Division and privatization of Japanese National Railways

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The division and privatization of Japanese National Railways (国鉄分割民営化, Kokutetsu bunkatsu min'eika) was a major administrative reform implemented by the Zenkō Suzuki Cabinet and Nakasone Cabinet. Under this reform, the Japanese National Railways (JNR) was divided into six regional passenger railway companies and one freight railway company, collectively known as the Japan Railways Group (JR), and these entities were privatized. The new companies officially began operations on April 1, 1987, bringing the 115-year history of JNR to a close.

In the transition to the new companies, approximately 94,000 employees—about one in three—were deemed surplus personnel. [1] Around 70,000 of them left JNR through a voluntary retirement program with enhanced severance payments. Even after the liquidation was completed, about 16.7 trillion yen in debt remained, which was ultimately covered by the public. [2][3]

The privatization of Japan's three major public corporations—including JNR, Nippon Telegraph and Telephone Public Corporation (NTT, now Nippon Telegraph and Telephone) and Japan Tobacco and Salt Public Corporation (JTSPC, now Japan Tobacco)—was promoted by the ruling Liberal Democratic Party (LDP) around the same time.

Successor organizations

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Operating areas of each JR company after privatization

As a result of the division and privatization of JNR, its operations and assets were transferred to the following 12 successor organizations:

Chronology

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1980

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1981

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  • December 5 – The Temporary Administrative Investigation Commission Establishment Act (臨時行政調査会設置法) is enacted, leading to the formation of the Second Provisional Commission for Administrative Reform (第二次臨時行政調査会).

1982

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  • July 30 – The commission submits its Third Report on Administrative Reform: Basic Recommendations (行政改革に関する第3次答申 : 基本答申), advocating privatization. [4]
  • September 24 – The Suzuki Cabinet approves the Policy for Implementing Future Administrative Reform (今後における行政改革の具体化方策について) in line with the Third Report, pledging to pursue reconstruction accordingly. [5]
  • October 11 – Prime Minister Suzuki announces his intention to resign.
  • November 27 – The First Nakasone Cabinet is inaugurated.

1983

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  • March 14 – The commission submits its final report (Fifth Report), reaffirming the privatization policy of the Third Report. [6]
  • June 10 – The Temporary Measures Law for the Promotion of the Reconstruction of Japanese National Railways Operations (日本国有鉄道の経営する事業の再建の推進に関する臨時措置法) is enacted, establishing the JNR Restructuring Supervisory Commission (国鉄再建監理委員会) within the Prime Minister's Office. [6]
  • December 18 – The 37th House of Representatives general election is held.

1985

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1986

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  • February – Eight JNR reform-related bills, including the Japanese National Railways Reform Act (日本国有鉄道改革法), are submitted to the Diet. [9]
  • March 20 – Recruitment for wide-area transfers began.
  • May 30 – The Act on Special Measures to Be Taken Urgently in Fiscal Year 1986 for the Improvement of the Management of the Enterprises Operated by the Japanese National Railways (日本国有鉄道の経営する事業の運営の改善のために昭和六十一年度において緊急に講ずべき特別措置に関する法律) was enacted. Recruitment for voluntary retirement with enhanced severance payments commenced.
  • July 6 – In the 38th House of Representatives general election, LDP wins a sweeping victory.
  • July 22 – The Third Nakasone Cabinet is inaugurated.
  • December 28 – With the support of LDP, Komeito, and DSP, the eight JNR reform-related bills are passed and enacted by the Diet. [10]

1987

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  • April 1 – The Japan Railways Group (JR) is established, and JNR is reorganized into Japanese National Railways Settlement Corporation (JNRSC). [6]

Background

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Massive accumulated debt caussed by political interventions

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In the era of the Japanese Government Railways—the predecessor of JNR—before the war, the company had never run a deficit since their establishment. [11] However, after the war, in addition to the progress of motorization in rural areas, personnel costs rose as the Japanese government hired a large number of war repatriates into JNR as part of its employment measures. As a result, in 1964, JNR fell into deficit for the first time. That same year also marked the opening of the Tōkaidō Shinkansen.

JNR had become an independent public corporation in 1949, separate from the Ministry of Transport, operating on a self-financing basis. [12] While the government no longer bore direct responsibility for JNR's finances, core business decisions—such as fare changes, budgets, new line construction, and personnel matters—still required Diet approval, leaving JNR vulnerable to political interference.

For example, fare hikes were often blocked for electoral reasons or to combat inflation. JNR was also prohibited from expanding into non-transport sectors to avoid competing with private businesses. Furthermore, due to Prime Minister Kakuei Tanaka's "Remodeling the Japanese Archipelago" (日本列島改造論) policy and other pork-barrel politics, new rural lines were constructed even when profitability was unlikely. Such new line constructions were not frozen until 1980.

Since JNR was officially a self-supporting enterprise, the Japanese government avoided providing subsidies even when it ran deficits. Instead, JNR had to issue railway bonds, increasing its debt. In urban areas, especially the Greater Tokyo Area, rapid population growth worsened commuting conditions, prompting JNR to launch initiatives like the "Five-Directional Commuter Strategy" (通勤五方面作戦) to increase transport capacity. However, these improvements received minimal government funding and were largely financed by JNR itself. Enormous costs were also incurred in building the Shinkansen, a high-speed rail network of Japan, all of which were added to JNR's debt.

To make matters worse, the Ministry of Finance restricted fiscal investment and loan programs and forced JNR to issue high-interest, non-government-guaranteed special railway bonds, further increasing its financial burden. As a result, JNR's debt expanded rapidly. [13] Although the government began offering subsidies for construction costs in 1969 and for maintaining local lines in 1976, these measures were too little, too late. [14]

Following the establishment of the Japan Railway Construction Public Corporation (日本鉄道建設公団, Nihon Tetsudō Kensetsu Kōdan) (JRCC), the government took over the cost of building local lines, but operating losses remained JNR's responsibility. From the late 1970s, the government tried to make up for years of fare suppression by increasing fares by 50% and continuing annual fare hikes. However, even these measures failed to improve revenues, as ridership declined even on popular routes like those in the Tokyo area and the Shinkansen. [15]

In 1980, the Japanese government passed the Act on Special Measures for the Promotion of the Restructuring of the Japanese National Railways (日本国有鉄道経営再建促進特別措置法), or JNR Reconstruction Act (国鉄改革法) for short, also called "the final self-rehabilitation plan". This legislation included measures such as staff reductions, freezing the construction of new local lines, categorizing lines based on passenger density (into Main Lines (幹線), Local Lines (地方交通線), and Specific Local Lines (特定地方交通線)), and converting unprofitable local lines to bus services. Surcharges on local lines were also introduced.

In 1981, the Zenkō Suzuki Cabinet established the Second Provisional Commission for Administrative Reform (第二次臨時行政調査会), headed by Toshiwo Doko, to deliberate on JNR reform and broader fiscal reconstruction. Its first recommendation, issued on July 10, emphasized rebuilding Japan's finances without raising taxes, leading to further cuts in subsidies to JNR. On February 5, 1982, the Liberal Democratic Party (LDP) set up its own committee for JNR reform, chaired by Hiroshi Mitsuzuka.

Within the commission, Subcommittee IV (headed by Hiroshi Katō [ja]) carried out in-depth discussions on JNR reform. Members actively disseminated their views through the media. Katō famously declared, "JNR should be dismantled" (Gendai, April 1982), while advisor Tarō Yayama [ja] referred to JNR labor relations as "traitorous" (Bungei Shunjū, April 1982).

