Amakudari
Encyclopedia
is the institutionalised practice where Japanese senior bureaucrats retire to high-profile positions in the private and public sectors. The practice is increasingly viewed as corrupt and a drag on unfastening the ties between private sector and state which prevent economic and political reforms.
gods from heaven to earth; the modern usage employs it as a metaphor, where "heaven" refers to the upper echelons of the civil service, the civil servants are the deities, and the earth are the private sector corporations.
In amakudari, senior civil servants retire to join organisations linked with or under the jurisdiction of their ministries or agencies when they reach mandatory retirement age, usually between 50 and 60 in the public service. The former officials may collude with their former colleagues to help their new employers secure government contracts, avoid regulatory inspections and generally secure preferential treatment from the bureaucracy.
Amakudari may also be a reward for preferential treatment provided by officials to their new employers during their term in the civil service. Some government organisations are said to be expressly maintained for the specific purpose of hiring retiring bureaucrats and paying them high salaries at taxpayers' expense.
In the strictest meaning of amakudari, bureaucrats retire into private companies, but in other forms bureaucrats move into government corporations (yokosuberi or 'sideslip'), are granted successive public and private sector appointments (wataridori or 'migratory bird') or may become politicians, including becoming members of parliament
(seikai tensin).
Political scientists have identified amakudari as a central feature of Japan's political and economic structure. The practice is thought to bind private and public sector in a tight embrace and prevent political and economic change.
Amakudari was a minor issue prior to World War II
since government officials could be outplaced to a large number of industrial organization that were nationalized. However, reforms during the Occupation of Japan eliminated most of these nationalized organizations resulting in a need to outplace individuals to the private sector. Such outplacement is inevitable in a personnel system where traditional Confucian values prevent one who entered the organization at the same time as another to become his subordinate
A 1990 study suggested that Amakudari retirements to large companies by bureaucrats from prominent ministries, such as the Ministry of Finance had peaked in 1985 but that the practice was on the increase by bureaucrats from other types of government organisations such as the National Tax Agency. As a result, the percentage of former bureaucrats on the boards of private-sector listed companies had remained stable at 2%.
A series of scandals in the mid-1990s focused the media spotlight on amakudari. In the 1994 general contracting (zenekon) scandal, corruption was uncovered among bureaucrats associated with building contractors, leading to the jailing of high-ranking politician Shin Kanemaru
for tax evasion. In the mortgage scandal of 1996, Japanese housing lenders went on a lending spree and racked up bad debts worth 6 trillion yen ($65.7 billion) sparking a financial crisis. The industry was supposed to be regulated by the Ministry of Finance, but the presence of its former officials in top jobs at the lenders is thought to have deflected oversight.
It wasn't until the next decade that Japanese prime ministers responded with policies to limit amakudari, although it is unclear whether theses policies are having any effect. In July 2002, the Japanese Prime Minister Junichiro Koizumi
ordered that strict amakudari be ended, because of its association with corruption between business and politics. Koizumi's successor, Prime Minister Shinzo Abe
enacted new rules as part of a policy pledge to completely eradicate amakudari in 2007, but his reforms were criticised as toothless (see below) and a campaign ploy for Upper House elections in July 2007.
While policy has focused on limiting amakudari to private companies, the number of bureaucrats retiring to jobs at other government organisations (yokosuberi or "sideslip") has surged reaching 27,882 appointments in 2006 up 5,789 on the previous year. These organisations, numbering 4,576, received 98 percent of the expenses for state projects without being subject to the bidding processes faced by private companies.
Over 50 years ending in 2010, 68 high-level government bureaucrats have taken jobs with electricity suppliers after retirement from their government positions. In 2011, 13 retired government bureaucrats were employed in senior positions in Japanese electric utilities.
But the law also removed a two-year ban that prevented retiring officials from taking jobs with companies they had official dealings with during the five years prior to retirement, which may increase amakudari. It also left considerable loopholes, including not placing restrictions on watari, where retired bureaucrats move from one organization to another. Bureaucrats could retire to a job at another government agency, and then switch jobs to a private company later. Critics say that the government could better prevent Amakudari by raising the retirement age for bureaucrats above 50.
