Wage Determination and Information Sharing: An Alternative Approach to Incomes Policy?

The flexibility of the Japanese labour market attracts attention domestically as well as abroad. It is widely believed that labour market flexibility, particularly of wages, has been highly instrumental in rapidly restoring the equilibrium of the Japanese economy with stable prices and nearly full employment through the storms of the oil crises in the 1970s. The paper first identifies the meaning of alleged wage flexibility in the context of the Japanese labour market. Next it reviews what has happened in the system of wage determination under collective bargaining, known as shuntō or synchronised wage negotiations in spring, during the adjustment years following the oil crises. The prime focus is on the functional reforms of the shuntō system as a source of renderinig flexibility to aggregate patterns of wage changes. Finally the paper attempts to interpret such developments from the viewpoint of corporatism.