Foreign Banks in Japan Tread on Tricky Turf with Labor Laws

By Lake, David | American Banker, August 19, 1986 | Go to article overview

Foreign Banks in Japan Tread on Tricky Turf with Labor Laws


Lake, David, American Banker


Foreign Banks in Japan Tread On Tricky Turf with Labor Laws

Most foreign banks have avoided unionization in Japan through an intensive management effort to maintain employee satisfaction. Nevertheless, most newcomers worry about complying with Japan's intricate labor laws.

The majority of the 77 foreign banks in Japan arrived during the 1970s, and did not have to face a labor force that tilted toward unions as a means of security. But larger banks that have operated in Japan prior to World War II have been unionized since the 1950s and warn that the Japanese labor movement can be difficult to work with. These banks include: Hongkong and Shanghai Bank, Citibank, Chase Manhattan Bank, Bank of America, Standard Chartered Bank, Bank of India, and ABN Bank.

The Japanese bank union movement was part of the political turmoil following World War II. The occupation forces in Japan began experimenting with a labor law, in part to quash sometimes violent protests by left-wing radicals. During this period, foreign bank unions were born.

The Japanese union system is unique in the Far East because it is made up of a multitude of small, independent unions that do not normally cross company boundaries.

"Each unionized bank has a different situation,' says John Mason, chief executive officer of Hongkong and Shanghai Tokyo, and head of the personnel committee of the Institute of Foreign Bankers. "At one point, a Dutch bank had to hold eight different negotiating sessions. Each of their four branches had an enterprise union, and each branch had a chapter of the Foreign Bank Labor Union which negotiated separately.'

Hongkong and Shanghai Remembers 1955

Hongkong and Shanghai Banking Corp., which has been in Tokyo for more than 100 years, has a staff of 250. In 1955, the first bank strike against any of its subsidiaries worldwide was launched in Japan, and the bitter taste of those days still lingers. Most of its employees are union members, and the bank renegotiates salaries every spring.

"Foreign banks have more trouble with unions than domestic banks,' says Mr. Mason. "Management is weak because it is changed every few years, so there is no continuity. Everyone knows that foreign companies must pay more and offer lifetime service for the inconvenience of having to deal with a different culture. Contrary to popular belief, lifetime employment does not even exist for most corporations the size of foreign banks.'

Some foreign bankers also feel they have inherited a low-caliber work force. After the war, almost every worker with clerical or language skills preferred to work for a Japanese corporation. …

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