Q. What are the Rokin Labour Banks?A. Rokin Labour Banks are cooperative welfare finance institutions established through mutual contributions by workers in trade unions and consumer cooperatives for the purpose of their mutual assistance. Rokin Labour Banks operate under the Labour Bank Act. The saving deposits received from workers are dedicated to loans aiming at improving livelihoods of workers and the surplus arising from the business is returned to workers through the development of new quality products and better services.
The establishment of the Rokin Labour Banks dates back to 1950 after Japan’s defeat in World War II. At that time the country was suffering from severe food shortages and mass unemployment. Although the establishment of the Labour Union Act in 1945 promoted the creation of trade unions under the democratization policies of the Allied Occupation forces, post-war economic reconstruction was the top priority. Financial institutions did not prioritize loans to workers, but invested most of their capital in Japanese government and private companies. Workers had no choice but to rely on high-interest loans or pawnbrokers getting exposed to the burdens of high interest rates and harsh collection of debts.
To address these challenges, two Rokin Labour Banks were established in 1950: one is Okayama Rokin Labour Bank led by Okayama Prefecture federation of consumer cooperatives and the other is Hyogo Rokin Labour Bank initiated by trade union movement. At first they were registered as credit unions under the Small and Medium-Sized Enterprise and Cooperatives Act, and when the Labour Bank Act came into effect in 1953 they obtained legal corporate status as Rokin Labour Banks. Today there are 13 regional Rokin Labour Banks in Japan covering all 47 prefectures.
National Association of Labour Banks (NALB) was set up in 1951, and its Governing Body adopted the philosophy of the Rokin Labour Banks as follows in 1997:
- They are financial cooperatives that cultivate the dreams and ideals of workers;
- They aim to promote the economic, welfare, environmental, and cultural activities of members and to contribute to the realization of a society in which people can live together in happiness;
- They comprise organizations of working people as their members and operate through this network;
- Members participate in the administration of labour banks from an equal standpoint and endeavour to develop their activities and business; and
- They endeavour to be sincere, fair, and open and to respond to the trust of members through sound management.
Q. How do the Rokin Labour Banks work?A. While all 13 Rokin Labour Banks operate independently of each other, NALB is responsible for nationwide issues concerning labour banks through research, policy development, guidance and networking. The Rokinren Bank works as a central financial institution of the member labour banks, including through the efficient management of their surplus funds and the development and operation of common online systems.
There are three types of main financial services provided by Rokin Labour Banks: deposit account products (ordinary, savings, fixed-term, asset-building, pension, etc.), loan products (housing, card, education, special loan to support workers’ livelihoods, etc.) and other services (transferring, cashing, online banking, etc.). As of March 2017, there were 633 branches nationwide with total deposits of 19 trillion yen (≈ 170.5 billion USD) and loans of 12 trillion yen (≈ 107.7 billion USD). The amount of deposits rank 11th among other financial institutions in Japan. Since in principle Rokin Labour Banks don’t provide corporate loans with some exceptions, almost all of the loans are for personal use such as housing and education.
Membership eligibility of Rokin Labour Banks is stipulated in the Labour Bank Act and most of the members are institutional members that includes trade unions, consumers’ cooperatives, civil servants’ associations and other workers’ mutual-aid organizations which have offices in the Rokin Labour Bank’s operational areas.
Today labour banks have more than 52,000 institutional members. The banks are used by over 10 million indirect members affiliated to these institutions. Japanese labour banks have close ties with their institutional members which are contributors as well as service users.
In compliance with the Act, members themselves participate equally in the management of the labour banks based on a principle of “one member, one vote”. If there is a surplus, it is used for the development of their business and activities or returned to members as dividend under a prescribed limit.
After the financial crisis in 2008, Japan also suffered from economic downturns and many workers faced risk of dismissals, destabilization of employment and salary or bonus cuts. Rokin Labour Banks, in collaboration with the Ministry of Health, Labour and Welfare provided Employment Stability Loan Scheme to support re-employment of unemployed workers. This scheme has come to an end but the Rokin Labour Banks still provide other employment support schemes. Moreover, in collaboration with trade unions, Rokin Labour Banks have long worked on Livelihood Support Activities such as support for workers facing multiple debt problems, protection from such problems through educational activities, and advice for financial life planning.
Q. What are the challenges and opportunities for Rokin Labour Banks?A. In Japan, where the demographic and employment pattern is changing rapidly, the workers’ needs for financial services are getting more diverse. In order to serve as cooperative welfare finance institutions that are trusted by all workers and their families, Rokin Labour Banks will promote development of new products and services needed to provide lifelong support for workers. In addition Rokin Labour Banks will contribute to solve social problems and nurture local communities as a financial core of non-profit and cooperative sector organizations.
Spotlight Interviews with Cooperators is a series of interviews with cooperative leaders from around the world with whom ILO officials have crossed paths during the course of their work with cooperatives. The responsibility for opinions expressed in this interview rests solely with the interviewees, and the article does not constitute an endorsement by the International Labour Office.