On July 30, 1982, the commission officially recommended that JNR be divided and privatized within five years. This marked a major shift toward the dissolution of JNR. The Suzuki Cabinet formally adopted the recommendation on September 24 and resolved to pursue the division and privatization of JNR. [16]

However, Tokusaburō Kosaka [ja], who served as Minister of Transport for one year starting in November 1981, strongly opposed the privatization plan proposed by the commission. He argued: "JNR has assets worth 50 trillion yen at market value. Its debt as of 1987 amounts to approximately 37.3 trillion yen, so the deficit can be offset by the difference in valuation. Even if all land were sold, there would still be surplus left, so JNR is not bankrupt". [17] He further stated, "Just because NTT (Nippon Telegraph and Telephone Public Corporation) and JTSPC (Japan Tobacco and Salt Public Corporation) were privatized doesn't mean JNR should be similarly divided and privatized". [17] These arguments effectively slowed down the momentum of the reform plan. However, advocates of reform fired back, criticizing his reasoning as fundamentally flawed: "This is the logic of giving up on running a railway and selling off all assets—an illogical mix-up between stock and flow." [18][19]

Within the ruling LDP, several influential figures also opposed the division and privatization of JNR, including transport policy veterans Mutsuki Katō [ja] and Hajime Tamura. Although their resistance was significant, the Nakasone Cabinet, launched on November 27, 1982, embraced administrative reform and pushed forward the privatization agenda. On November 30, the cabinet decided to establish the JNR Restructuring Supervisory Commission (国鉄再建監理委員会, Kokutetsu Saiken Kanri Iinkai). The relevant legislation passed the House of Councillors (upper house) on May 13, 1983, and the commission was officially launched on June 10, with Masao Kamei [ja] appointed as chairman. Within JNR, reform advocates such as Masatake Matsuda [ja], Yoshiyuki Kasai [ja], and Masataka Ide [ja] led the push for division and privatization, earning the nickname "The JNR Reform Trio" (国鉄改革三人組, Kokutetsu Kaikaku San-nin-gumi). In contrast, the conservative faction opposing division and privatization was dubbed the "National Body Preservation Faction" (国体護持派, Kokutai Goji-ha).

Prime Minister Yasuhiro Nakasone remained cautious. This was partly due to the influence of Kakuei Tanaka—effectively a kingmaker within the LDP—who supported privatization but opposed dividing JNR. Many within JNR management and the National Railway Workers' Union (NRU) leaned on Tanaka, seeking a compromise through unified (non-divided) privatization. The "Basic Policy for Management Reform" that JNR submitted to the commission on January 10, 1985, reflected that stance. [20] However, the document was leaked to pro-division factions in advance and widely criticized in the media. The JNR leadership had Materials Bureau Director Mitsufumi Akiyama secretly compile documents advocating non-divided privatization, which were distributed to lawmakers and journalists. Reformists like Ide and Matsuda were sidelined—Ide was reassigned to the Western Tokyo Railway Administration on September 21, 1984, and Matsuda to Hokkaido on March 15, 1985—in an effort to suppress the pro-division camp.

Prime Minister Nakasone initially took a cautious stance, but later pushed forward with the privatization and division of JNR, which was completed under his Third Nakasone Cabinet.

On February 6, Prime Minister Nakasone responded to a question from Saburō Tsukamoto [ja] of the Democratic Socialist Party, criticizing the JNR plan as "big-government dependency" (親方日の丸, oyakata Hinomaru; "having Japanese flag as their boss") and hinted at disciplinary action. [21] Kakuei Tanaka's political clout was already faltering due to rebellion led by Noboru Takeshita (who formed the Sōseikai, his faction within the party), and after Tanaka suffered a stroke on February 27, the momentum for division and privatization grew stronger. In the second reshuffled Nakasone Cabinet launched in December 1985, Hiroshi Mitsuzuka—head of the LDP's JNR Reform Subcommittee and a staunch advocate of division and privatization—was appointed Minister of Transport. (He resigned in 1986 due to concurrent House of Representatives and House of Councillors elections.)

On May 27, 1986, JNR Executive Director Tomoyuki Ōta spoke "off the record" to an Asahi Shimbun reporter, criticizing the "JNR Reform Trio" and Masao Kamei while claiming that efforts were underway to implement unified privatization. This leak reached Takayuki Kasai, and through journalist Tarō Yayama, it was reported to Prime Minister Nakasone. In response, Nakasone dismissed eight senior JNR executives, including President Iwao Nisugi [ja], who opposed division and privatization. On June 21, Nisugi and others were publicly described as having resigned voluntarily, and Takaya Sugiura [ja] was appointed as the new JNR president. The previously sidelined reformists were recalled to headquarters, and the pro-division camp effectively took control of JNR's leadership.

By that point, debt interest had snowballed into a vicious cycle of compounding liabilities. On August 2, 1982, the Ministry of Transport's budget request for fiscal year 1983 included new measures such as freezing new hires at JNR in exchange for debt coverage. In 1985, JNR recruited only university graduates as prospective leaders for the post-privatization companies. Recruitment was halted again entirely the following year, including university graduates.

One of the core aims of JNR's privatization was to handle its enormous cumulative debt through a combination of increased JR profitability, the sale of JNR assets, and government funding via taxpayer money. However, Nakasone later stated that the true intent of the reform was to dismantle the labor unions (and, by extension, to weaken leftist forces such as the Japan Socialist Party).

At that time, JNR's cumulative debt had reached 37 trillion yen, approximately 168 billion USD at the exchange rate at that time. Though labor unions opposing privatization claimed this figure was intentionally inflated, [22] the reality was that even with rising land prices during the bubble economy, JNR's asset sales could not possibly cover the full debt. Annual interest payments alone exceeded 1 trillion yen.

Mismatch to regional transportation needs

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Because profitability was not clearly defined on a regional basis, local governments and residents had little understanding of the railway's financial situation, making it difficult to secure support for the railways. There was also little competitive awareness toward other local transportation operators. [23]

JNR held a 50% share of the domestic passenger transport market in 1960. However, over the decades, the uniform nationwide transport model failed to meet local needs, and the company suffered from delayed technological innovation. These issues, combined with repeated fare increases, the proliferation of private automobiles due to road infrastructure development, and the expansion of air and express bus services, caused JNR's market share to decline to just 23% by 1985—less than half its peak. [24] In particular, JNR's Local Lines accounted for 45% of its total operating kilometers, but their share of total transportation volume was only 5%. [25]

Many local lines were abolished, beginning with the Shiranuka Line shown in the photograph.

Even before the privatization debate intensified, the 1980 JNR Reconstruction Act had initiated the closure of unprofitable local lines with low transport density. From 1981 onward, three rounds of selection identified 83 specified local lines for closure. Despite opposition from local residents, closures began in 1983 with the Shiranuka Line. Ultimately, 45 lines were closed and replaced with bus services, 36 were converted into third-sector railways, and 2 were transferred to private operators.

This process continued even after the privatization was finalized. In 1990, with the conversion of the Miyazu Line to the Kitakinki Tango Railway [note 1] and the final closure of the Kajiya and Taisha Lines, the fate of all 83 lines was determined. Compared to 1960s efforts to eliminate "the Deficit 83 Lines", this round of closures progressed more smoothly. Although the process began independently of the privatization plan, it conveniently ensured that the newly formed JR companies inherited fewer unprofitable routes. However, criticism arose over inconsistencies—for example, some highly utilized lines like the Ise Line were handed over to third-sector operators, while other lightly used branch segments survived merely because they were part of main lines without independent names.

Surplus personnel

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As a result of the Japanese government policy to employ a large number of repatriates from the World War II—about 250,000 people—JNR faced an extremely high personnel cost ratio (82% of operating revenue), which became a serious problem. [26][27] Each year, more than 20,000 employees retired, creating additional financial burdens in the form of retirement allowances and pensions. [26] In contrast, the personnel cost ratio for private railway companies was around 45%. [26][28]

The National Railways Reform Commission stated that the new companies must operate with a workforce of 183,000 employees. As of April 1986, JNR had approximately 277,000 employees, meaning around 94,000 were considered "surplus personnel". [1] In May 1985, the Act on Special Measures to Be Taken Urgently in Fiscal Year 1986 for the Improvement of the Management of the Enterprises Operated by the Japanese National Railways (日本国有鉄道の経営する事業の運営の改善のために昭和六十一年度において緊急に講ずべき特別措置に関する法律) was passed by the Diet. Under this law, employees under the age of 55 who chose voluntary retirement were entitled to an additional severance payment equivalent to ten months' salary, and 193.6 billion yen was allocated in the national budget as funds for retirement payments. [29]

The government initially expected around 20,000 applications for voluntary retirement and about 40,000 transfers to the Settlement Corporation. [30] However, in the end, approximately 70,000 employees opted for voluntary retirement. Those who did so were provided with job placement assistance and were re-employed in government agencies, special public corporations, private companies, and other railway operators. As a result, around 200,000 employees were hired by the newly privatized JR companies at the time of privatization. [31]

Projected personnel at the time of the new companies' establishment (FY1987)[32]
Hokkaido East Central West Shikoku Kyushu Total
Personnel 13,000 89,000 25,000 53,000 5,000 15,000 200,000

About 7,000 people who were not hired by the new companies were transferred to the Japanese National Railway Settlement Corporation (JNRSC). Those not hired included people who insisted on being employed locally in Hokkaido and Kyushu, regions with severe surplus issues (NRU's policy was to demand employed locally or respond with a blank sheet of paper), and individuals designated by JNR management as having received two or more suspensions between 1983 and 1986, or a single suspension of over six months, or deemed otherwise unfit based on hiring criteria.

