Comparison Of The Welfare And Industrial Relations Systems Of Germany And Japan

Introduction

Germany is frequently seen as the exemplar of a highly coordinated and regulated market economy. In the German ER system, employee interests are represented in a dual system: co-determination at the workplace and company levels as well as collective bargaining at the industry level. A minority of employees enjoy this representation, however, and this ‘duality’ is slowly eroding. The number of industrial disputes is relatively low due to the centralisation of the system, a certain degree of cooperation and trust, and alternative dispute resolution mechanisms. The gradual shift towards the Anglo-American Liberal Market Economy model is evidenced by the decentralisation of collective bargaining, more flexible labour practices, and a growing emphasis on share-holder interests. However, a complete convergence is unlikely.

West Germany experienced very strong economic performance after World War II. The high-productivity, high-value-added, high-wage, high-skill model lasted to the mid-1970s. The collapse of the Bretton Woods system and the oil crises in the 1970s contributed to economic decline in the West German economy. There was some recovery in the 1980s, but problems arose with the integration of the socialist East German economy in 1990, and between the mid-1990s and mid-2000s, economic growth was low and unemployment high. The political system has been continuous and stable. Germany is a federal system but employment relations policy is uniform across states (in contrast to Canada or the US). Germany has a comprehensive welfare system focused on occupational status and the insurance principle.

The Japanese model – ‘lifetime employment’, seniority with merit-based pay, and enterprise unionism – has been under pressure in recent years. Key changes include the growth of overseas activities by Japanese multinational companies, the deregulation of corporate laws and the rise of non-standard employment. Contemporary Japanese employment relations are relatively stable, and relations between labour and management are generally cooperative (but the number of individual labour disputes is growing). Union membership is declining and a range of social, economic and labour trends pose challenges to the future of unions.

The growth of non-regular employment has been linked to increasing inequality and poverty, and raises questions about how to protect the employment and working conditions of atypical workers who are not represented by trade union. Japan is one of the largest economies in the world. It has a labour force of 66 million and in 2012 it had a labour force participation rate of 74%. Since the burst of the ‘bubble’ economy in 1991, the Japanese economy has been grappling with low growth and mild deflation. Nominal wages diminished slightly over the last two decades. The declining fertility rate and ageing population are major issues for the future. Japan’s unemployment rates were among the lowest in the world until the 1990s.

After having reached 5.4% in 2002, the rate went down to 4% in 2013. Politics are dominated by the conservative Liberal Democratic Party (LDP). After the dismal interlude of the Democratic Party (2009-2012), the government of Shinzo Abe (LDP) since 2012 pursues an aggressive monetary policy in order to stimulate the economy and to stop the deflationary trend which has been at work for the last two decades. Unions are generally considered close to the DP but have little influence on members’ voting decisions.

The Japanese model of employment relations is based on cooperative labour relations between employers and unions at the enterprise level and long-term employment relations. It was gradually shaped in the 1950s and 1960s, after a period of strife following the democratization of Japan under the Allied Powers of General Headquarters (1945-1951). This model is believed to have contributed to Japan’s solid economic performance in the 1970s and 1980s. The model is under pressure due to the growth of overseas activities by Japanese enterprises and the decline of union density.

Fiji, is rife with all forms of disputes. Like most communities or developing nations, it has disputes which cover a wide variety of areas such as:

1. neighborhood disputes;
2. family disputes;
3. commercial disputes; and
4. environmental disputes.

However, it is the area of industrial or employment relations that generates the most disputes in Fiji. These disputes are quite serious in terms of their outcomes because, unlike Australia, Fiji has no social security safety net. Example: If an employee/worker loses his or her job, they have no source of financial support to fall back on. In 1973, the Fiji Government enacted the Trade Disputes Act Cap 97 that required parties to try and resolve disputes themselves. (now repealed and replaced by ERP 2007). In the event the parties fail to resolve the dispute themselves, the Act forces/obliges the parties to conciliation, sometimes followed by arbitration. This complex weave of dispute resolution processes was designed to maximize the chances of resolution before drastic action can occur, such as dismissal or a strike.

