SMEs play a very important role in the Japanese economy. To support them or to encourage their development so as to preserve existing jobs and create new ones, the government adopted at the beginning of the decade a series of policies concerning assistance for the improvement of personnel management in the existing SMEs through business cooperatives. Subsequently, following the economic shocks of recent years, it was observed that the employment management in the SMEs needed to be improved further so that they could play the roles for the urgent task of employment creation, and the state has already introduced a second set of measures, some of which are in the area of personnel management, so as to increase interest in employment in them.

In Japan the various levels of government, especially at the national and Prefectural level, provide numerous support services to small and medium enterprises in the form of subsidies, financing, guidance and advice. The Law concerning the Promotion of Improvement of Employment Management in Smaller Enterprises (SMEs or Cooperatives containing groups of SMEs) for securing manpower and creating good employment opportunities, were intended to improve the attractiveness of jobs in this sector, among others, through improvements in working conditions such as a reduction of working hours, the improvement of the workplace environment and of social protection.

The government believed at that time that by preserving or even increasing the level of activity in small enterprises, they would, given their important role in the economy, contribute to economic revival as a whole and to the well-being of the workers. The gap between the levels of workplace conditions and social protection in large corporations and those prevalent in small enterprises was such that the latter were caught in a vicious circle: small enterprises, being unable to provide good working conditions, could not attract highly qualified workers, and this placed limits on their own development, and thus on their ability to improve working conditions to the point where those workers would be interested in working for them.

The 1991 Law took up the conclusions of an expert group brought together at the request of the Director General of the Employment Security Bureau, Ministry of Labour. In response to changes occurring in the labour market, their report raised employment security in small enterprises as the first priority of the labour market policies. The Law was passed by Parliament after consultation with some Consultative bodies composed of experts and representatives of workers and employers.

This law has since made a major contribution to employment protection in small and medium enterprises. However, the recent restructuring of industrial organizations, resulting from globalization and deregulation, has faced Japanese industry, and SMEs in particular, with new and severe problems which have led to closures, productive reorientation, and so on. Once again, the government made labour mobility a top priority. Numerous measures were adopted to allow many workers to shift smoothly - i.e. without an intervening period of unemployment - from one industry or firm to another. A balance had to be found between facing the difficult employment situation on the one hand and maintaining employment stability on the other. Furthermore, job creation became a matter of increased urgency on account of the decline in job openings for young people, in spite of the long-standing policies designed to ease access to employment.

It was now necessary to create new employment opportunities by setting up new businesses or innovation such as opening up new areas of activity in existing businesses, given the saturation point which the labour market had reached. Small and medium enterprises which might be expected to open up new fields of activity simply found themselves unable to do so. They could not bring about the changes required without causing unemployment, and did not hire young workers emerging from the education system for three principal reasons:

the workers themselves seemed uninterested in working in SMEs, preferring to work in the big corporations;
the SMEs' recruitment methods are not very effective;
SMEs have great difficulty in attracting either highly qualified or highly creative workers;

To create new jobs, it was necessary to provide support to employment and staff development in SMEs. The government's primary objective was therefore to create jobs by supporting the upgrading of SMEs in the development and motivation of their labour force and in the improvement of the quality of work.

Thus in order to protect and develop employment and provide more stimulating jobs, the Government proposed amendments to the 1991 law which were passed by Parliament after consultations with Tripartite Committees and with expert groups. The amended law provides for new measures targeting directly to the SMEs concerning their human resource management in addition to those already existing, benefitting them through business cooperatives.

The role of the leading actors

The implementation of the various measures envisaged by the law is in the hands of the prefectures, the Public Employment Security Offices and the Employment Promotion Corporation - a statutory body under jurisdiction of the Ministry of Labour, whose local offices, the Employment Promotion Centers are located in each Prefecture. The law lays down the role of national and local government as well as that of the Public Safety at Work Offices and the Employment Promotion Corporation. Detailed information on this point is provided to the Prefectures and to the Corporation in directives issued by the Ministry of Labour. The law stipulates that the national government sees to the promotion of employment measures and they are then applied by the Prefectures.