In October 2006, 339 public entities were violating the guidelines concerning amakudari, a figure 38 times higher than the number for the previous year. This declined to 166 by July 2007.
Some studies find that amakudari promotes more risky business activities. A 2001 study found that banks with amakudari employees were found to behave less prudently the more retired civil servants they employed (measured by the capital-asset ratio, an indicator of the prudential behaviour of banks).
Many studies find that companies with amakudari employees are subjected to less oversight by public agencies. Around 70 percent of public contracts awarded to organisations that employed hired retired bureaucrats through amakudari were given without a bidding process in 2005. The contracts were worth a total 233 billion yen. By contrast 18 percent of private companies that didn't have ex-bureaucrats on the payroll got contracts without bidding.
Definition
The term's literal meaning, "descent from heaven", refers to the descent of the ShintoShinto
or Shintoism, also kami-no-michi, is the indigenous spirituality of Japan and the Japanese people. It is a set of practices, to be carried out diligently, to establish a connection between present day Japan and its ancient past. Shinto practices were first recorded and codified in the written...
gods from heaven to earth; the modern usage employs it as a metaphor, where "heaven" refers to the upper echelons of the civil service, the civil servants are the deities, and the earth are the private sector corporations.
In amakudari, senior civil servants retire to join organisations linked with or under the jurisdiction of their ministries or agencies when they reach mandatory retirement age, usually between 50 and 60 in the public service. The former officials may collude with their former colleagues to help their new employers secure government contracts, avoid regulatory inspections and generally secure preferential treatment from the bureaucracy.
Amakudari may also be a reward for preferential treatment provided by officials to their new employers during their term in the civil service. Some government organisations are said to be expressly maintained for the specific purpose of hiring retiring bureaucrats and paying them high salaries at taxpayers' expense.
In the strictest meaning of amakudari, bureaucrats retire into private companies, but in other forms bureaucrats move into government corporations (yokosuberi or 'sideslip'), are granted successive public and private sector appointments (wataridori or 'migratory bird') or may become politicians, including becoming members of parliament
Diet of Japan
The is Japan's bicameral legislature. It is composed of a lower house, called the House of Representatives, and an upper house, called the House of Councillors. Both houses of the Diet are directly elected under a parallel voting system. In addition to passing laws, the Diet is formally...
(seikai tensin).
Political scientists have identified amakudari as a central feature of Japan's political and economic structure. The practice is thought to bind private and public sector in a tight embrace and prevent political and economic change.
History
Amakudari is a widespread practice in many branches of the Japanese government but is currently subject to government efforts to regulate the practise. Pressure to reduce amakudari retirement to corporations may be leading to an increase in bureaucrats retiring to other public sector organisations instead.Amakudari was a minor issue prior to World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
since government officials could be outplaced to a large number of industrial organization that were nationalized. However, reforms during the Occupation of Japan eliminated most of these nationalized organizations resulting in a need to outplace individuals to the private sector. Such outplacement is inevitable in a personnel system where traditional Confucian values prevent one who entered the organization at the same time as another to become his subordinate
A 1990 study suggested that Amakudari retirements to large companies by bureaucrats from prominent ministries, such as the Ministry of Finance had peaked in 1985 but that the practice was on the increase by bureaucrats from other types of government organisations such as the National Tax Agency. As a result, the percentage of former bureaucrats on the boards of private-sector listed companies had remained stable at 2%.
