 Chronology of irregular work contract regulations . 31 3.1 Formal labor policy actors ......... ..... .. 52 3.2 Reng6's largest unions in 2012 ... ........ 68 3.3 Part timer unionization rate ..... ........ .. 74 4.1 Chronology of Dispatch Worker Law (DWL) .... 98 5.1 Chronology of Part Timer Law (PTL) .. ...... 123 6.1 Chronology of fixed-term contract (FTC) legislation ........ .......... 1 4 2 6.2 Percent of employees with fixed-term contract by contract length in 2010 .. .. .. 145 7.1 Poverty and poverty reduction in OECD countries ... ....... ... ... ... 182 7.2 6th Central Labor Policy Deliberative Council Members .... ...... ... ... 183 7.3 Chronology of coalition governments . ............ ........ .... .. 185 7.4 List of Regulatory Reform Committees .................... ...... 187 7.5 List of prim e m inisters ............................. ...... 187 9 Acknowledgements