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Japanese Approach To

PLWS

October 22, 2015

Yasuhiko INOUEJapan Productivity Center (JPC)

1. The Meaning of Productivity & PLWS (1) International Common Indicator of Productivity (National Level = GDP & Company Level = Value-Added) (2) GDP = Total of All company’s Value=Added amount in Malaysia

2. Japanese Approach to Productivity and PLWS

(1) Three Guiding Principles

(a) Job Security First

(b) Labor-Management Cooperation (c) Fair Distribution of Productivity Gains (PLWS)

3. Japanese Approach to Quality

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Definition of Productivity(Technical)

Output

Input

Products/ServicesProfitValue-Added

Quality of Management

Labor / Workers

Capital Machines

Productivity is NOT just a technical concept.

Wide social concept is; Productivity is above all, an attitude of mind. It seeks to continuously improve what already exists.

It is based on the belief that one can do better today than yesterday and even better tomorrow.

(1958, European Productivity Agency ) Human Oriented & Betterment of QWL / QL

Definition of Productivity (Social)

(International Common Indicator)

WHY PRODUCTIVITY?

Why Productivity

for Malaysia ?

Indicator of Country’s Productivity

= GDP or GDP per Capita

Because we want to make Malaysia Rich & Competitive.

　

(International Common Indicator　　　　　　　　　　　　

for your NATION / COUNTRY? Productivity Indicator

= GDP

Bigger GDP

= Competitive Country

= Higher Productivity

for your NATION / COUNTRY?

GDP per Capita ( WB, 2014/2010 US $, PPP)

2014 2010

Malaysia 24,951 (20,096)

Philippines 6,982 ( 5,524)

Indonesia 10,517 ( 8,294)

Thailand 14,552 (12,508)

Vietnam 5,629 ( 4,396)

China 13,216 ( 9,239)

Japan 36,426 (33,741) Singapore 82,763 (70,598)

GDP = Total of All Companies’VALUE ADDED (GROSS PROFIT)

In Malaysia

Indicator of Malaysia’s Productivity /Wealth 　　　　　　　　

　　　　　　　　　　　　 is

(International Common Indicator)

GDP = Total of All Companies’

Value-added (Profit) in Malaysia

ＧＤＰ

Textile Electric Auto OthersChemical

A C D nB

(Industries)

(Companies)

(International Common Indicator)

International Common Indicator

Company’s VALUE ADDED

Management Share Labor (Workers) Share 　　　

(GROSS PROFIT (LABOR COSTS

=Profit, Dividends ， or PERSONNEL

Tax , etc. ） EXPENSES )

Depreciation

Converted into

To RenovateExisting 　Facilities New Projects

Reinvestment

VALUE ADDED STATEMENT

　 　 Hotel Business　

　　　　　　　　　　　　　　　　　　　Creating Value Added

39%Employees 　Salaries

39%

26% Government Tax　　　　　　　　　　　　　　　　　　　 Provides for 13% Interest on Bank Loan 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

12%Shareholders

Dividend 　　　　　　　　　　　　　　　

　　　　　　　　　　　　　　　　　　

10%Reserved 　　　　　　　　　

Earnings 　　　　　　　　　　　　　　　　　

Enlarge Productivity Gains (Value-Added)

Value- Added

Productivity Improvement Activities

(Company Level)

* Company Productivity is to maximize Gross Profit ( = Value Added Amount)

* Value Added Amount of All Companies in a Nation = GDP ( = Indicator of National Wealth)

Company’s Productivity contributes to National Economy

(Japanese Approach)Management & Labor (Workers) can Cooperate in enlarging Value-Added.

International Common Indicator Company’s VALUE-ADDED

Management Share Labor(Workers) Share 　　　

　 (GROSS PROFIT (LABOR COSTS

=Profit, Dividends ， or PERSONNEL

Tax , etc. ） EXPENSES )

Three (3) Guiding Principles for a Company to Increase Productivity

PROCLAIMED in 1955 when JAPAN STARTED PRODUCTIVITY MOVEMENT

(1) Should Not Layoff Workers

(Job Security First)

(2) Productivity Increase through Teamwork

& Cooperation Between Workers - Management

(3) Fair Distribution of Productivity Increase

Three (3) Guiding Principles for a Company to Increase Productivity

PROCLAIMED in 1955 when JAPAN STARTED PRODUCTIVITY MOVEMENT

(1) Should Not Layoff Workers (Job Security First)

(2) Productivity Increase through

Teamwork & Cooperation

Between Workers & Management

(3) Fair Distribution of Productivity Increase

This is a “SYSTEM or TOOL” to materialize the Second Principle

Labor-Management

Joint Consultation System

(LMJCS)

Labor - Management Joint Consultation System (LMJCS)

Collective L.M.J.C.S

Bargaining

Clash of Interest Common Interest

Labor Conditions Productivity Increase

Sharing FruitsEnlargement of Resources for Sharing

Character

Contents

Objective

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• Key Factors of LMJCS

•(Management Side)

(1) Management should consider trade union as Social Partner(Stakeholder)

(2) Management has to disclose any information requested by trade union

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• Key Factors of LMJCS

•(Trade Union Side)

(1) Trade Union should consider Management as Social Partner(Stakeholder)

(2) Trade Union has to understand management information or language.

(3) Trade Union should keep secrecy of

information disclosed by management

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•Agenda of LMJCS) (1) Business strategy and plan

(management strategy, long-/medium-/short-term plan,

production plans, marketing & sales, etc.)

(2) Productivity results

(3) Basic plan of reorganization, such as merger, new plant, etc.

(4) Personnel management (career development, welfare policy, training, etc. )

Three (3) Guiding Principles for a Company to Increase Productivity

PROCLAIMED in 1955 when JAPAN STARTED PRODUCTIVITY MOVEMENT

(1) Should Not Layoff Workers (Job Security First)

(2) Productivity Increase through Teamwork

& Cooperation Between Workers - Management

(3) Fair Distribution of

Productivity Increase (PLWS)

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(Japanese Productivity & Wage Curve) Productivity : Increase by Workers (Their Experience & Knowledge to improve Productivity)

Wage : (1) Seniority System (Increase according to length of service) (2) Life-style & Wage (Wage jump at age 30 ＆ 40 ）)

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(Wage & Productivity)

Age 55 60

(-) 65

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(-) + (+) +(-) = 0 Starting(Age 18 or 22 ） 30 Salary / Wage 　 * Productivity

(-)

Age / Length of Service

(+)

100 - 1 = 99

Productivity & Quality

* Productivity & Quality are not trade-offs

* High Quality does not make our Goods/Services cost more