Mitsuo Nagumo, president of the Japan Federation of Service and Distributive Workers Unions JSD

Corporate Social Responsibility as a Key to the 21st Century Labor-Management Relations

Whenever I am asked what is the social responsibility of companies or their significance as social entities, my answer is that through their activities companies contribute to the development of the national economy and that they provide people working for them with a basis for earning a living. To this end, companies should disclose all their information, realizing their grave responsibilities to their major stakeholders including: 1. shareholders, 2. customers (or consumers), 3. banks and suppliers, 4. employees (or unions), 5. national and local governments (and communities), and 6. the international society. In this sense, I must say that trade unions have heavy responsibilities as well as an extremely important role to play vis-a-vis companies both as their partner and as their countervailing force. Needless to say, the responsibility of running a company lies primarily with the company's manager.

Now I would like to share with you some facts and analyses about labor-management relations in the commerce sector in Japan.

The union organization rate in the commerce sector in Japan is around 9%, very low as compared with those in other industries.

There are four reasons for this:

1. Most companies are very small, with high concentrations of mom-and-pop stores along shopping arcades. In fact, more than 80% of companies are small businesses with less than 50 employees.

2. Many workers are under part-time, temporary, or other non-regular employment arrangements that are growing in Japan today.

3. The workforce is predominantly female in this labor-intensive industry.

4. Most companies are not under modern management. Long hours are worked, as stores are open all year round and at night.

Against this background, it can be said that in Japan the commerce sector is organized mainly at large companies such as department stores and mass merchandisers which are relatively modernized.

Soon after the war, around 1946, unions were established one after another first at traditional department stores. This was followed by unionization at superstores, supermarkets, and other national chains that emerged around 1950 to 1960. Later, unionization continued to cover local supermarkets as well. If we look at companies with 300 employees or more, the organization rate is quite high at around 80%. On the other hand, very small companies do not have unions.

Therefore, the major characteristics of labor-management relations that I am going to now discuss apply mainly to large companies with tradition. They do not apply to the entire commerce sector in Japan.

Unions in the commerce sector in Japan have the same characteristics that most other unions in Japan have. They are enterprise-based. They are union-shop. They collect union dues under check-off agreements with the companies within a range of 1%-2% of salaries. Enterprise-based unions are the building blocks that comprise industry-wide federations, which in turn comprise the national center, Rengo.

As a result of this organizational structure, most labor-management decisions are made basically through face-to-face negotiations at individual companies. Industry-wide federations provide enterprise-based unions with necessary assistance, guidance, and information. They also develop guidelines, visions, and other materials to help strengthen the activities of their affiliates.

The existence of enterprise-based unions is one aspect of labor-management relations in Japan. As expressed in the statement that you cannot have the happiness of employees without the prosperity of the company, a company together with its employees has come to form a community with a common fate. This has resulted in rigid workforce mobility.

Now I would like to point out the following as the main factor that has made labor-management relations in Japan what they are today.

It is the productivity improvement movement which was brought from the US in 1955. The Japan Productivity Center was established by government, labor, and management and defined the three principles of productivity as follows: 1. stabilization of employment, 2. fair

profit-sharing, and 3. establishment of labor-management consultation systems. This triggered the diffusion of labor-management consultation systems particularly at private-sector companies in Japan and accelerated unions' participation in the management of companies.

This meant a shift from confrontation to dialogue. Then came the liberalization of capital as well as the first oil crisis which led to skyrocketing prices. Both companies and unions tried to survive the age of mega competition by improving productivity, thus further strengthening their mutual identity as a community with a common fate.

With the burst of the economic bubble and the advent of the age of global economy, new approaches to labor-management relations were looked for. Unions started to watch more strictly how companies were run. They parted with labor-management collaboration that they built in the age of high economic growth and adopted the principle of labor-management equality where they had a louder voice. They now stood on their own feet and aggressively challenged companies to fulfill their social responsibilities. In other words, unions redefined themselves as social entities with responsibilities to society as they addressed labor-management relations.

If I may repeat, in the history of labor-management relations in Japan, unions strengthened their participation in the management of companies and tried to develop better environments for working people based on labor-management consultation systems. Under different names at different levels of organization such as company, store, and department, labor-management consultation meetings are held regularly throughout the year, usually once a month, with basically the same number of participants from both sides. Business information is disclosed for frank discussions between labor and management on an equal-footing basis.

To achieve quality labor-management relations, it is indispensable to have quality management, quality union leadership, and quality union members. At labor-management consultation meetings and collective bargaining tables, unions challenge companies to fulfill their social responsibilities as well as to reform the way they run themselves. Always keeping in mind the principles of stable employment and fair profit-sharing, unions demand that companies reform wage and other personnel systems, implement disciplined time management, and honor collective agreements.

Unions place great importance on labor-management consultation systems. As part of their day-to-day activities, they make efforts to conduct studies and researches on companies' behavior, enhance their business analysis skills, and develop union officers' ability to prepare proposals. With some unions that have built quality labor-management relations, the consultation meeting agenda contains not only reports and opinion statements, but also items for discussion and decision. Those unions have strengthened their participation in the companies' decision-making process.

In some cases, unions themselves participate in the ownership of companies by buying stock. Employee stock ownership systems are becoming common practice at large companies. To ensure fair profit-sharing, some companies have introduced ability- or performance-based appraisal systems. Details of these systems are disclosed to employees and decisions are made jointly by labor and management.

Also, personnel systems that concern appraisals and wages of union members are clearly defined by labor and management and disclosed to all employees. Some new systems allow for a variety of options to meet the needs of individuals. Working conditions are important for union members, but it is also important for them to have fulfilling work and live a life that is worthy to live.

Finally, we, the workers in the commerce sector, should be loved by people, the customers. Companies would be driven out of business right away if they should do anything against society. We must remember hat commerce is an industry for the citizens, for the local community, and for the people.

How companies can fulfill their responsibilities to society is the key to their growth and prosperity. In this sense, we can say that it is very important for unions to check the conduct of companies. Our industry requires us to think globally and act locally.

It is not that people exist for the sake of companies. Rather, it is that companies exist for the sake of people. Companies that are not good for people have no reason to exist. To make sure that companies fulfill their social responsibilities, unions should now do their best to build quality labor-management relations. By emphasizing this last point, I would like to conclude my report.

Thank you for your attention.