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Vol. 19 The Journal of Social Policy and Labor Studies (Shakai-seisaku Gakkai shi)


HOME > PUBLICATIONS > Early Journals > The Journal of Social Policy and Labor Studies (Shakai-seisaku Gakkai shi) (1999-2007)

The East Asian Path of Economic Development and the Quality of Labour and Life : An Historical Perspective


This paper argues that there was a long-term path of economic development in East Asia, which underpinned the “industrious revolution” since the seventeenth century and labour-intensive industrialization since the late nineteenth century, and eventually produced the “East Asian miracle” during the second half of the twentieth century. Central to this path was its commitment to the improvement of the quality of labour. The improvement of the quality of life, expressed in education, health and housing, was also pursued from a relatively early stage in order to improve the quality of labour.

The first half of the paper describes the interactions between “high initial conditions”, international circumstances and government policies in postwar East Asia, and suggests that “developmentalism”, an ideology adopted by many governments of the region’s high growth economies, reflected its specialisation in labour-intensive industries in the global division of labour, based on the East Asian path, rather than its effort to “catch up” with the West.

The paper then considers how development economics in the postwar period had neglected the question of the improvement of the quality of labour and life, and attributes some of the reasons for the rapid improvement in education and, to a lesser extent, health in East and Southeast Asian economies to the region’s long-term commitment to “productivist” ideology. The success was also helped by the “mechatronics revolution”, which combined the introduction of micro-electronics technology with traditional mechanical engineering in the 1970s and the 1980s. The speed at which new technology was adopted to consumer electronics, computer and other manufacturing and service industries was faster in East Asia than anywhere else, because the region was able to combine good-quality labour of all kinds, from unskilled to highly skilled, to produce competitive manufactured goods. It was the quality of labour that determined where the region’s comparative advantage lay.

The paper ends with comments on the development of “social policy” in East Asia. In the literature on development, “social policy” often means human development policy, and includes all areas of education, health, housing etc. as well as the traditional areas covered by welfare state policies such as social security and unemployment benefits. While Esping-Andersen’s typology of welfare capitalism is formulated on the experience of the Western path of economic development, the East Asia path requires a different evaluation, on which to assess the history of a rather piecemeal introduction of Western-style welfare system to the region.



Perspectives for Studying East Asian Social Policies


In the 2000s, at least two perspectives towards social policies in East Asian countries began to interweave and articulate themselves. One perspective is from comparative social policy or political economy, which originated in the West but began to include some East Asian countries in the 1990s, while another is from development studies, which have been paying greater attention to social policies in a developmental context, with a focus on East and Southeast Asian countries. Against this backdrop the current paper first tries to overview different but partly overlapping concepts of social policy in various perspectives. It suggests that much is expected of chronological as well as cross-sectional comparative studies of social policies, in order to cover policy measures other than social insurance schemes or their alternative modes of social protection on the one hand, and stages of development preceding industrialization and democratization on the other hand.

Secondly by introducing a conceptual framework of “livelihood security system”, this paper highlights a characteristic of 20th century welfare states, in which the inherently individualistic and multi-dimensional risks of livelihood were reduced to the single-dimensional insufficiency of the income of male breadwinner, and explained away as employed or not employed in terms of main causes of risk. Of course, welfare states in the 20th century did not share a similar structure, and the livelihood security systems of “advanced” nations around the 1980s can be grouped into three main categories: the “male breadwinner” model, the “work/life balance” model and the “market-oriented” model.

It is argued that 20th century welfare state dysfunction has revealed itself as “social exclusion” in a broader sense, particularly in the male breadwinner model, designated as “the clearest case of impasse” in adapting to post-industrialization. Youth and women are excluded both within and outside the labor market, and exclusion is widely used by employers to avoid the burden of social insurance premiums. In Japan, where the male breadwinner orientation of the livelihood security system at the turn of the century is stronger than in other countries, social exclusion as accelerated “extra-legality” in social insurance schemes is evident. It needs to be contrasted to recent social security reforms in Korea and Taiwan that moved towards universalization of social insurance schemes in their efforts to restructure their strategies of economic development from labor-to capital-and skill-intensive.



