Ithaca, NY: Cornell University Press, 2014. xvi, 229 pp. (Tables, figures.) US$49.95, cloth. ISBN 978-0-8014-5215-4.
The economic and social institutions in Japan and Korea seem more similar to each other than to institutions in Europe or the U.S. In this book, however, the author reveals that the two countries respond in different ways to similar pressures of labour market reform. This is because of differences in the formation and arrangement of institutions in Japan and Korea.
[The author] argues that the two variables of employment protection systems and industrial relations determine the diverging pathways of labour market reform. The institutional features of employment protection shape the pattern of reform-selective reform for outsiders versus comprehensive reform for all workers by constraining the available range of reform options, especially for employers and policy makers, and the configurations of industrial relations affect the consequences of reform on the workforce by exacerbating or alleviating insider-outsider differences in reform implementation through the mechanism of compensation. The lack of compensation policies for those affected by labour market reform accelerates labour market inequality and dualism (8).
As a result, in Japan what emerged was liberalization for outsider workers and protection for insider workers, and in Korea, the liberalization of all workers, with the exception of those working for family-owned and managed business conglomerates (i.e., Chaebol).
The major accomplishments of this book include its revealing the emergence of different paths from the same pressures, especially the divergence of the internal labour markets in Japan and Korea even though we might have expected similar outcomes in those two countries. It would have been better to mention in terms of the different functions of employment the substantial institutions and the role of employers in Japan and Korea in order to improve the book’s achievements.
First, as the author mentions for figures 1.1 (22) and 1.2 (23), the grade of employment protection legislation for regular workers is nearly the same in Japan and Korea and for temporary workers the difference is not great. It is worth noting here that in figure 2.2 (59) the author notes the length of tenured years for regular Japanese workers in 1995 as higher than that of regular Korean workers. The author explains this as having to do with “a high degree of the institutionalization of employment protection in Japan versus a low degree of the institutionalization of employment protection in Korea” (59). According to Botero et al. (“The Regulation of Labour,” The Quarterly Journal of Economics (2004) 119 (4): 1339–1382) the labour market regulation index, which is a measurement of employment law, industrial relations law, and social security law, indicates that the grade of employment legislation is almost the same in Japan and Korea—with Japan ranking 34th and Korea 35th in terms of labour market regulation among the 60 developed and developing countries in the index. However, in the substantial regulation index (i.e., the employment adjustment speed), Korea (9th) ranks much higher than Japan (41st) among the 59 countries indexed. Here we can see the gap between Korea and Japan in terms of legislation and substantial regulation.
Secondly, how can we explain this gap? We can find one clue from the role of the employer in labour management relations because the employer is not only a partner but also the final arbiter in the substantial forming of labour management relations. A Japanese employer is required to protect employee jobs even though retrenched in a recession that has continued for two years, as during the oil shock period of the 1970s (Kazuo Koike, “Kaiko kara mita gendai nihon no rōshi kankei” [Contemporary Japan’s labour-management in perspective from dismissal], in Moriguchi C., Aoki M. and Sawa T. (eds.), Nihon keizai no kōzo bunseki [Constructional analysis of the Japanese economy], Tokyo: Sobunsha, 1983). We might better term it “long-term stable employment” rather than lifetime employment because Japanese companies have reduced employees during recessions. Nevertheless, Japanese employers make efforts to retain their workers, the reason we recognize job security in Japan as stronger than in other countries. We also need to investigate retroactively in order to distinguish the origin of the differences between employer behaviour regarding labour relations in Japan and Korea, particularly at large-scale companies. Korean employers had little experience in labour management relations at large-scale companies during the first colonial industrialization period because Japanese companies advanced into Korea and sent in Japanese top and middle managers. After the 1960s, during the second industrialization period in South Korea, Korean employers did not have enough to develop meaningful labour management relations.
This book is the first to reveal the distinctions between the labour markets of Japan and Korea through a focus on large-scale companies and Chaebol. This accomplishment would be much improved if the author had focused on the function of substantial institutions for social protection and the differences of the employer’s role in labour management relations.
Jae Won Sun
Pyongtaek University, Pyongtaek, South Korea
pp. 928-930