Among the roughly 1,600 managerial-level employees equivalent to career-track public servants, only about 1,100 were retained by the JR companies.

In March 1986, JNR began recruiting employees for wide-area transfers (広域異動, kōiki idō). [33] This program aimed to reassign surplus personnel from regions burdened with excess staff due to the closure of deficit lines and declining local economies with few employment opportunities, to major urban areas on Honshu — specifically, to rail yards, stations, and factories in the three major metropolitan regions (Tokyo, Osaka, and Nagoya). The program initially covered Hokkaido and Kyushu, [34] and later extended to the Tōhoku, Chūgoku, and Shikoku regions. [35][36]

  • Hokkaido – Approximately 2,500 employees were targeted for transfer to the Tokyo–Nagoya area; about one in two workers there were considered surplus. [34]
  • Kyushu – Approximately 900 employees were targeted for transfer to the Osaka area; about one in three workers were surplus. [34]

In addition, around the time of the new companies' establishment, the three Honshu companies also carried out wide-area recruitment. In the case of Hokkaido, more than 6,000 people, including family members, relocated in order to maintain employment as railway workers.

Furthermore, many surplus employees were absorbed by private railway companies, private bus operators, and private enterprises, which were facing severe labor shortages at the time. Others chose to return to their hometowns to take over family businesses, obtain national qualifications to enter specialized professions, or start their own independent ventures, making use of the knowledge and skills they had developed during their time with JNR.

Unstable labor-management relations

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Number of train cancellations due to labor disputes[37]
Year Passenger
trains		 Freight
trains		 Total
1955 - 172 172
1956 15 360 375
1957 1,189 1,810 2,999
1958 166 153 319
1959 144 6 150
1960 2,220 434 2,654
1961 0 101 101
1962 383 70 453
1963 8 2 10
1964 0 0 0
1965 559 16 575
1966 1,713 126 1,839
1967 1,640 26 1,666
1968 3,328 1,229 4,557
1969 2,875 2,262 5,137
1970 916 112 1,028
1971 2,818 2,267 5,085
1972 12,514 10,587 23,101
1973 72,701 78,718 151, 419
1974 102,687 47,519 150,206
1975 198,362 70,406 268,768
1976 52,355 22,174 74,529
1977 30,762 - 30,762
1978 51,602 22,567 74,169
1979 9,612 2,624 12, 236
1980 14,235 4,515 18,750
1981 1,810 162 1,972
1982 0 0 0
1983 260 60 320

At that time, JNR had labor unions such as the following.

Among them, NRU had the highest unionization rate, followed by NRMU and Tetsurō, which were also relatively large unions. Initially, NRU and NRMU were characterized by a stance that did not shy away from fierce confrontation with management, whereas Tetsurō was distinguished by its labor–management cooperation approach.

NRU was even Japan's largest labor union at the time, with 187,592 members as of April 1, 1985. It was also a key part of Sōhyō (The General Council of Trade Unions of Japan), a major support base for the opposition Japan Socialist Party (now the Social Democratic Party). However, the union had been also infiltrated by radical factions such as Chūkaku-ha (Revolutionary Communist League, National Committee) and Kakumaru-ha (Japan Revolutionary Communist League (Revolutionary Marxist Faction)), with some openly advocating communist revolution—yet NRU failed to expel them.

NRU argued against division and privatization on the grounds that it would worsen service quality. However, in reality, the quality of service had already declined during the final days of the JNR before its privatization. Labor–management relations were unstable, and after the failure of the productivity improvement movement called the Marusei Movement (マル生運動), workplaces fell into disorder and discipline deteriorated. Chronic tardiness, unauthorized absences, and excessive use of paid leave became common. [38][39] Many employees violated dress codes by not wearing uniforms or caps required under JNR's rules and the Railway Business Act, and management was unable to enforce discipline. Managers often had to cover for lower-ranking workers. [40] The government claimed a lazy work conditions and generous treatment of employees—such as illicit union activities, unauthorized allowances, unauthorized leaves, fake overtime, fake business trips, habitual drunkenness on duty, and lax enforcement of dress codes—were unimaginable in private companies. [41][42] The mass media widely echoed and amplified the criticisms against the NRU. [40][43]

From the 1960s to 1970s, following the failure of Marusei Movement, deteriorating labor-management relations led to many strikes and disputes, such as work-to-rule and suto-ken suto (スト権スト; "strike for the right to strike") [note 3]

During the 1970s, the labor unions NRU and NRMU led a series of "work-to-rule", called junpō tōsō (遵法闘争; "law-abiding struggles") in Japan [note 4], in which employees deliberately adhered to the letter of the law in a way that disrupted operations. —For example, if a bird happened to be on the tracks ahead of a train, it would almost always fly away, so under normal circumstances, the train could continue without any problem. Yet during the work-to-rule, train crews would deliberately slow down or stop the train, claiming reasons such as "an obstacle was found on the tracks", or they would stop before entering a crowded platform "for safety reasons". In doing so, they exploited the discretionary safety measures legitimately permitted to drivers, causing excessive delays. As a result, trains on the Takasaki Line—normally taking 37 minutes from Ageo Station, a Greater Tokyo commuter suburb, to Ueno Station in central Tokyo—had come to require around three hours for the same journey. [45]

In the Ageo Incident [ja] of 1973, passengers, enraged by the abnormal delays and congestion caused by a work-to-rule campaign, rioted and destroyed station facilities.

Such conditions continued day after day, and with repeated train delays, overcrowding, and entry restrictions, passengers' frustration grew increasingly intense. On March 13, 1973, a riot broke out at Ageo Station in which passengers destroyed station facilities and trains — the so-called Ageo Incident [ja]. In response, NRU temporarily suspended its work-to-rule, but because labor-management negotiations failed to reach an agreement, the campaign was resumed the following month. This led to a new wave of riots on April 24, when passengers at multiple stations across the Tokyo metropolitan area simultaneously erupted in violence — the Greater Tokyo Area JNR Riots [ja] — marking the peak of public distrust toward JNR.

Numerous accidents caused by what could be described as negligence also occurred. In this environment of declining public trust, JNR repeatedly raised fares and charges, which only accelerated the shift of both passenger and freight traffic to other modes of transportation. Within NRU, sharp internal ideological divisions were evident. The union was even unable to officially abandon its strike tactics previously agreed upon informally with NRMU, due to factional infighting. As a result, NRU failed to present a unified stance, making consensus difficult. Consequently, its arguments found no support from passengers or the general public.

The situation worsened on March 15, 1982, when a serious accident occurred at Nagoya Station: during coupling operations, a sleeping car express train Kii [ja] collided with a passenger car due to the locomotive engineer driving under the influence of alcohol. [43][46] This incident marked the peak of societal criticism against JNR. JNR concluded that the root cause lay in collusion between the Personnel Bureau and NRU, and replaced senior officials within the bureau. In January 1982, it was also revealed in a media exposé that some employees were receiving allowances for "phantom business trips", in which they claimed pay for working on Blue Train sleeper services without actually taking part in the runs. An internal JNR investigation later found that, when including other locomotive depots as well, such fraudulent claims amounted to approximately 100 million yen per year. [43]

A nationwide inspection of 4,439 workplaces was conducted. The investigation revealed a host of deeply rooted "malpractices", including:

  • 1,252 cases of unauthorized leave
  • 708 cases of unofficial allowances
  • 1,308 cases of improper vacation
  • 241 full-time union positions not properly authorized
  • 1,293 cases of union activity during working hours
  • 1,677 cases of employees bathing during working hours
  • 2,163 instances of unauthorized wearing of union ribbons or badges
  • 1,992 cases of improper delegation of duties to lower-ranked staff

These revelations forced JNR to adopt drastic reform measures. [47]

On the other hand, some argue that this "hidden" motive for division and privatization—namely, the elimination of NRU—was actually a convenient excuse to legitimize the real motive: resolving JNR's massive debts. [48]

Method of division

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The nationwide, centrally-managed structure of JNR was broken up regionally in order to reduce the operational scale of each company and promote stronger local engagement.