A Comparative Study of Industrial Relations in Japan and Korea: Based on the Cases of Toyota Motor Corporation and Hyundai Motor Company

Jong-Won WOO

This paper examines the differences between the similarly enterprise-union-based industrial relations of Japan and Korea by focusing on union functions. In the case of Toyota, the union cooperates with management, which strives for “kaizen”. The core workers on the shop floor, who also take on leadership of the union, are systematically trained and committed to shop management. Other ordinary workers are able to work flexibly and are committed to long-term training. In contrast, the relation between union and management in Hyundai is adversarial. Management does not depend on shop-floor workers but on engineers to maintain production system. Moreover, the union does not commit itself to functional flexibility or show interest in long-term training.

The paper investigates the historical contexts in which the contrasting practices were formed. First, the existence of skilled workers and the degree of their cooperation in the primary stage of economic growth influenced whether or not the production system made good use of the shop-floor workers’ skills. Next, the democratization process affected the workers’ attitudes toward long-term training differently. In Japan, “democratization” after WWII meant “equalization” between white-collar workers and blue-collar workers. The latter tried hard to improve their long-term abilities in order to show that they deserved equal status with the former. In Korea, democratization after 1986 was limited to free collective bargaining between management and blue-collar workers. It could not attain “equalization” because management was not weakened and the white-collar workers were more privileged than their Japanese counterparts. Finally, ideology influenced managerial attitudes toward worker participation in management. In particular, the division of the Korean peninsular exerted a strongly negative effect on worker participation in South Korea because it was believed that managerial prerogative should not be infringed in the capitalist regime.

The most difficult issues facing Korean unions are how to commit themselves more strongly to long-term training and how to reduce the working condition differentials between permanent and contingent workers in the process of setting up industrial unions. The problems facing Japanese unions are covering contingent workers more broadly and managing lifestyles, which have not been viewed as a worker’s own but as a salaryman’s.



Comparison of Public Pension Reforms in the East Asian Countries: China, Korea, and Japan

Kwang Joon PARK

This is a comparative study regarding the purposes and contents of public pension reforms among the East Asian countries of China, Korea, and Japan. For the purposes of reform, the three nations, with varying degrees of maturity, are compared in terms of universal coverage, the adequacy of benefits, fiscal security (sustainability), and modernization.

To examine the nature of pension reforms, a framework of four ways of spreading-out in social policy-penetration, imposition, harmonization, diffusion-is utilized to examine how each nation assimilated experiences from other countries. Diffusion was seen as the most common way of expansion in pension reforms while under conditions of globalization harmonization and diffusion have became the more prevalent methods.

East Asian countries face the usual challenges of fiscal security, intergenerational equity, diversifying need (i.e., women’s rights to benefits), and public distrust, but each nation pursued its own objectives based upon its years of maturity. China, which started its reforms in the 1990s, has as its primary goal universal coverage followed by fiscal viability. Korea is, above all, seeking financial stability in its system, juggling between the adequacy of benefits and their sustainability. More mature than those two countries is Japan, which is, however, beginning to see the possibility of modernizing its pension system while pursuing fiscal stability as the primary objective.

The increases in the number of part-time workers and in public distrust of the pension system are still prevalent in these three countries. Sound and proper measures have not yet been developed to deal with demands for more fundamental reforms.



A Study on the Characteristics and Prospects of Japanese Industrial Relations

Yoshinori TOMITA

This study aims to examine the development pattern of Japanese industrial relations and trade union movements in the post-World War Ⅱ period. In addition, it also provides suggestions on overcoming the difficulties confronted by trade unions in Japan at present.

The mid-1980’s marked a turning point in industrial relations in Japan as various economic transformations, which influenced industrial relations deeply, took place in succession. The main transformations were (i)Globalization of the product market, (ii) Acceleration of market changes (shortening of the average product life cycle), (iii) Technological changes (introduction of microelectronics and information technologies), and (iv) Reduced demand for labor (slackening of labor markets).

These transformations in turn forced changes in systems of management, product development and production. The unit of management in firms became smaller and extended down to shop floors. Work teams on shop floors were designated as the smallest units to be responsible for firm profitability. At the same time, firm cost control became more severe. On the other hand, functions and responsibilities granted to lower level workers increased. As a result of these changes, the shop floor level became important because not only conflicts between workers and management, but also resolution of conflicts, took place there.

