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1. Stance on the JNR reform with its focus on division and privatization
(1) Report by the Ad Hoc Commission on Administrative Reform
The third report by the Ad Hoc Commission on Administrative Reform, dated
July 30, 1982, emphasized the necessity of the division and privatization of
JNR and laid out policies for settling long-term debts, in recognition that
the management of JNR was more than in a critical condition but in the state
of bankruptcy.
(2) "Advice on JNR Reform" by the Supervisory Committee for the JNR Reconstruction
The Supervisory Committee for the JNR Reconstruction was established in
June 1983 mainly to formulate measures for radically improving the JNR operation.
The Committee submitted Advice on JNR Reform, which advocated division and privatization
of JNR as the basic idea to the Prime Minister on July 26, 1985.
(A) Why is the JNR reform necessary?
The reform is necessary in order to transform a JNR that was on the verge
of collapse into a business that can survive fierce competition in the transportation
market, so that JNR can play a positive role and take its full responsibility
as an important" means for improving the quality of life for the public.
(B) Whey did the JAR business collapse?
The JAR business collapsed because, despite changes of the environment of
railway services, it could not reform itself to cope with such changes nor could
it boost productivity fast enough. In short, JNR could not appropriately deal
with changes of the times. This was caused by the structural problem inherent
in the management style itself, in other words, a single nation-wide management
by a huge organization under the system of a public corporation.
(C) The necessity of division
To overcome problems inherent in a huge organization operating in a unified
way throughout the country and to conduct operation to meet today's needs as
a railway service, it is indispensable for the passenger transport section to
be divided into appropriate business units so as to properly administer management
and at the same time secure operation that reflects the characteristics of localities
and business sections. On the other hand, the freight section, in view of its
actual train operation, should separate its management from that of the passenger
transport section and should become an independent business that can operate
in a unified way across the country.
(D) The necessity of privatization
The only way to overcome structural problems inherent in the public corporation
system is to privatize the present corporation in a bid to change the bureaucratic
nature of managers, change the ideas of employees, and to strengthen the management
foundation by developing related businesses.
(E) Basic stance on the settlement of long-term debts
The long-term debts will be too much of a burden on the new companies even
if they try to maximize the efficiency of the management. Therefore, the debts
should be separated from the new companies and should remain with the former
JNR. Utmost efforts should be made to settle the debts with the best use of
the JNR-owned land. There is no choice concerning the remaining debts except
that the burden will be eventually be borne by the public in some way or another.
(F) Stance on measures to deal with the redundant workforce
The redundant workforce will be reduced as much as possible before the switch
of JNR to the new management form by promoting voluntary retirement. Then a
part of the remaining redundant workforce will be transferred to passenger railway
companies. The rest will remain with the former JNR. Every effort will be made
so that all the employees belonging to the former JNR will be able to find new
jobs by carrying out concentrated measures within a specific period of time.
2. From JNR to JR
(1) The inauguration of new companies
The passenger transport section of railway services by JNR was divided by
region into six companies : Hokkaido Passenger Railway Company (JR Hokkaido),
East Japan Passenger Railway Company (JR East), Central Japan Passenger Railway
Company (JR Tokai), West Japan Passenger Railway Company (JR West), Shikoku
Passenger Railway Company, (JR Shikoku), Kyushu Passenger Railway Company (JR
Kyushu). The freight section was separated from the passenger transport section
and inaugurated as the Japan Freight Railway Company (JR Freight).
As JNR was divided and privatized, JR Hokkaido, JR Shikoku, and JR Kyushu
did not take over the long-term debts because the three companies were expected
to incur operating losses. In addition, the companies established the Management
Stabilization Funds whose management profit can be aimed at compensating for
operating losses so as to consolidate management foundation.
(2) Establishment of Shinkansen Holding Corporation
The Shinkansen Holding Corporation was established to hold the four existing
Shinkansen lines as a whole and to extend loans to JR East, JR West and JR Tokai.
However, the corporation was dissolved after transferring the Shinkansen facilities
to the three companies in October 1991. All the rights and responsibilities
of the corporation were taken over by the Railway Development Fund that was
established on the same day as the corporation broke up.
(3) Inauguration of Japanese National Railways Settlement Corporation
The Japanese National Railways Settlement Corporation (hereinafter referred
to as the Settlement Corporation) took over JNR. The Settlement Corporation
aimed to settle the long-term debts carried over by JNR and sell assets for
the settlement. It was also expected to encourage JNR employees to find new
jobs.
Of 7,628 employees transferred from JNR to the Settlement Corporation, 5,737
found new jobs, 844 retired on special benefits, and 1,047 were dismissed from
" the Settlement Corporation. The case of not reemploying the 1,047 workers
is pending in court.
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