Projected transportation volume at the time of the new companies' establishment (FY1987) [49]
Hokkaido East Central West Shikoku Kyushu Total
Operating km 2,600 7,300 1,900 5,200 900 2,200 20,100
Volume (billion passenger-km) 37 956 360 432 15 67 1,867

The following considerations were taken into account during the division:

  • Avoid assigning through-trains in major metropolitan areas to multiple companies whenever possible.
  • Keep intercity express services (e.g., limited express trains) under a single company as much as possible. [50]
  • Assign entire lines to a single company when feasible.
  • Minimize the number of trains traversing three or more companies.
  • Choose boundary points with minimal through traffic and ridership.

The following considerations were explicitly excluded:

  • Adopting a "vertical separation [ja]" model (infrastructure-operation separation). [note 5]
  • Dividing the company along pre-existing regional railway bureau lines. [51]
  • Assigning the Shinkansen to a separate company. [51]
  • Creating a company dedicated only to urban transportation.

Various division points were proposed and examined based on company size, workforce requirements, and other factors. In Honshu, where rail networks are particularly complex, multiple options were explored—two, three, four, or five regional companies—with numerous variations for each. However, more divisions meant more boundaries and complications. The Tōkaidō Shinkansen had too many through-passengers to be easily split, and the Tōhoku and Jōetsu Shinkansen lines shared maintenance depots and control centers, making separation impractical. Ultimately, Honshu was to be divided into East and West—Eastern Honshu (including the Kōshin'etsu region and conventional (non-Shinkansen) lines of Shizuoka) managed by the Tokyo headquarters, and Western Honshu (including the Hokuriku and Tōkai regions excluding Shizuoka) by the Osaka headquarters. But it was found that if the lucrative Tōkaidō Shinkansen were assigned to the Western company, the Eastern company's revenue would fall short. Therefore, it was decided to create a third company, headquartered in Nagoya, covering the Tōkai region including the Tōkaidō Shinkansen, most of Shizuoka Prefecture (originally intended for the Eastern company), the southern parts of Yamanashi and Nagano Prefectures.

The restructuring required the development of new rules to address many issues, such as:

  • Train crew changes for through-services crossing company boundaries
  • Responsibility for vehicle maintenance
  • Calculation and settlement of vehicle usage fees
  • Fare calculation and revenue sharing
  • Allocation of rail yards
  • Division and cost-sharing of facilities

In practice, the company boundaries were defined by the outer side of the home signal at boundary stations. The guiding principle was that all facilities of a station would be managed by a single company. For example, at Kinomiya Station on the Tōkaidō Main Line, the boundary is the inbound signal inside the Tanna Tunnel. [note 6] The east side is JR East, and the west side is JR Central. However, since tunnel structures can't be physically divided, the entire tunnel is managed by JR Central. At Maibara Station, instead of using the inbound signal as the boundary—which would make things too complex—the first outbound block signal to east serves as the boundary. At Kameyama Station, though it is under JR Central's control, the Kameyama Locomotive Depot on the western side of the station services the Kansai Main Line west of Kameyama, which belongs to JR West. Therefore, the depot was assigned to JR West. As a side effect, the originally planned closure of the Ise Operations Depot was reversed to preserve JR Central's vehicle base in the area.

The amount of assets and liabilities to be transferred to the new company and the resulting projected business performance are as follows.

Assets and liabilities at the time of the new companies' establishment, and projected revenue and cost for FY1987 (billion yen) [52][53]
Hokkaido East Central West Shikoku Kyushu Total
Assets 300 3,300 600 1,400 100 300 6,000
Liabilities 0 2,900 300 1,100 0 0 4,300
Revenue 127.9 1,384.9 779.5 705.3 43.0 134.8 3,175.4
Cost 127.0 1,371.1 771.7 698.2 42.7 133.7 3,144.4
Profit 0.9 13.8 7.8 7.1 0.3 1.1 31.0

Developments leading to the privatization

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Reactions from labor unions

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The pro-management Tetsurō (Japan Railway Workers Union) quickly accepted privatization. NRMU (National Railway Motive Power Union), initially opposed to privatization, shifted its stance under Chairman Akira Matsuzaki [ja]. Following the rift with NRU (National Railway Workers' Union) during the defeat of the 1975 suto-ken suto ("strike for the right to strike") [note 7] and LDP's electoral victory that effectively sealed the fate of JNR, Matsuzaki emphasized "cooperating to protect union members' jobs". However, NRU, the largest union, was sharply divided between pro- and anti-privatization factions.

Asakusabashi Station, damaged in the Simultaneous Guerrilla Attacks on JNR Commuter Lines [ja]. The attacks were carried out by the Chūkaku-ha, which supported CMU in its opposition to privatization. However, railway passengers—already inconvenienced by repeated strikes prior to the incident—came to hold even greater resentment toward them, and public opinion shifted further in favor of privatization.

The left-wing political bloc strongly opposed the privatization of JNR. On November 29, 1985, the new left group Chūkaku-ha carried out a Simultaneous Guerrilla Attacks on JNR Commuter Lines [ja] in the Greater Tokyo Area and the Keihanshin (Kyoto–Osaka–Kobe) Area, paralyzing operations for an entire day. However, this act of domestic terrorism only strengthened Prime Minister Yasuhiro Nakasone's resolve. Public opinion, rather than turning against the government, rallied in support of the division and privatization of JNR. Even parties like the Japanese Communist Party (JCP), which opposed the privatization itself, condemned such sabotage as unjustifiable acts of terrorism.

With the "JNR Reform Trio" in control, JNR proposed a "Joint Declaration by Labor and Management" (労使共同宣言) to conclude a "Job Security Agreement" (雇用安定協約), a form of labor-management agreement, with the unions.

On January 13, 1986, representatives of the five unions were summoned to President Sugiura's office. The two unions, namely NRU and Zendōrō, refused the declaration. The three unions, namely NRMU, Tetsurō, and Zenshirō, accepted it. Citing the rejection, JNR notified NRU and Zendōrō of the termination of their job security agreements, which then expired.

In NRU, the loss of the job security agreement led to a wave of defections due to employment insecurity. On April 13, 1986, a splinter union from NRU called the "True JNR Workers' Union" (真国鉄労働組合, Shin Kokutetsu Rōdō Kumiai), shortened as Shinkokurō (真国労), chaired by Tetsurō Furukawa, was formed with the support of NRMU and Tetsurō. Shinkokurō was also said to include members aligned with Kakumaru-ha. [54]

JNR later proposed a "Second Joint Declaration" (第二次労使共同宣言), which added clauses requesting the unions to refrain from strikes until stable operations were established post-privatization and for both sides to drop lawsuits against each other. At the NRU's emergency convention called Shuzenji Convention (修善寺大会) on October 9, 1986, the NRU's anti-mainstream (JCP-affiliated) faction led by Tokusawa and the non-mainstream (JSP-aligned) faction led by Igarashi joined forces. After heated debate, a vote was held, and a majority rejected the division and privatization plan. As a result, NRU's Chairman Shun'ichi Yamazaki, who led the pro-privatization mainstream faction, resigned. He was succeeded by Satoshi Roppongi [ja] from the Morioka regional branch. Yamazaki's faction eventually left NRU and formed a new union, Japan Railway Industrial Union (日本鉄道産業労働組合総連合, Nihon Tetsudō Sangyō Rōdō Kumiai Sōrengō), shortened as JRIU (鉄産総連, Tetsusan Sōren). Triggered by the Shuzenji Convention, NRU underwent internal collapse and suffered a significant loss of power. The establishment of JRIU is said to have been partly prompted by the JSP as a second-best strategy to facilitate employment with the JR companies. Meanwhile, disappointment with the Roppongi leadership, which pursued a hardline stance of total confrontation, and with the labor-management relations of the JNR, led to a wave of withdrawals from NRU at the workplace level. As a result, more than 200,000 union members left the union before the privatization and breakup of JNR, including those who resigned from the company altogether. By the time of privatization, NRU's membership had dropped to 62,000. Although the overall number of employees was significantly reduced due to streamlining efforts, the union fell to the status of a minority union. [55]

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Among political parties, the Komeito and Democratic Socialist Party (DSP) supported the ruling Liberal Democratic Party (LDP)'s plan. The Japan Socialist Party (JSP) opposed the division but accepted privatization, and the Japanese Communist Party (JCP) opposed both division and privatization. In the 38th House of Representatives general election held on July 6, 1986, LDP, which had pledged to privatize the three public corporations (JNR, NTT, and JTSCP) and five state-run enterprises, won a sweeping victory, while the opposition parties, led by JSP, suffered a crushing defeat. As a result, the division and privatization of JNR was effectively decided.