Another aspect of change in contemporary industrial relations is individualization. The individualization of industrial relations has had a deep impact on the trade union movement. This paper attempts to examine its impact by viewing (i) individualization of work hour controls, and (ii) individualization of payment controls. It is vital for trade unions to alleviate the effects of individualization through collective regulation. In a firm that devotes sufficient time to labor-management consultation, workers succeed in regulating working conditions collectively. As a result, working conditions tend to get better in such firms. This indicates that, in the process of individualization of industrial relations, joint consultation is effective and practical than collective bargaining.



Centralization and decentralization of three-tiered structures of industrial relations within the U.S. automotive industry due to labor-management cooperation


This paper examines the transformation of industrial relations within the U.S. automotive industry, focusing on the evolution of the historically adversarial model into a cooperation- based approach to labor-management relations.

During the New Deal era, the federal government began supporting the collective bargaining process, a development which put labor unions on equal footing with employers for the first time. As a result, labor’s share of corporate success increased in the form of improved wages, conditions, and benefits, ultimately stimulating economic activity in the U.S. marketplace. Around 1950, a new three-tiered structure of industrial relations was introduced and nearly fully realized. This three-tiered structure was comprised of a strategy level on an industry-wide basis, a collective bargaining level on both an industry wide basis and a company basis, and a work place level on a plant or an office basis. At that time, the power relationships within these three levels were balanced. However, in recent years, these dynamics have been altered due to (1) the loss of union power due to a declining rate of organization, (2) the emergence of a non-union industrial relations system, (3) the use of human resource management or low-wage strategies, and (4) changes in marketplace competition due to increased globalization. Under these new circumstances, the cooperative labor-management model’s goal of attaining competitive levels of productivity and quality, for both the labor union and management, has become more important than the objective of continuing traditional industrial relations. Within the automotive industry, there are some patterns of labor-management cooperation unique to each company’s management style. Daimler Chrysler and General Motors have taken different approaches in their efforts to transform industrial relations and rebalance power within the three-tiered structure. Such examples illustrate not only the possibility of the labor union’s recovery, but also its limits and contradictions.



The Provident Fund Centered Social Security System: A Comparative Examination of Three Countries and Policy Implications for Nepal

Ghan Shyam GAUTAM

Provident funds that work through the mandatory saving accumulation are the dominant social security scheme in some Asian and African countries, though with varying levels of progress over the years. In this paper, we present a comparative analysis of provident fund performance in three Asian countries, Nepal, Malaysia and Singapore, respectively representing agriculture-dominated, industrializing and industrialized economies, and try to identify issues and prospects from the Nepalese perspective. After briefly reviewing the existing social security structures in the three countries, we comparatively appraise provident funds from different angles. Thereafter, after examining issues and prospects of provident funds, we conclude with some policy implications for the future design of the social security system in Nepal.

In Nepal, where the social security system is a relatively new phenomenon, the scope of EPF is rather narrow in terms of participants and services compared to Singapore and Malaysia. More concretely, coverage is drastically low, health service is completely neglected and schemes to enhance members’ choices are lacking. In all three countries, no significant income redistributive features are available, necessitating the requirement of such provision by pooling certain funds among the participants. Positively, returns to members’ savings are comparatively attractive in the Nepalese provident fund and the overall progress since 1990 deserves considerable praise. It possesses strong potential to become an effective social security program by bringing all organized workers and upper-income persons into its coverage. Nevertheless, the provident fund can hardly incorporate the large population engaged in the informal and agriculture sectors in the near future, making necessary a supplementary scheme to guarantee social security for all. Lastly, considering the possibility of introducing social insurance to incorporate the excluded majority into the social security net, we propose a two-layered four-pillared social security framework for Nepal. However, detailed preparatory work for the framework is needed for its successful implementation, and this has not been conducted in this study.



Defects in the Financial Verification of Public Pensions


This paper reviews the report “Financial Report on the Public Pensions System Fiscal Year 2003” recently published by the Pension Mathematics Section (PMS) in the Social Security Council of May 2001. The report provides data calculated from annual financial verification, including comparisons of the actuarial revaluation in 1999 with actual results. The report provides considerable information, but not enough information about National Pension and Basic Pensions benefits per insured person (B/P), which exceeded the forecast in the actuarial revaluation by 180 yen from 2000 to 2003. This paper argues that the inadequacy needs to be compensated for two reasons: (1) The National Pension involves over 20 million insured persons and attracts national attention, and (2) the financial problem affects all public pensions through the Basic Pension system, in which public pensions are mutually balancing.

