GENERAL SURVEY
Vol.37-No.10 October 1,1998
In the middle of the continuing recession, voters cast their ballots in the
18th Upper House election on July 12. The Liberal Democratic Party (LDP)
suffered a major setback, failing to win a majority. The Democratic Party of
Japan (DPJ) and the Japanese Communist Party (JCP), however, gaining
considerably more seats in the election.
Voter turnout for the Upper House election was 58.8 percent, up from 44.5
percent in the 1995 election. Analysts interpreted the exceedingly high
voter turnout as a clear rejection of the LDP's economic policies by the
so-called non-party voters. Their protest votes went to the DPJ and the JCP.
Taking responsibility for the party's defeat, Prime Minister Ryutaro
Hashimoto announced his resignation. The LDP then elected Keizo Obuchi to
succeed Hashimoto as president of the ruling party, thereby ensuring his
election as prime minister in the Lower House of the Diet. In the Upper
House, the opposition parties banded together to support the DPJ's leader,
Naoto Kan, as their candidate for prime ministership while the Lower House,
in which the LDP has a strong majority, elected Obuchi to that position on
July 31. Akira Amari became the labor minister in the new Obuchi Cabinet.
Born in 1949, Amari graduated from Keio University and worked for Sony Corp.
before becoming secretary for his father (Tadashi Amari) who was an Upper
House member. In 1983, he was elected to the first of five terms in the
Upper House. In 1996, he was elected under the new proportional
representation system from the Minami-Kanto District. He has served as the
chief of the LDP's Commerce and Industry Panel, as chairman of the LDP
Policy Research Council and as the LDP's deputy secretary general.
Rengo (the Japanese Trade Union Confederation), has come to recognize the
newly formed DPJ as an axis of political strength that will enable a change
in power. It fully backed DPJ candidates in the proportional representation
districts. In specific election districts it supported non-LDP and anti-JCP
candidates under the banner of the "unified opposition." Rengo supported 10
candidates under the proportional representation system and 38 in election
districts. Seven of the former group and 23 of the latter group won seats.
The Democratic Socialist Party (DSP) was created by a split of the Japan
Socialist Party (JSP) in 1960. Thereafter, the relationship between labor
unions and the political parties was characterized by the on-going
confrontation between two blocs, with the Sohyo (General Council of Trade
Unions of Japan)-JSP bloc and the Domei (Japanese Confederation of
Labour)-DSP bloc.
The formation of Rengo in 1989 brought together many of the unions in Sohyo
and Domei. As a result, the two national centers were dissolved. However,
that did not lead to unification on the political front. Rather, it brought
strife between the political parties in Rengo. In the July 1993 general
election, the LDP lost its majority in the Lower House. That led to the
formation of the Hosokawa coalition government. Although Rengo played a
major role in creating the coalition, it soon saw the political parties
backed by its affiliated labor unions divided into two opposing camps, those
in the ruling coalition and those in opposition. The dissolution of the new
parties and the resulting creation of the DPJ at the end of 1997 prompted
Rengo to support the DPJ. Major gains made by the DPJ in the July 12
election may strengthen Rengo's influence in the political arena.
What kind of relationship will Rengo establish with the DPJ in the future?
With a growing number of non-party voters and the pluralized consciousness
of many in the labor force, Rengo is now faced with new challenges.
On May 25, the National Personnel Authority (NPA) submitted its 1998 White
Paper on National Public Servants to the Diet and the Cabinet. Reflecting
on the bribery scandals involving senior officials, the white paper points
to the need to change the current practice under which only those expected
to be senior officials - those who are dubbed "career officials" (and have
passed the First-Class Test) - can be promoted to elite positions in the
government's central ministries and agencies. It calls for flexible
personnel policies that would allow other officials to be promoted to elite
positions. To implement such policies, the white paper notes four steps
being taken by the NPA.
First, to secure the services of people with highly specialized abilities
and diverse experience, the NPA will actively recruit mid-career people from
private firms and will drastically revise its system of classification in an
attempt to relax its rigid examination approach to allocating personnel to
specific job or career tracks. The second step is to add flexibility to the
way staff can be assigned to specific tasks and to streamline administrative
procedures. A new pay scheme is to be introduced for those doing highly
sophisticated work. A range of work schedules, including a short-time work
scheme for child-care and nursing care, also needs to be introduced. Third,
the paper also mentions the multiple-track promotion system based on ability
and adaptability. The NPA will establish a means by which employees in the
first group of jobs may work in staff jobs or may work for extended periods
in the same division. It will study ways of speeding up the promotion of
those initially hired in the second or third group of jobs so as to enhance
their chances of being promoted to senior positions. Under the
multiple-track promotion system, those initially hired in the first group of
jobs will not be trained only in line jobs. Finally, the paper turns to the
question of retirement. Considering the ageing of society and opportunities
for re-employment following compulsory retirement, the report indicates that
the NPA will respond by extending the retirement age.
Starting in 1997, the NPA has hired in people in mid-career in some areas in
order to secure their highly specialized skills and diverse range of
experience, attributes that are difficult to develop inside the
organization. Since then it has hired 27 such people, including researchers
and financial experts.
On July 17, the 1998 Economic Survey of Japan was submitted to the Cabinet
for approval. Subtitled "Laying the Groundwork for Innovative Development,"
it provided a much harsher outlook than did the 1997 survey, which had
optimistically suggested the economy would move into recovery. However,
this year's survey concludes that the nation's economy has failed to
recover. It provides three reasons for current economic stagnation.
First is the April 1997 increase in the consumption tax and the end of a
special tax cut. Both undercut consumer spending. Second is the continuing
fallout from the years of the "bubble economy." One effect has been the
declining trust in the nation's financial system owing to the large amount
of non-performing loans. Third is the Asian currency crisis. The survey
also attaches significance to the large-scale bankruptcies of firms and
financial institutions in the fall of 1997. Those failures led to households
having a dim view of the future and deciding to limit their expenditures.
The survey predicts that factors supporting growth - such as special cuts in
income and residential taxes - and factors slowing growth - such as the
rising unemployment rate - will offset each other.
In view of the current situation, the survey predicts that the economy will
contract by about two percent. It stresses the need to overhaul the nation'
s economic structure and the need to stimulate the economy from the supply
side by cutting corporate taxes, promoting deregulation and dealing
adequately with non-performing loans.
Finally, it points to the failure of a series of measures to stimulate the
economy in the 1990s. It highlights the further deterioration of the
government's finances and concerns over the heavier economic burden that
future tax increases will impose on households, thereby constricting their
willingness to spend more on consumer goods. The survey stresses the need to
reduce financial deficits as provided for by the Fiscal Structural Reform
Act.
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