The Fijian Parliament has enacted a new Employment or Industrial Relations legislation (ERP2007) which seeks to preserve the stages of dispute resolution currently being practised but introduces mediation as an additional method of dispute resolution prior to adjudication. It was against this background that Macquarie University’s Centre for Dispute Assessment and Resolution (CeDAR) was employed to deliver consultancy services. CeDAR also provided training services to the Fiji Employers Federation (FEF, now FCEF) and the University Of South Pacific (USP) in January 2004. CeDAR was a joint initiative between the Macquarie University Division of Law and the Graduate School of the Environment and is designed, amongst other things, to advise and implement dispute resolution systems for government and industry.

Body

There are some 7.4 million trade union members in Germany. However, this includes a substantial number of retired trade union members, now 20% of the total and growing. The vast majority of union members are in the main union confederation, the DGB, but within it individual unions, like IG Metall and Verdi, have considerable autonomy and influence. Only around a fifth of employees in Germany are union members, and union density has fallen sharply since the early 1990s, in part because of a sharp fall in manufacturing employment in Eastern Germany after unification. There are now two unions – IG Metall and Ver.di – of similar size. As a result, the ICTWSS database of union membership put union density at 18.0% in 2011.1 The main trade union confederation in Germany is the DGB, which aims to recruit all types of worker. Among DGB unions, 33.1% of union members are women and 66.9% men (figures for end 2014). Traditionally DGB unions have been organised primarily on an industrial basis, with unions for metal workers, chemical workers, employees in the public sector, finance and retail and so on.

Overall union membership has fallen sharply since German unification. It is by far the largest confederation and the unions affiliated to it have 6,104,851members (2014). DGB unions face significant competition from non-DGB unions in the public sector and former public sectors, where another confederation, the dbb, has 1,282,829 members (2014). Membership of the Marburger Bund (doctors) rose by 16% between 2006 and 2012, from 98,033 to 114,179.10 Trade union membership is strongest among manual workers in manufacturing and in the public services, but much weaker among workers in the private services sector. In the DBB, 31.8% of union members are women and 68.2% are men (2014). IG Metall is once again the largest, with 2,269,281 members (end 2014). The two largest unions are the teachers’ union VBE and komba, a union for administrative staff in local government.

Japanese Trade Union Confederation (Rengō), Japanese in full Nihon Rōdō Kumiai Sōrengōkai, largest national trade union in Japan. The federation was founded in 1989 and absorbed its predecessors—including the General Council of Trade Unions of Japan (Sōhyō), the Japanese Confederation of Labour (Dōmei), and others—and brought together both private- and public-sector unions. Labour unions began forming in Japan in the late 19th century, but they were disbanded during World War II. After the war the labour movement was relaunched, but it remained divided for decades. With the birth of Dōmei in 1964, four organizations—Sōhyo, Dōmei, the Federation of Independent Labour Unions (Chūritsu Rōren), and the National Federation of Industrial Organizations (Shinsambetsu)—became equal leaders. In 1967 a battle for unity began, and unsuccessful talks to unify private-sector unions took place in 1970 and 1973. In light of this failure, a few major private-sector federations teamed up, launching a joint conference to promote policy-based demands.

From the late 1970s they organized annually to campaign for higher wages, and under a then-sluggish economy the four organizations developed joint activities. With these achievements, in 1982 the National Council of Trade Unions in the Private Sector (Zenmin Rōkyō) was formed with 41 industrial federations and 4.25 million members and was recognized by the four organizations. In 1987 the Japanese Trade Union Confederation (i.e., Rengō) for the private sector was formed, and it merged with public-sector federations—into what is sometimes known as Shin (“New”) Rengō—in 1989 with eight million members. Consequently, the four constituent organizations dissolved. Unions affiliated with the Japan Communist Party criticized this move as an expansion of class collaboration and formed its own national centre, the National Confederation of Trade Unions (Zenrōren). In accordance with its mission to defend the rights and improve the living standards of working persons, Rengō established the Research Institute for Advancement of Living Standards, a labour-related think tank, and the Japan International Labour Foundation.

Key features and processes of ER/IR system of the three countries (Collective bargaining, dispute resolution, employee participation, etc.)