On November 1, 1986, JNR implemented a major timetable revision to reflect future privatization. Later that month, eight laws related to JNR reform were passed, including:

  • The Japanese National Railway Reform Act (日本国有鉄道改革法)
  • The Passenger Railway Companies and Japan Freight Railway Company Act (旅客鉄道株式会社及び日本貨物鉄道株式会社に関する法律)
  • The Shinkansen Holding Corporation Act (新幹線鉄道保有機構法)
  • The Japanese National Railway Settlement Corporation Act (日本国有鉄道清算事業団法)
  • The Special Measures Law for Promoting Reemployment of Employees Who Wish to Retire from Japanese National Railways and Employees of the Japanese National Railway Settlement Corporation (日本国有鉄道退職希望職員及び日本国有鉄道清算事業団職員の再就職の促進に関する特別措置法)
  • The Railway Business Act (鉄道事業法)
  • The Law to Amend Part of the Local Tax Law and the Law Concerning Grants and Payments to Municipalities Where State-owned Assets Are Located (地方税法及び国有資産等所在市町村交付金及び納付金に関する法律の一部を改正する法律)

These laws created the legal foundation for JNR's division and privatization.

Workforce redistributions and surplus personnel

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JNR and the JR companies were treated as separate legal entities, and JR had no legal obligation to hire former JNR employees. Legally, the new companies were independent, and applications from former JNR employees were treated as external applicants. [56]

Among the approximately 7,000 who refused employment outside their home regions or in government agencies, special-purpose corporations, and private companies and were sent to the JNRSC, 70.8% were NRU members. The rest were from Zendōrō and National Railway Chiba Motive Power Union (国鉄千葉動力車労働組合, Kokutetsu Chiba Dōryokusha Rōdō Kumiai), the latter shortened as CMU (動労千葉, Dōrō Chiba). [note 8] When the JNRSC was dissolved in 1998, 1,047 individuals remained unemployed, most of whom were NRU members. NRU, Zendōrō, and CMU filed relief petitions with the Central Labor Relations Commission [ja]. Although the Commission did not grant relief in every case, it did issue orders in favor of the unions in some instances. In response, the JR companies filed a lawsuit against the commission, claiming that "the JNR and the JR companies are unrelated". The Supreme Court ultimately ruled in favor of the JR companies. However, lawsuits concerning the legal responsibility of the former JNR continued. In 2010, under the administration of Prime Minister Yukio Hatoyama of the Democratic Party of Japan, a political settlement was reached in which compensation of 22 million yen per household was paid to the plaintiffs. Notably, following this political resolution, the NRU leadership expelled union members who had participated in the lawsuits.

Critics of the privatization argued that it amounted to a "state-sanctioned unfair labor practice". [57] Some union members of NRU, Zendōrō, and CMU alleged that JNR's then-deputy director of personnel, Takayuki Kasai, recognized that the dissolution of anti-privatization unions such as the NRU constituted unfair labor practices. They claimed Kasai stated it would be "cleverly done" by exploiting legal loopholes. [note 9] Kasai denied this, and courts were divided on whether it constituted an unfair labor practice. [58][59][60]

Aftermath of privatization

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Modernization of operations

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After privatization was effectively decided, the November 1, 1986 timetable revision introduced regionally tailored train schedules and new rolling stock. In areas such as Kansai, the elimination of uniform timetables that ignored local needs has led to the introduction of train schedules that meet local needs. Old vehicles and outdated automatic train stop (ATS) systems were upgraded.

Although railways were considered a "sunset industry" at the time due to declining market share, privatization reversed the trend. Ridership stabilized and began increasing slightly—prompting talk of a "railway revival". [61] New stations were opened, service frequency increased, and congestion eased significantly. With the support of the booming bubble economy, ridership of JR companies in Honshu (JR East, JR Central, and JR West) rose about 20% between 1987 and 1995. Even in non-Honshu area, where ridership had been declining during the JNR era, there was a significant ridership increase of approximately 10% in Kyushu, 20% in Shikoku, and 25% in Hokkaido. [15] Electrification and double-tracking projects also progressed, particularly in urban areas.

In Kansai, where JNR had long competed with powerful private railways, JR West's "Urban Network" successfully outperformed rivals. However, incidents such as the Shigaraki train disaster, Amagasaki derailment, sparked criticism that JR prioritized market principles over safety. On the other hand, some argue that accident rates have statistically declined since privatization, and private railways tend to have fewer accidents—suggesting there is no link between these incidents and the privatization. [62]

A train car severely damaged in the Amagasaki derailment accident. One of the causes identified was that the driver, fearing punitive Nikkin Kyōiku [ja], delayed the use of the brakes.

The Amagasaki derailment also revealed the existence of Nikkin Kyōiku (日勤教育; "Day Shift Re-education") controversy. In this internal training system, which was supposed to be aimed at preventing the recurrence of accidents and other incidents, had become inappropriate, serving as a means of punishment and bullying for employees and ultimately caused the accident.

In the Tōhoku region, JR East introduced the 701 series all-longitudinal seat commuter trains with slogans like "urban style". However, as longitudinal seats are less comfortable and they also reduced the number of train sets, the change sparked backlash. [63] Especially outside the congested Sendai area, many passengers switched to cars and highway buses.

Divergence in fare systems

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During the JNR era, due to the fact that fare increases had been suppressed in earlier years, a fare increase of approximately 50% was implemented in October 1976, and from 1978 onwards, with the exception of 1983, fare increases were repeated almost every year until 1986. Since privatization, however, the three JR companies in Honshu have not raised basic fares, except to adjust for consumption tax increases (1989, 1997, 2014, and 2019). On the other hand, due to the harsh business environment, the "Three Island Companies" (三島会社, Santō-gaisha), namely JR Hokkaido, JR Shikoku, and JR Kyushu, implemented a fare increase in 1996 and added a surcharge for passengers traveling across the JR companies in Honshu. In October 2019, JR Hokkaido implemented a fare increase that exceeded the consumption tax increase, and in May 2023, JR Shikoku also implemented a fare increase. As a result, Japan's nationwide unified fare system has effectively collapsed, except for travel that spans both Honshu and the Three Islands.

Decline of sleeper trains

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Long-distance sleeper trains (called the "Blue Trains" in Japan), which operated across multiple companies, were preserved at the time of privatization. The opening of the Seikan Tunnel and Great Seto Bridge in 1988 even spurred new long-distance routes. However, by the 1990s, economic stagnation, competition from other transportation modes, and the popularization of overseas travel led to a decline in passengers of these trains. Furthermore, the privatization and division of JR companies resulted differences in the business priorities between them, which hindered improvements to long-distance trains, such as the introduction of new train cars. As a result, these trains lost their competitiveness against other transportation modes, and were gradually discontinued. As of 2024, the only remaining long-distance regular sleeper train is the Sunrise Izumo/Seto.

