The introduction and transformation of job-based wages in the steel industry : a case study of Yahata Steel and Nippon Steel from 1960 to 1971

Abstract

The purpose of this paper is to investigate the introduction of job-based wages (shokumu-kyu) and their transformation in Yahata Steel and Nippon Steel, with special attention to the objective factors and the subjective intentions of labor and management. In Yahata Steel, the impact of technological changes on the labor process caused great discontent among young workers because they believed that their wage levels were unfairly low under the seniority-based wage system. This problem was resolved by the partial introduction of job-based wages into the wage system of blue-collar workers, which management implemented in 1962. Moreover, the worker ranking system and incentive wages were both revised in 1967 to strengthen their links with job grades. The establishment of Nippon Steel by the merger of Yahata Steel and Fuji Steel changed the situation. In Nippon Steel, the worker ranking system was modified to weaken its connection with job grades. In addition, the job-based wage system was further modified by the inclusion of assessment of job performance. The strong backing of management for job-based wages seemed at first to be successful, but as this case study shows, because of industrial politics between union and management, the implementation of a job-based wage system ended in failure.