Amakudari

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.

Definition

The term's literal meaning, "descent from heaven", refers to the descent of the Shinto 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. [ [http://search.japantimes.co.jp/cgi-bin/nn20070414a3.html Amakudari crackdown called toothless, poll ploy] , "Japan Times", 14 April 2007, retrieved 26 July 2007]

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). [ Richard A. Colignon and Chikako Usui (2003) [http://www.japanesestudies.org.uk/reviews/2005/Cardwell.html Amakudari: The Hidden Fabric of Japan's Economy] , Ithaca: Cornell University Press, ISBN 0-8014-4083-I.]

Political scientists have identified amakudari as a central features 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. [ The Enigma of Japanese Power, Karel van Wolferen, 1989, ISBN 0-679-72802-3]

History

Amakudari is a wide spread 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 since government officials could be outplaced to a large number of industrial organization that were nationalized. However, reforms during the Occupation 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. [ Richard A. Colignon and Chikako Usui (2003) [http://www.japanesestudies.org.uk/reviews/2005/Cardwell.html Amakudari: The Hidden Fabric of Japan's Economy] , Ithaca: Cornell University Press, ISBN: 0-8014-4083-I.] . 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. [Mayumi Otsuma, Ken Ellis, Todd Zaun, Andrew Morse, and Norie Kuboyama [http://www.jpri.org/publications/critiques/critique_III_2.html "Japan's Housing Lenders' Crisis"] , Japan Policy Research Institute, JPRI Critique Vol. III No. 2: February 1996. Accessed 7 April 2007.]

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. [ [http://english.people.com.cn/200207/23/eng20020723_100198.shtml "Japanese Government to Review 'Amakudari' Practice"] , "People's Daily", July 23, 2002. Accessed 7 April 2007.] 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. [ [http://www.asahi.com/english/Herald-asahi/TKY200707260104.html Editorial:Constitutional revision] , "Asahi Shimbun", 26/07/2007, retrieved 26 July 2007] [ [http://search.japantimes.co.jp/cgi-bin/nn20070414a3.html Amakudari crackdown called toothless, poll ploy] , "Japan Times", 14 April 2007, retrieved 26 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. [ [http://www.asahi.com/english/Herald-asahi/TKY200703310086.htm l5,789 more 'amakudari' positions filled] , "Asahi Shimbun", 31/03/2007, retrieved 26 July 2007]

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. [ [http://www.asahi.com/english/Herald-asahi/TKY200707240089.html Editorial: Civil service reform] , "Asahi Shimbun", 24/07/2007, retrieved 26 July 2007] . Critics say that the government could better prevent Amakudari by raising the retirement age for bureaucrats above 50. [ [http://search.japantimes.co.jp/cgi-bin/nn20070414a3.html Amakudari crackdown called toothless, poll ploy] , "Japan Times", 14 April 2007, retrieved 26 July 2007]

In October 2006, 339 public entities were violating the guidelines concerning amakudari, a figure 38 times higher than the number for the previous year. [ [http://72.14.235.104/search?q=cache:wzeEduX9gQIJ:www.asahi.com/english/Herald-asahi/TKY200707170517.html+amakudari&hl=en&ct=clnk&cd=6&gl=jp&client=firefox-a 339 entities violate 'amakudari' rules] , "Asahi Shimbun", 07/17/2007, retrieved 26 July 2007] This declined to 166 by July 2007.

Impact

As well as various scandals, the effects of amakaduri 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). [ [http://swopec.hhs.se/eijswp/abs/eijswp0136.htm Effect of Amakudari on Bank Performance in the Post-Bubble Period] , Kenji Suzuki, Scandinavian Working Papers in Economics, No 136, 1 November 2001, retrieved 27 July 2007]

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. [ [http://www.asahi.com/english/Herald-asahi/TKY200706250076.html Firms with amakudari ties win government projects with no bids] , "Asahi Shimbun", 25/06/2007, retrieved 27 July 2007]

References

ee also

* Government-business relations in Japan