The "Blank Generation"

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Toward the end of the JNR era, it became evident that independent reconstruction was no longer possible, leading to a complete halt in new employee recruitment. Even after the launch of the JR Group, uncertainty about the feasibility of recovery meant that hiring new employees was not a priority. While the hiring of university graduates as future managerial staff resumed in the year following privatization, recruitment of high school graduates—who would form the backbone of the workforce—progressed only slowly. As a result, JR companies faced a generation gap, with a notable shortage of mid-career employees born before 1976. Consequently, younger frontline hires were sometimes placed in critical operational positions such as dispatch command, a situation that has been pointed out by observers. [64]

Labor union reorganization

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See also: JNR dismissal lawsuit

In labor relations, the Japan Confederation of Railway Workers' Unions (全日本鉄道労働組合総連合会, Zen Nihon Tetsudō Rōdō Kumiai Sō-rengōkai), shortened as JRU (JR総連, Jei-Āru Sōren)[note 10], which had cooperated with the privatization, came to dominate workplace dynamics. Later, due to internal policy conflicts, a splinter group—Japan Railway Trade Unions Confederation (日本鉄道労働組合連合会, Nihon Tetsudō Rōdō Kumiai Rengōkai), shortened as JRTU (JR連合, Jei-Āru Rengō), primarily composed of former Tetsurō (Japan Railway Workers' Union) affiliates—was formed. Both organizations are affiliated with Rengo (the Japanese Trade Union Confederation), which was affiliated with the Democratic Party of Japan (now split into the Constitutional Democratic Party of Japan and the Democratic Party For the People). Meanwhile, NRU (National Railway Workers' Union), though now a minority group, remains active and is affiliated with Zenrōkyō (National Trade Union Council), which is affiliated with the Social Democratic Party.

Following the end of the Cold War, the bursting of the asset bubble, and the broader adoption of labor-management cooperation frameworks, radical labor disputes in public transportation in Japan, including within the JR companies, became very difficult. In this sense, the Japanese government and JNR leadership achieved their aim of rendering strikes and work-to-rule actions effectively powerless. [note 11]

CMU is known as a labor union that still collaborates with the far-left Chūkaku-ha and continues political activities today.

The only exception is the CMU (National Railway Chiba Motive Power Union), which maintains a strong presence among train drivers in the Bōsō Peninsula region of Chiba Prefecture. However, even in that region, there have been no strike-related disruptions or service suspensions since 2011, suggesting a decline in union influence.

In companies where JR Sōren held a majority, there were reported cases of harassment—such as persistently pressuring members who had transferred to other unions to return, or reprimanding those who associated with other unions, ultimately driving them to resign. [65][note 12] Conversely, in companies where JRTU held sway, there were cases of discrimination against workers affiliated with other unions, including denial of promotions and so-called Nikkin Kyōiku [ja] ("Day Shift Re-education") involving verbal abuse and intimidation. In some tragic instances, this led to suicides. This Nikkin Kyōiku would later become known as the cause of the Amagasaki derailment accident. [66][67][68][69]

On May 27, 2002, eight members of NRU—some of whom were senior officials or activists affiliated with Chūkaku-ha—were arrested by the Tokyo Metropolitan Police Department's Public Security Bureau for violently assaulting a fellow NRU member (punching, kicking, strangling). Six of them were indicted on October 28. The next day, two more were arrested, and both were indicted on November 18. [70]

NRU became a minority union across all JR companies after privatization. Due to its opposition to the division and privatization, many of its members were not rehired by JR and remained with the JNRSC until dismissal. Of these, 1,047 formed the "NRU Struggle Group" (国労闘争団, Kokurō Tōsōdan) and filed a complaint with local labor relations commissions, arguing they were victims of unfair labor practices. Although the regional commissions ordered JR to provide relief, JR companies refused and requested a review. The Central Labor Commission largely sided with the struggle group, but JR countered by filing a lawsuit in Tokyo District Court. JR Sōren and JRTU, both of which had supported privatization, reportedly pressured companies not to accept any ruling in favor of the NRU complainants.

Public support for the movement was limited due to various factors: backlash from the public over NRU and NRMU's past actions—such as work-to-rule, the Ageo Incident, the Greater Tokyo Area JNR Riots, suto-ken suto (strikes for the right to strike), unauthorized leave and overtime, and working under the influence of alcohol—; a shift toward labor-management cooperation in Japan's labor movement; the fact that these unions had not joined Rengo, the largest national labor federation in Japan; and the difficulty the public had in understanding their demand that JR hire workers from unions that had opposed the privatization in the first place. In 2004, the Supreme Court ruled in favor of JR, affirming that the companies bore no responsibility. Meanwhile, conflicts between the increasingly radicalized NRU Struggle Group and the NRU leadership itself deepened significantly.

Despite JNR's dissolution, NRU still calls itself the National Railway Workers' Union. However, in 1995 it formally accepted the division and privatization of JNR—under pressure from JR companies, who had demanded this acknowledgment as a precondition for dropping damages lawsuits. Some journalists argue that this case established a troubling precedent: it made dismissals through what amounted to "strategic bankruptcy" legally permissible. [note 13]

The fate of JNR's enormous debt

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At the time of JNR's breakup and privatization, its cumulative debt had reached 37.1 trillion yen, approximately 168 billion USD at the exchange rate at that time. Of this, 25.5 trillion yen was assigned to the JNRSC for repayment, The remaining 11.6 trillion yen was to be repaid by JR East, JR Central, JR West, JR Freight, and the Shinkansen Holding Corporation (dissolved in 1991). JR Hokkaido, JR Shikoku, and JR Kyushu—whose business outlooks were deemed too poor—were exempted from repayment obligations.

While the primary goal of the JNR reform was the resolution of this massive debt, the outcome can be judged as a failure. One key reason was that the debt, already massive, grew rapidly under compound interest—reaching levels where even over 1 trillion yen per year in interest payments alone made repayment nearly impossible. Many argue this could have been avoided if the Japanese government had intervened earlier, while the debt was still manageable. However, under the principle of "independent accounting", the government had kept subsidies to a minimum and instead allowed JNR to accumulate debt on its own. Although the passenger division had returned to a surplus in fiscal year 1984, [71] this was nowhere near enough to repay the cumulative debt—let alone the interest.

That said, the privatization introduced market-based principles that significantly improved the profitability of core railway operations. Moreover, because the burden on JR companies was limited to a manageable level, they were able to steadily reduce their interest-bearing debt.

In a public relations document, the Ministry of Land, Infrastructure, Transport and Tourism stated: "In the final years of JNR, the government injected over 600 billion yen in subsidies in 1985 alone, yet JNR still posted losses exceeding 1 trillion yen. In contrast, by FY2005, the seven JR companies recorded a combined recurring profit of approximately 500 billion yen and paid about 240 billion yen in corporate and local taxes". [72]

Meanwhile, debt repayment by the JNRSC made little progress. Although the market value of the land assets held by the Settlement Corporation was estimated at 14.7 trillion yen, the sales plan was based on an estimate of just 7.7 trillion yen—nearly half that amount—raising serious questions about the validity of the plan. In reality, land values surged during the subsequent asset bubble, and by March 1988, some commentators even claimed that the actual market value exceeded 30 trillion yen at one point. [73]

However, due to concerns that urban redevelopment projects funded by land sales would further fuel the skyrocketing land prices, political intervention occurred. For instance, a Cabinet decision under the Nakasone administration declared that "sales will be postponed until abnormal price increases in the affected regions subside". [74] As a result, asset liquidation did not proceed as planned.

After the bubble burst, land prices plummeted. During the extended period in which these assets were effectively frozen, the accumulation of interest-bearing debt accelerated, and ironically, the total amount of debt increased. By the time the JNRSC was dissolved on October 22, 1998, the debt had ballooned to 28.3 trillion yen—2.8 trillion yen more than the amount inherited from JNR. Ultimately, the task of debt repayment was taken over by the JNR Settlement Headquarters (国鉄清算事業本部, Kokutetsu Seisan Jigyō Honbu) of the JRTT (Japan Railway Construction, Transport and Technology Agency), an incorporated administrative agency.

Of the 28.3 trillion yen in debt held at the time of the JNRSC's dissolution, 16.1 trillion yen in interest-bearing debt was transferred to the national general account (funded by tobacco excise tax), effectively becoming national debt. Of the remainder, 3.4 trillion yen for future pension liabilities and approximately 590 billion yen for welfare pension transfers were to be repaid by the JNR Settlement Headquarters. JR companies were also required to repay around 180 billion yen in welfare pension transfer costs, in addition to their prior obligations. The rest of the debt was written off.

