Japan Business Federation (Nippon Keidanren) inaugurated

Keidanren (the Federation of Economic Organizations) has long wielded
tremendous influence on Japanese politics, and acts as the unofficial
"Head Office" of the business community. On May 28, it officially
merged with Nikkeiren (the Japan Federation of Employers' Associations),
often referred to as the business community's labor affairs department,
and a new organization--Nippon Keidanren--was launched. Let us study
the background that led to this integration and the challenges the
new organization faces.
During the post-war economic boom, Keidanren encouraged businesses
to move away from a controlled or managed economy and promoted
liberalization. It also demonstrated powerful leadership during times
of crisis. It supported industries in their desperate effort to
streamline their operations to overcome the so-called "Nixon shock,"
during which Japan was forced to dramatically change its foreign
exchange rate, and the "oil shock" that triggered runaway inflation.
Keidanren also played a key role in pushing forward administrative
reforms as well as privatization of the Japan National Railways and
Nippon Telegraph and Telephone Public Corporation.

Keidanren's political influence was primarily dependent on political
contributions, the payment of which it carefully allotted to member
industries. In the wake of a series of political donation scandals
that resulted, and the collapse of the single-party administration
dominated by the Liberal Democratic Party, Keidanren decided in 1994
to abolish the system of helping to raise political donations. As a
result, the organization’s political influence has drastically
diminished in recent years.

On the other hand, membership of labor unions, which was banned
during WWII, was permitted again after the war. Labor unions instantly
became a major force and took part in fierce labor disputes. Nikkeiren
was launched to oppose them. Nicknamed "the fighter," Nikkeiren devoted
itself to resolving a long series of major labor disputes. In 1974,
in the midst of a severe inflationary slump, the organization released
guidelines that called on employers to suppress annual wage hike rates
to single-digit figures. These guidelines have had a major influence
on subsequent wage hike negotiations.

Recently, however, the labor movement has markedly declined in
influence, with many people criticizing the spring labor offensive
as becoming a mere name. Under these circumstances, Nikkeiren is said
to have lost some of its raison d'etre.

There are several reasons why the two organizations decided to
merge under these conditions. First was an increase in important
issues and tasks that called for immediate, concerted responses
from the two organizations, such as social security reform and the
employment issue that must be resolved without separating the
problems between labor and business. The second key reason was that,
because of the lingering recession, member companies have found it
burdensome to pay membership dues and to dispatch officials and staff
to multiple organizations.

As a result of this integration, Japan's business community now
has three major organizations: the new Nippon Keidanren, the Japan
Chamber of Commerce and Industry that represents the views of small
- to medium-scale businesses throughout Japan; and the Japan
Association of Corporate Executives (Keizai Doyukai), whose memberships
are based on their personal qualifications, regardless of the interests
of a single company or region.

In his inaugural speech as the first President of Nippon Keidanren,
Toyota Motor Chairman Hiroshi Okuda stated that his aim is to
re-energize Japan and make it attractive to business, and added
that his fundamental ideals were to create "dynamism and creation
through diverse sets of values" as well as encourage the "empathy and
trust" that underpin them. All eyes are now focused on how Okuda,
as a true opinion leader, will steer this newly formed organization
so as to boost its ability to propose new policies and regain its
political influence.