In order to obtain the widest possible support from the social partners for the measures undertaken, the various levels of government consult with them when drawing up and also when applying them. Workers' and employers' associations therefore play an important role in the development of employment policy.

Implementation

All this activity takes place in the context of a job creation policy. It unfolds on the basis of detailed basic guidelines issued by the national government on the law and on officially approved regulations. The content of the directives - whether when first promulgated or in their amendment - are the subject of prior consultation among the administrative instances concerned and with consultative Councils on which workers' and employers' organizations are represented.

The main contents of the basic guidelines are:

The trends of management and employment of the SMEs;
The content of measures aiming to improve human resource management in SMEs;
Other issues of importance which SMEs should take into account in order to improve their human resource management.

The budget for these activities, which comes from the unemployment insurance fund, as well as planning and action programmes, are all drawn up and approved on an annual basis.

The sequence of implementation of the measures is as follows:

local-level cooperatives and SMEs in search of aid must prepare a project setting out steps they wish to undertake to improve human resource management, the workplace environment, the education and training of highly qualified or trained staff with a view to protecting their workforce. Prefectural governments or the Employment Promotion Corporation (through the Employment Promotion Centers) provide service (such as advice) to help in the preparation and presentation of projects;
the project is presented to the Governor of the Prefecture authorized to provide aid if the project is in accordance with the prevailing criteria;
prior to authorization, the Governor checks that the project fulfils the criteria contained in basic guidelines;
the Employment Promotion Corporation (through the Employment Promotion Centers) provides aid (budget) and advice in accordance with the rules contained in its procedure handbook;
national and Prefectural governments can also provide advisory services and guidance for particular projects.

The main support measures provided by the labour administration to SMEs are as follows:

Subsidies to employers for the recruitment of workers indispensable to the initiation of new activities; the subsidy helps to pay part of the wages of these indispensable workers and part of the wages of extra workers during one year;
Subsidies for the purpose of improving worker skills. This subsidy is intended to pay part of costs such as wages during training periods, so as to improve skills through exchanges (as secondments to research institutes or the hiring in of training experts from large corporations;)
Subsidies for the improvement of the workplace environment. This subsidy pays some of the costs of services and/or of the installation of equipment for SMEs employing new workers or who wish to improve the workplace environment by various measures, most prominently air-conditioning, lighting, work space, health. Culture or child care;
Subsidies for securing manpower. Payment of the cost of services provided by commercial cooperatives in research and consulting on upgrading of employment management as authorized by the Prefectures;
Financing for employment promotion. Employers seeking to improve employee welfare through services such as housing, the provision of canteens, sanatoria or occupational training services may receive a long-term, low-interest loan.

In principle, an employer cannot ask a third party to recruit staff for him or her without permission from the Minister. However, as an exception, an employer can do it without this permission if the third party is an authorized cooperative, i.e. a business cooperative whose plans for improvement of employment management have been authorized by the Governor of the prefecture. Furthermore, workers in SMEs which are members of cooperatives which have recruited personnel for them, have a priority placing in the queue for rented property from the Employment Promotion Corporation. This measure concerns workers who need to move in order take up a new job and who have in virtue of this received the approval of the Public Employment Office.

All these activities are undertaken in coordination with various national and Prefectural bodies - the Employment Promotion Corporation (Koyo Sokushun Jigyodan - KSJ) - and are integrated in the normal managerial and administrative activities of the responsible bodies. It is for the Governor of each Prefecture to prepare and approve the improvement plans, and for the KSJ to undertaken the necessary consultation with the grant-making planners, to provide advice and assistance, etc.

This policy is promoted at all levels of government by a wide-ranging publicity campaign and through the distribution of brochures.

Impact of the measure

These measures are too recent for an evaluation to be made. However, the law provides that the Governor of the Prefecture may require from the cooperatives and the SMEs a report on the progress of the implementation of the improvement programmes authorized.

Internal audits are undertaken both in advance and in retrospect so as to monitor the proper use of funds, and external audits, carried out where necessary by the Audit Council, are also possible.