Reduction of unprofitable local lines

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As noted earlier, the elimination of specified local lines—decided before the privatization—was completed within three years. Subsequently, however, other local lines also faced closure due to depopulation, aging societies, and increased automobile use stemming from improved road networks. Additionally, two lines transferred to private operators under the JNR Reconstruction Act—Shimokita Kōtsū [ja] Ōhata Line [ja] and Kōnan Railway Kuroishi Line—were later shut down due to growing deficits. Several third-sector railways also ceased operations: starting with the full closure of Hokkaidō Chihoku Kōgen Railway in April 2006, other casualties included the Kamioka Railway [ja], Miki Railway, and Takachiho Railway, which suffered from both ridership decline and natural disasters. Noto Railway also abandoned most of its lines.

Only a few third-sector lines remain profitable, such as the Aichi Loop Railway, which benefits from proximity to a major metropolitan area. Even so, the company has rarely posted actual profits without financial subsidies from Aichi Prefecture. Additionally, the government-provided transition grants have significantly lost value due to declining interest rates and lower investment returns.

Since the 2000s, new operational models emerged. Under the so-called "vertical separation" (infrastructure-operation separation) model, track ownership and train operations were split between different entities (examples include Wakasa Railway Wakasa Line and Shigaraki Kohgen Railway Shigaraki Line), as well as lines like the Miyazu Line of the former Kitakinki Tango Railway, where the original operator retained track ownership but handed over operations. JR West also began suspending services on local lines during the day for track maintenance. However, this was limited to low-traffic periods—once a month during weekdays—and announced in advance.

With the amendment of the Railway Business Act in 1999 (effective March 2000), procedures for closing deficit-ridden lines were simplified. Previously, government approval was required; after the revision, only a formal notification was necessary. Following this change, the terminal section of the Kabe Line was discontinued in 2003, [note 14] the Iwaizumi Line, which had been suspended since a 2010 disaster, was officially closed in March 2014, and the section of the Esashi Line between Kikonai and Esashi Stations was discontinued on May 12, 2014. In both the Esashi and Iwaizumi cases, closures were implemented with local government consent. [75]

In 2009, JR Central proposed closing the terminal section of the Meishō Line, which had been suspended due to a natural disaster, but later agreed to its restoration contingent on local cooperation. In April 2010, the president of JR West revealed that some local lines might be replaced with bus services and that discussions with municipalities had begun. In August 2015, JR Hokkaido announced its intention to close the terminal section of the Rumoi Line between Rumoi and Mashike Stations [76]—a plan that was formalized with a closure notice on June 29, 2016, and executed on December 5, 2016.

In a similar move, JR West submitted a closure notice for the Sankō Line on September 30, 2016, and the line was shut down on April 1, 2018. [77] Facing serious financial trouble, JR Hokkaido identified 13 routes or sections as "lines difficult to maintain" (維持困難路線) in November 2016 and began discussions with local governments. Among them, the Yūbari Branch Line of the Sekishō Line (Shin-Yūbari to Yūbari) was discontinued in March 2019.

Even after the privatization into JR, many local lines have been abolished. The photograph shows the former Kesennuma Line, part of which was converted to BRT service after the Great East Japan Earthquake.

Among the lines damaged by the Great East Japan Earthquake of 2011, parts of the Kesennuma Line and Ōfunato Line were repurposed as dedicated busways for Bus rapid transit (BRT). In July 2015, JR East officially announced it would not restore rail service but continue with BRT operations. [78] On April 1, 2020, it formally terminated its railway business (by railway replacement bus) for these lines. [79] As for the Yamada Line between Miyako and Kamaishi, which had also been suspended, local governments agreed in December 2014 to transfer operations to the Sanriku Railway, which fully restored service as the Rias Line on March 23, 2019. [80]

Even for major lines, under the Seibi Shinkansen (整備新幹線; "New Shinkansen Lines to Install") development scheme—designed to avoid creating another "JNR-like" debt crisis—some unprofitable conventional lines were separated from JR companies. Although the opening of new Shinkansen routes spurred local economies by boosting tourism and business travel, it also had unintended consequences. At stations such as Komoro and Akune, conventional limited express trains used to stop, but after the opening of parallel Shinkansen lines, they began to be skipped, creating a sense of unfairness as local residents were left with less convenient service.

Management disparities among JR companies

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As mentioned earlier, while the three Honshu-based JR companies—whose profitability had been anticipated—were required to assume part of JNR's debt, the three JR companies on the Three Islands (Hokkaido, Shikoku, and Kyushu), whose poor performance had been expected, were exempted from repayment. Instead, a Management Stabilization Fund (経営安定基金) was established, and its investment income was used to cover their deficits, with the aim of ensuring that all JR companies would operate in the black. However, with the collapse of the economic bubble, Japan entered an era of extremely low interest rates. The Honshu companies benefited from lower debt repayment costs, whereas the sharp decline in returns from the Management Stabilization Fund pushed the Three Islands companies into financial difficulties. The Honshu companies achieved steady management results and went public by 1997, but among the Three Islands companies only JR Kyushu managed to be listed in 2016, while JR Hokkaido and JR Shikoku, as well as JR Freight, still have no prospect of stock market listing.

These disparities in management performance are reflected in each company's railway investment. JR East has worked to alleviate congestion by opening the Ueno–Tokyo Line and introducing large numbers of new trains, while JR Central has aggressively invested in the self-financed construction of the maglev Chūō Shinkansen. In contrast, JR Hokkaido has successively shut down unprofitable local lines, and JR Shikoku, affected by the decline in passengers due to expressway expansion, [note 15] has been forced to implement rationalization measures such as reducing train services on some routes. Among the Three Islands companies, JR Kyushu stands out: thanks to its service area including numerous designated and core cities, and to its emphasis on non-transportation sectors such as real estate, the company was able to achieve a successful stock market listing in 2016.

Difficult conditions have continued in regions such as Hokkaido, Shikoku, Kyushu, and Tōhoku. Even within LDP, figures such as Shizuka Kamei,[81] who served as Parliamentary Vice-Minister for Transport under the Nakasone Cabinet, and Tarō Asō [82] have voiced criticism that the division of JNR was a failure.

Legacy and influence

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The privatization and breakup of JNR served as a model for subsequent reforms, including the privatization of the Japan Highway Public Corporation and the Japan Post. In fact, Masatake Matsuda [ja], then-chairman of JR East and a key figure in JNR privatization, was appointed as a member of the committee promoting highway privatization, recognized for his leadership in the JNR reform.

Railway privatization outside Japan

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Map of long-distance passenger rail services in Central Europe. Open-access private operators compete with state-owned railways.
See also: Privatisation of British Rail

In Japan, a policy was implemented whereby all railway assets and operations, previously state-owned, were fully privatized while maintaining the form of a vertically integrated organization, in which the railway operators that run the trains also own and exclusively use the infrastructure such as the railway lines. However, aside from Japan, only a handful of countries—mainly in the former Communist Bloc, such as Russia (2003) and Vietnam (2010)—have undertaken such vertically integrated corporatization, which structurally leaves little room for the introduction of market competition. Globally, this model is rarely adopted.

In European countries, inspired by Japan's experience, privatization has taken a different form. While some countries, such as the United Kingdom, pursued railway privatization through fragmentation, most countries, such as Germany, opted for privatizing the railway system under a single company. What distinguishes the European approach from Japan's is the adoption of the "vertical separation model [ja]" and "open access", both of which are mandated under European Union (EU) directives.

Under the vertical separation model, the management of railway operations is separated between the owner and maintainer of railway infrastructure and the operator of train services. A government agency or state-funded organization serves as the railway infrastructure manager, holding and maintaining fixed assets like tracks as public property. The railway undertakings (train operators) then pay infrastructure usage fees and purchase train paths to run their services. [83]

"Open access" in the rail sector refers to the liberalization of market entry for new railway operators on existing networks. This policy grants access rights to third parties beyond incumbent national railways, opening the market to broader competition. [84] Since the 1990s, the EU has pursued this open-network policy to liberalize network-based public utilities—such as railways, telecommunications, electricity, and gas—promote competition, and advance the formation of the European single market. [85] Operators not relying on a franchise model are referred to as open-access operators. The framework is designed based on the contestable market theory in economics, where government investment in infrastructure lowers the entry and exit barriers for operators, thus promoting competition in the market. [86]

However, these countries have also faced challenges similar to those experienced in Japan. These include the further abandonment of unprofitable local services, delays in upgrading low-density conventional lines for higher-speed operations, and declining technical capabilities due to organizational fragmentation—issues that have arguably contributed to the oligopolization of the railway rolling stock industry.