To reveal what caused the actual result of B/P to exceed the forecast in the actuarial revaluation, this paper analyzes B/P using “Differences Analysis”, which PMS has introduced (the method of Difference Analysis is explained in this paper). The result shows that B/P was mainly influenced by three factors: (1) The decrease of benefits functioned to cut B/P, (2) The number of persons insured by employees’ pensions decreased because some of them moved to the National Pension, and (3) The rate of insured persons who don’t pay contributions to the National Pension increased. The latter two worked to raise B/P, and their impact was much stronger than that of the former. In the actuarial revaluation in 1999, the Ministry of Health, Labour and Welfare assumed that the number of persons insured by employees’ pensions would continue to increase and that the rate of contributors to the National Pension would be fixed. These optimistic assumptions resulted in differences between the forecast and actual result.

The conclusion is that PMS overlooks the serious problem above, so the MHLW should verify the National Pension and Basic Pension in more detail, and make available its results to encourage a discussion about public pension reform among researchers and associations.



Globalization and the Philippines’ Overseas Employment Program for Nurses

Ryoichi YAMADA

The growth of the elderly population demands a large health workforce in the world’s developed countries. Many health workers, especially nurses, in the developing countries are moving to the developed countries. The Philippines’ global strategy is to provide a supply of health workers according to the current demands of each country. The Philippines has a redundant supply of nurses, and can supply them for the U.S.A., the U.K., the Kingdom of Saudi Arabia and many other countries. The remittances of OFWs (Overseas Filipino Workers) helps to maintain the economy and their families’ consumption.

The exodus of the nursing workforce has caused some measure of “Brain Drain”. It has cost the national economy the talents of many highly skilled professionals, such as licensed doctors who attend nursing schools to gain overseas jobs as nurses. The Philippines is at the brink of a healthcare worker and nursing crisis.

According to this research on the Philippines’ Global Age Strategy, we need to ensure that labour migration programs are orderly, efficient and protective of the rights of migrant workers.



Economic Basis of the “Ownership Society” in the United States: Analysis of “Ownership” in Private Pensions


Since 2004, the Bush administration has emphasized an “ownership society” as a key political concept. This concept includes promoting the “ownership” of retirement income as a significant aspect. In 2005, the administration assigned top priority to introducing the individual account system into the Social Security. This idea signified the application of a structural change in the private pension system to the public pension system, namely the introduction of defined contribution plans, such as 401(k)s.

This paper examines the historical implications and the economic basis of retirement income ownership by analyzing the characteristics of defined contribution plans. It arrives at two primary conclusions.

First, ownership of pensions has made participants independent of their employers. In defined contribution plans, the employer does not have the discretionary power to forfeit and reduce the benefits of the participants. It is a subject that the Employee Retirement Income Security Act of 1974 (ERISA) and a series of legislation on retirement income security tried to cover for defined benefit plans. Further, participants in defined contribution plans can decide how to manage their pension assets independently from their employers.

Second, the ownership of pensions also signifies the involvement of participants in a new economic order instead of the old order, industrial relations. In defined contribution plans, participants are dependent on plan providers, whose financial services incorporate a condition according to which participants can “own” their pensions. Participants need plan providers to manage their assets and generate profits from them. Such services are an application of services for individual investors and have been developed in order to promote various investment options to middle-class families. Hence, the independence of pension participants, or the ownership of the pension, is based on a specific historical condition-developing the financial business for middle-class individuals, which is also referred as the “money revolution.”

These finding suggest the emergence of new political issues over the ownership of pensions. In traditional defined benefit plans, the primary objective of retirement income policy is to coordinate industrial relationships, with a special focus on securing employees’ rights from employers. However, in defined contribution plans, it is also important to adjust for the conflict of interests between participants and financial institutions. For instance, disclosure of service fees and deregulation of investment management, banned under ERISA for potential conflicts of interest, have emerged as the main issue of retirement income policy since the rapid growth of defined contribution plans.