Why and how did Japan finally change its ways? The politics of Japanese labour-market deregulation since the 1990s

Abstract

This article analyses the politics of Japanese labour-market deregulation since the 1990s with reference to the cases of the 1999 and 2003 amendments to the Temporary Work Agency Law. It demonstrates that factors such as the loss of political power by labour unions vis-à-vis employers and the resulting significant changes in labour policy-making structures enabled the LDP government to implement ‘extensive’ labour-market deregulation policies related to ‘non-regular’ employment. The decline of the left by the 1980s and the economic stagnation after the collapse of the bubble economy against a background of globalisation led to the establishment of the Deregulation Committee, which represented business interests and exerted strong policy influence due to the Cabinet's adoption of its policy proposals. In addition, labour unions lost political power as a result of factors such as their inability to maintain common policy stances towards labour-market deregulation and the reduced influence of ‘tripartite’ policy-making among labour, employer and public representatives in the advisory councils of the Ministry of Labour. This article contributes to the literature on Japanese political economy by showing an ‘exceptional’ case of extensive economic reform in Japan and its political reasons.