A series of scandals in the mid-1990s focused the media spotlight on amakudari. In the 1994 general contracting (zenekon) scandal, corruption was uncovered among bureaucrats associated with building contractors, leading to the jailing of high-ranking politician Shin Kanemaru
Shin Kanemaru
Shin Kanemaru , September 17, 1914 - March 28, 1996, was a Japanese politician. He was born in Imasuwa village , Yamanashi Prefecture. He was a member of the Liberal Democratic Party and member of the faction of Noboru Takeshita. In 1992, he was indicted in the Sagawa Kyubin corruption scandal...
for tax evasion. In the mortgage scandal of 1996, Japanese housing lenders went on a lending spree and racked up bad debts worth 6 trillion yen ($65.7 billion) sparking a financial crisis. The industry was supposed to be regulated by the Ministry of Finance, but the presence of its former officials in top jobs at the lenders is thought to have deflected oversight.
It wasn't until the next decade that Japanese prime ministers responded with policies to limit amakudari, although it is unclear whether theses policies are having any effect. In July 2002, the Japanese Prime Minister Junichiro Koizumi
Junichiro Koizumi
is a Japanese politician who served as Prime Minister of Japan from 2001 to 2006. He retired from politics when his term in parliament ended.Widely seen as a maverick leader of the Liberal Democratic Party , he became known as an economic reformer, focusing on Japan's government debt and the...
ordered that strict amakudari be ended, because of its association with corruption between business and politics. Koizumi's successor, Prime Minister Shinzo Abe
Shinzo Abe
was the 90th Prime Minister of Japan, elected by a special session of the National Diet on 26 September 2006. He was Japan's youngest post–World War II prime minister and the first born after the war. Abe served as prime minister for nearly twelve months, before resigning on 12 September 2007...
enacted new rules as part of a policy pledge to completely eradicate amakudari in 2007, but his reforms were criticised as toothless (see below) and a campaign ploy for Upper House elections in July 2007.
While policy has focused on limiting amakudari to private companies, the number of bureaucrats retiring to jobs at other government organisations (yokosuberi or "sideslip") has surged reaching 27,882 appointments in 2006 up 5,789 on the previous year. These organisations, numbering 4,576, received 98 percent of the expenses for state projects without being subject to the bidding processes faced by private companies.
Over 50 years ending in 2010, 68 high-level government bureaucrats have taken jobs with electricity suppliers after retirement from their government positions. In 2011, 13 retired government bureaucrats were employed in senior positions in Japanese electric utilities.
Legal status
Amakudari is subject to rules which were revised in April 2007 in response to corruption scandals. Under the new rules, ministries are instructed to slowly stop helping bureaucrats land new jobs over three years starting in 2009. Instead a job center to be set up by the end of 2008 will take on the role and government agencies and ministries will be prohibited from brokering new jobs for retirees.But the law also removed a two-year ban that prevented retiring officials from taking jobs with companies they had official dealings with during the five years prior to retirement, which may increase amakudari. It also left considerable loopholes, including not placing restrictions on watari, where retired bureaucrats move from one organization to another. Bureaucrats could retire to a job at another government agency, and then switch jobs to a private company later. Critics say that the government could better prevent Amakudari by raising the retirement age for bureaucrats above 50.
In October 2006, 339 public entities were violating the guidelines concerning amakudari, a figure 38 times higher than the number for the previous year. This declined to 166 by July 2007.
Impact
As well as various scandals, the effects of amakudari have been documented by a sizable body of research.Some studies find that amakudari promotes more risky business activities. A 2001 study found that banks with amakudari employees were found to behave less prudently the more retired civil servants they employed (measured by the capital-asset ratio, an indicator of the prudential behaviour of banks).
Many studies find that companies with amakudari employees are subjected to less oversight by public agencies. Around 70 percent of public contracts awarded to organisations that employed hired retired bureaucrats through amakudari were given without a bidding process in 2005. The contracts were worth a total 233 billion yen. By contrast 18 percent of private companies that didn't have ex-bureaucrats on the payroll got contracts without bidding.
See also
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- Revolving door (politics)Revolving door (politics)The revolving door is the movement of personnel between roles as legislators and regulators and the industries affected by the legislation and regulation and on within lobbying companies. In some cases the roles are performed in sequence but in certain circumstances may be performed at the same time...