Labor Relations and Labor Law in Japan

This article builds on a rationalistic understanding of Japanese employment customs to argue that, up until the 1990s, Japanese labor law facilitated private bargaining instead of engineering a desired outcome directly through legal regulations. Through this indirect approach toward labor relations, at least part of Japanese labor law made a highly positive contribution to the attainment of economic efficiency. After the 1990s, the merits of Japanese employment customs diminished and needed reform. While such reforms were made in some aspects, Japanese labor law has taken the stance of directly regulating the economy, particularly in the area of employment protection and working hours regulation at this stage. Due to this mismatched regulatory approach toward Japanese employment relations, Japanese labor law has hindered the performance of the Japanese economy