Employment adjustment in steel industry: The U.S. and Japan compared
Park, Ho Hwan
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Permalink
https://hdl.handle.net/2142/20594
Description
Title
Employment adjustment in steel industry: The U.S. and Japan compared
Author(s)
Park, Ho Hwan
Issue Date
1992
Doctoral Committee Chair(s)
Taira, Koji
Department of Study
Labor and Employment Relations
Discipline
Labor and Employment Relations
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Management
Economics, Labor
Sociology, Industrial and Labor Relations
Language
eng
Abstract
This study purports to compare employment adjustment process in steel industry between the U.S. and Japan in the period 1974-1988. In response to production decline after the Oil Shock of 1973, Japanese steel companies reduced working hours, but not employment. In the 1980s, however, they adopted a new policy: reduction of both employment and working hours. U.S. steel companies reduced both employment and working hours in the 1970s. They changed their adjustment policy in the mid-1980s: reduction of employment and an increase in working hours.
This study presents industry-level and firm-level data and analyses. Using the theories of internal labor market (ILM) and strategic congruency, it explains international differences and changes overtime in employment adjustment policies and practices. First, ILM theory argues that ILM structure affects the use and extent of employment adjustment measures such as layoffs. Both Japanese and U.S. steel companies use hiring freeze and early retirement. A sharp contrast is that Japanese companies frequently transfer redundant workers within and between firms, whereas U.S. companies readily lay them off.
Second, the congruency of transfer with promotion and compensation is examined. In Japanese steel industry, transfers do not hurt the promotion and compensation of transferred workers. In the U.S., at least inter-plant transfers adversely affect these terms of employment due to seniority rules limited to one plant. This incongruency of transfer, promotion, and compensation in U.S. steel industry discourages the inter-plant transfer of redundant workers and increases layoffs. In conclusion, the employment adjustment of Japanese steel companies appears more concerned for employment security than that of U.S. companies.
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