Does consensus bargaining control labor costs in Japan? Evidence from the "bubble economy" and its aftermath

Article Abstract:

Japan's system of labor negotiations provides an opportunity to see whether consensus bargaining restrains labor costs. The recent volatility of the Japanese economy affords a unique chance to observe how consensus-based labor settlements adjusted to sudden, sharp changes in market conditions. It is also possible to evaluate the role of bonus payment in amending labor settlements. With observations for 1986-1995, I use measures of productivity gains to calculate the capacity for increasing worker pay and then analyze whether pay increases exceeded that capacity. I report the extent to which changes in labor earnings were scheduled or resulted from adjustments in bonus pay. During the boom years of the late 1980s, employers inflated bonuses so that workers' pay increased more than had been scheduled, but not enough to exceed the capacity for growth. But during the sluggish years of the early 1990s, pay agreements were excessive. Employers cut workers' bonuses to keep earnings growth in check. Thus, bonus pay provided a "degree of freedom" allowing employers to adjust labor costs following sudden upswings and downturns in the economy. (Reprinted by permission of the publisher.)

Labor Relations, Collective Bargaining, Japan, Labor costs, Consensus (Social sciences)

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Strike strategies and the minimum effective union

Article Abstract:

Research has shown that in an industry-wide strike, a union must be able to reduce output "by a substantial percentage below competitive levels" to impose hardship on producers. But a union may also be effective by pursuing selective strikes. If some producers are struck while others are free to operate, then the targeted producers may bargain with the union, and holdouts can be targeted for strikes. This article analyzes the effects of selective and general strikes on both a competitive industry and a duopoly. If there are side-payments among producers, then general strikes are easier to mount. If there is no mutual aid among employers, then selective strikes are less costly to implement. It is also shown that strikes are easier to mount in a duopoly than in a competitive industry. This may contribute to union formation and collective bargaining in noncompetitive industries. The analysis is modified to allow for firms of different sizes. The results show that unions must be able to remove more output from larger firms than smaller ones, suggesting that union formation may be focused more on larger firms. (Reprinted by permission of the publisher.)

Labor unions

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The relative effects of craft-level strikes: the case of airlines

Article Abstract:

One aspect of bargaining power is the ability of unions to impose losses on firms by striking. Using stock market data from 1963 through 1986, this study tests whether strikes by different crafts have resulted in different losses for airlines. The evidence indicates that strikes by pilots and mechanics initially reduced the share value of struck airlines and that strikes by airline workers in other jobs did not result in significant share value losses. There is no evidence that strikes have imposed permanent losses on air carriers. (Reprinted by permission of the publisher.)

Aircraft, Aircraft industry

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