Among European countries, the United Kingdom adopted a particularly complex privatization model. However, due to a focus on shareholder returns—where available capital was directed toward high dividends for executives rather than infrastructure investment—a series of accidents occurred, revealing serious infrastructure deterioration. This situation led to the decision in 2024 to re-nationalize passenger rail operations. The process of re-nationalization is being carried out in stages from 2025 through 2027.

Notes

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  1. ^ Subsequently, from April 2015, under the vertical separation model (separation of infrastructure ownership and operation), Kitakinki Tango Railway became a Category-3 railway operator (owning infrastructure), while Willer Trains (operating under the brand name “Kyoto Tango Railway”) became a Category-2 railway operator (conducting actual train services).
  2. ^ Hereafter referred to as "Tetsurō" as its English short name "JRU" is shared by different union.
  3. ^ Suto-ken suto refers to the "strike for the right to strike". Because employees of JNR were considered a type of public servant, strikes were prohibited under a 1948 law. Consequently, the unions initially refrained from striking and adopted a policy of submitting labor disputes to arbitration. However, as cases increased in which the government declined to implement arbitration proposals, citing reasons such as "fiscal constraints", the unions began to engage in work-to-rule starting in 1952. Furthermore, beginning in 1961, they officially launched strikes "to obtain the right to strike".
  4. ^ The labor unions referred to this movement as a "law-abiding", but in 1956 the government (under LDP) officially recognized such actions as "illegal". [44] However, this did not result in the establishment of any judicial precedent; it remained merely within the scope of administrative guidance advising that such actions should not be taken.
  5. ^ The reason why the vertical separation model or the publicly built–privately operated model was not adopted was to prevent adverse effects such as the construction of numerous nonessential and low-priority local lines under political pressure.
  6. ^ Although Kinomiya Station is, for operational purposes, a station on the Itō Line, the Tōkaidō Main Line and the Itō Line run parallel as far as Kinomiya. Next to the Itō Line platform at Kinomiya Station, on the Tōkaidō Main Line tracks, there is a siding where JR East trains turning back at Atami Station are stabled. For this reason, from the standpoint of train operation, Kinomiya Station is also regarded as existing on the Tōkaidō Main Line, and the section up to this point is under the jurisdiction of JR East.
  7. ^ The suto-ken suto was repeated many times after 1971, when the labor unions gained momentum following the failure of the Marusei Movement. In particular, the strike of November 1975 became a large-scale action; however, the government and the ruling LDP refused to yield even slightly, and the strike ultimately ended in defeat for the unions. It is widely believed that one major reason was that, due to previous "work-to-rule", shippers had already stopped using JNR's freight services, so the impact on cargo transportation was far smaller than expected. This defeat dampened the momentum of these labor unions and also caused cracks in their cooperative relationship.
  8. ^ As its name suggests, CMU was originally the Chiba Regional Chapter of NRMU. However, from around 1972 onward, it had been in conflict with the NRMU headquarters. The Chiba Chapter supported and participated in the Sanrizuka Struggle opposing the construction of Narita Airport, but as that movement became increasingly radicalized by the New Left, the NRMU leadership decided in 1979 to sever all ties with the Sanrizuka Struggle. The Chiba Chapter, rejecting this decision and choosing to continue its involvement, consequently broke away and became an independent union.
  9. ^ On May 21, 1986, at a meeting of the three executive officers from each branch of the Shinkansen section of NRMU, Kasai is reported to have said in his greeting: "I am now thinking of punching Yamazaki (of NRU) in the gut. I believe we must act in a way that prevents everyone from being made unhappy and dragged down together. However, engaging in 'unfair labor practices' is prohibited by law, so I will not commit any unfair labor practices. In other words, 'not doing them' means doing things cleverly..."
  10. ^ Hereafter referred to as "JR Sōren" as its English short name "JRU" is shared by different union.
  11. ^ Note, however, that unlike during the JNR era—when strikes of public servants were illegal—strikes under privatized JR companies became legal. As such, the word "illegal strike" disappeared from post-strike apologies issued by companies to passengers.
  12. ^ In this case, called the Urawa Train Depot Incident (浦和電車区事件), JR Sōren regarded the dismissal of the seven workers who were summarily discharged as a false accusation and filed a lawsuit against JR East seeking the cancellation of the disciplinary dismissals and compensation for damages. In the criminal proceedings, guilty verdicts were handed down in both the first and second instances, but in the civil lawsuit, the court ruled that the dismissals of two of the workers were invalid.
  13. ^ JNR was effectively bankrupt since its cumulative debt had reached over 37.1 trillion yen.
  14. ^ Of the discontinued section of the Kabe Line, the 1.6 km stretch from Kabe Station to Aki-Kameyama Station (near the former Kōdo Station) was electrified and railway operations were reinstated on March 4, 2017.
  15. ^ Shortly after JNR's privatization, the government adopted the Comprehensive National Development Plan that promoted expressway construction as a central policy.

References

[edit]
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  2. ^ Restructuring Supervisory Commission 1985, p. 99.
  3. ^ Nakanishi, Ken'ichi 1985, p. 290.
  4. ^ Provisional Commission for Administrative Reform, Prime Minister's Office 1982, p. 88.
  5. ^ The Zenkō Suzuki Cabinet (1982-09-24), 今後における行政改革の具体化方策について（昭和５７年９月２４日　閣議決定）
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  7. ^ Kusano, Atsushi 1989, pp. 208–209.
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Further reading

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Government documents

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Books

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  • Katō, Hitoshi (1986). 国鉄崩壊 [The Collapse of JNR]. Kodansha. ISBN 9784062030885.
  • Matsuda, Masatake [in Japanese] (2002). なせばなる民営化JR東日本―自主自立の経営15年の軌跡 [Privatization Achieved through Determination: JR East—Fifteen Years of Independent Management]. Japan Productivity Center. ISBN 9784820117247.
  • Kasai, Yoshiyuki [in Japanese] (2001-02-08). 未完の「国鉄改革」―巨大組織の崩壊と再生 [The Unfinished "JNR Reform": Collapse and Rebirth of a Giant Organization]. Toyo Keizai. ISBN 9784492061220.
  • Kasai, Yoshiyuki (2007-07-01). 国鉄改革の真実―「宮廷革命」と「啓蒙運動」 [The Truth about JNR Reform: A "Palace Revolution" and an "Enlightenment Movement"]. Chuokoron-Shinsha. ISBN 9784120038495.
  • Shinji, Tomosada (2007). 国鉄最後のダイヤ改正―JRスタートへのドキュメント [The Final JNR Timetable Revision: A Documentary Leading to the Launch of JR]. Kotsu Shimbunsha. ISBN 9784330965079.
  • Shozawa, Hideki [in Japanese] (2011-06-01). 国鉄の基礎知識 [Basic Knowledge of JNR]. Sogensha. ISBN 978-4-422-24066-4.
  • Maki, Hisashi (2017). 昭和解体 国鉄分割・民営化30年目の真実 [The Dismantling of the Showa Era: The Truth about JNR Division and Privatization Thirty Years Later]. Kodansha. ISBN 9784062205245.
  • Kusano, Atsushi [in Japanese] (1989). 国鉄改革 : 政策決定ゲームの主役たち [JNR Reform: The Key Players in the Policy Decision Game]. Chūōkōron-sha. doi:10.11501/13277619.
  • Fukuda, Saburō (1987). 国鉄新会社発足 : その軌跡と構図 [The Launch of the New JNR Companies: Their Development and Structure]. 福田三郎. doi:10.11501/13331747.
  • Nakanishi, Ken'ichi (1985). 戦後日本国有鉄道論 [Postwar Theories on the Japanese National Railways]. Toyo Keizai. doi:10.11501/12069295.
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See also

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