8: Germany, Japan, US

Question 2

Explain the German employment system

Answer 2

Framework of Law

• Supports and regulates interest representation in employment relations

Dual Structure of Interest Representation

• Collective bargaining at region/industry level
  
  • Covers Issues of Interest, e.g. labour hours, flexibility of working time.
  • Trade unions – may call strikes
• Co-determination at firm level (covers issues of rights)
  
  • Work councils – must cooperate with mgmt.
• TUs negotiate on behalf of members and non members

Social Partnership

• Political exchange between employers organisations, TUs, Government
• A coalition of “stakeholders” to guide the future

Question 3

Explain the German business system

Answer 3

German business system

State regulation: “bargained corporatism”

• Of employment
• Of employee organisation, bargaining and participation

Corporate Governance and Finance

• Management obligation to stakeholders not just shareholders
• Funding mostly through banks and commercial investments
• A nationalised banking system makes it easier and cheaper for firms to get LT loans
  
  • There is thus a much lower ST shareholder focus than in the UK
• Long term view allows investment in R&D, employee development etc. – “insider capitalism” (focus on stakeholders)

Vocational Education and Training (VET)

• School leavers enter 3 years of VET
• Broad based, standard qualifications
• Jobs designed to fit standard worker training

Question 4

Explain how employment and business system have impacted German competitiveness

Answer 4

• Regulation said to have encouraged competiveness through skills and high productivity
• Broad skills encouraged by VET said to make staff more adaptable and to require less supervision
• Split of collective bargaining and co-determination said to have reduced conflict resulting in:
  
  • high productivity and a competitive market for sophisticated, innovative, high value products based on high levels of R&D
  • firms being able to pay high wages without being uncompetitive

Question 5

Explain the Japanese employment system

Answer 5

Japan – Employment system

• Lifetime employment
  
  • Recruited from school or university
  • Vacancies filled by internal promotion
  • Slack absorbed by relocation or new subsidiaries
• Seniority-based Pay
  
  • Person-related not job-related
  • Promotion increases status and pay, not nec. duties
• Enterprise Unionism
  
  • Unions organised by firm

Question 6

Explain the Japanese Business system

Answer 6

Japan – Business system

State regulation

• Supports right to organise and act collectively
• Minimum standards for wages, working time etc.

Corporate Governance and Finance

• Mgmt. obligation to stakeholders not just shareholders
• Funding through banks and commercial investments
• Long term view allows investment in R&D, employee development etc. – insider capitalism

Vocational Education and Training (VET)

• Typically enterprise based
• Employees train in range of jobs
• System supports seniority based promotion system

Question 7

Explain how Japanese employment and business system impact competiveness

Answer 7

Japan – Competiveness

• Japanese success said to be largely based on manufacturing systems – lean; Total quality; kaizen etc.
• Lifetime employment encourages workers to share knowledge with mgmt. (allowing optimisation)
• Lifetime employment links fate of individual to that of firm, promoting commitment even in the face of low job satisfaction
• Enterprise based union promotes cooperation and encourages flexibility
• Training and job-rotation facilitates functional flexibility

Question 8

Explain the US employment system

Answer 8

USA – Employment system

Pluralism – The New Deal

• Response to Great Depression
• Established trade union rights etc
• Evolved into “job control unionism”
• Rejected by many employers

Sophisticated Unitarism – Welfare capitalism

• Non-unionism and mutual commitment
• Sophisticated pattern of benefits and rewards
• Paternalistic, but many practices now at the heart of HRM

Traditional Unitaris​m

• Low cost competition – low wages, limited benefits
• Standardisation, job controls and de-skilling, little training

Question 9

Explain the USA business system

Answer 9

USA – Business system

State regulation

• State reluctant to play active role in business regulation
• “Hire and Fire” creates a flexible employment market

Corporate Governance and Finance

• Relations are generally market and contract based
• Stock market – separation of ownership and control
• Strong control over labour through mechanisation, de-skilling and bureaucracy

Vocational Education and Training (VET)

• Typically enterprise based
• Employees train in skills required for specific tasks
• Tendency to substitute capital equipment for labour

Question 10

Explain how the US employement and business system affect competitiveness

Answer 10

USA – Competitiveness

Weak institutional constraints permits great variation in approach and supports flexibility

• Employers can treat labour as a disposable commodity and adjust remuneration to market conditions
• Superior management capabilities lead to more systematic approaches to work organisation and control
• Competitive market encourages rapid adoption of technological innovation & contributes to high productivity
• Evident in higher levels of capital investment per capita

Question 11

Summarise the main differences between the employment relations of Germany, Japan and USA

Answer 11

Germany

• Economic difficulties
• Traditional approach constrained flexibility
• Greater emphasis on shareholder interests

Japan

• Stagnation of economy and unemployment
• Union membership falling, more non-standard labour
• Increasing links between pay and performance

USA

• Reduced commitment to job security and reduced benefits
• Emphasis on employability, more contingent labour
• Focus on Shareholder value