Japan

In Japan, collective bargaining predominantly takes the form of enterprise-based bargaining, namely the bargaining between an enterprise-based union that has organised employees in a single enterprise and their employers. The distinctive feature of enterprise-based bargaining is that the employer and enterprise-based union have almost complete autonomy over the process. Thereby, exclusive negotiations are common where there are no participants from outside the enterprise (Shirai, 1999: 79).

Labour unions successfully concluded collective agreements with employers. This percentage was higher than the 1996 figure of 89.2%, and the 1991 figure of 91.3%. Every industry, with the exception of the service industry, had over 90% concluded collective agreements. The larger the size of enterprise, size of union membership or unionisation rate, the higher the percentage of concluded collective agreements. The earlier the year of union formation, the higher the percentage of concluded collective agreements.

In terms of the key players in concluding collective agreements, 58.2% of unions indicated that a low-level union concluded the collective agreement alone; 25.4% for indicated that a higher-level organisation concluded collective agreement alone; and 15.9% indicated combined involvement of a low-level union and higher-level organisation. The larger the size of the enterprise, the higher the percentage of collective agreements concluded by a higherlevel organisation.

The practice of concluding collective agreements by enterprise-based unions has become imbedded in the collective bargaining framework. • This practice has particularly acquired a solid foundation at large enterprises and enterprise with large unions.

The practice of concluding collective agreements is relatively infrequent in the services industry, smaller enterprises and enterprises with small unions or low unionisation rate.

Germany

Collective bargaining in Germany predominantly takes place at sectoral level between sectoral trade unions and employer organisations. There are some exceptions to this, such as the carmaker Volkswagen, which negotiates its own collective agreement with the trade union IG Metall.

Fiji

Industrial Relations in Fiji has developed along a mix of the traditional British voluntarist and historic interventionist New Zealand traditions, and have mirrored developments in Australia and New Zealand (Prasad and Hince, 2003). The Fiji Trades Union Congress and the Fiji Employers Consultative Association (FECA), which later became Fiji Employees Federation (FEF), were the national actors from the mid 1970’s onwards.

Collective Bargaining

Traditionally centralized, but is now decentralized and conducted at enterprise level

Pay and working conditions are determined by the Wages Councils in 10 different industries/sectors under National Wage Order

The role of Employers Association Of three countries

To provide the employers of Fiji with the knowledge, understanding and capability to maintain the best possible labour relations while seeking to grow their businesses and the economy by encouraging the government to provide the environment for the private sector to prosper.

Unions have a right to organize, collective bargain (which can lead to a collective agreement), and act collectively such as to strike.... The employer has an obligation to engage in collective bargaining requests in good faith, but there is no obligation to agree to the union's request.

In general, the main function of trade unions is to conclude collective bargaining agreements. Trade union representatives also support employees or the works council (e.g. by giving legal advice and representing employees before the court), but do not have participation rights within a company.

IR/ER institutions formed to look after IR/ER matters

Japanese industrial relations system include workplace focused enterprises unions, lifetime employment systems, broad based training and seniority based wages. Another outcome of the Japanese institutions such as the Keiretsu system and the system of production organization (subcontracting and quality-focused, team based work) is the simultaneous achievement of stability in labour market terms and considerable functional flexibility in work place level industrial relations through the development of internal labour markets. The Japanese follow permanent employment system, consensus decision making and patriotic leadership. The Japanese respect the senior and senior behaves just like a guardian not like a boss. Management treats all as team members whether executives or workers. They emphasize on continuous customer focus improvement in quality and total involvement.

Labour legislations or Laws

Since 1987, Japan has adopted the principle of a 40 hour week.... However, although overtime pay is required by law, Japanese companies before 1990 were known to take employees to court over employees' requests for overtime or other legitimate compensation. Also, collective agreements may extend the normal work week.

The main sources of German employment law are federal laws, collective bargaining agreements, works council agreements and case law. There is no consolidated Labour Code. Certain minimum labour standards are instead laid down in various acts. The legislation of the European Union as well as the jurisdiction of the European Court of Justice is increasingly impacting German employment law.

The amendments suggest Government's intentions of supporting working parents and promoting work life balance into Fiji's current work force. In accordance with the usual principles of Fiji employment law, the Act sets out minimum statutory standards that all Fiji employers may exceed but may not fall below.