Job cuts hit dispatch firms hard

by Mariko Kato

In the past few months, companies have started to cut workers to save costs. As well as growing to be a major social issue, slashing temp workers also means agencies dispatching such workers face an increasingly tough time.

“Temp agencies of all sizes are in a difficult situation,” said Teruo Kawabe, a representative of Japan Staffing Service Association, an industry group of temp agencies.

Most of the association’s members send temp workers to offices rather than factories, where many jobs are being cut, but they, too, are losing contracts, he said.

“They’re suffering, even though they don’t face simultaneous job losses in large numbers, as they tend to allocate a small number of staff to different companies,” Kawabe explained.

Compared with 2007, the total amount of debt owed by temp agencies that went out of business so far this year fell to ¥3.68 billion from ¥4.47 billion, but the number of bankrupt temp agencies has risen from 33 to 47, according to a survey compiled by Teikoku Databank Ltd.

Over the past two years, both the number of insolvent temp agencies and the total debt they owe has almost doubled, the survey said.

Even major temp agencies are affected.

“This year, there has been no increase in the number of staff we send out, while in recent times it had been rising by more than 10 percent every year,” said a spokeswoman for Intelligence, Ltd.

But it is the small and local-level temp agencies that dispatched workers to large manufacturers that are bearing the brunt of the downturn as these workers are cut loose, according to a union representative.

Although major temp agencies send staff to client firms in several sectors, smaller agencies allocate their workforces to only one or two companies, making them vulnerable when many jobs are cut at the same time.

“These agencies are angry because, having been expected to provide a workforce year on year, their staff contracts are now being terminated illegally or not being renewed,” said the representative of a national union who wished to remain anonymous due to the sensitivity of the issue.

Temp agencies that send staff exclusively to one or several specific companies, a practice known as “moppara haken,” is illegal, according to the Health, Labor and Welfare Ministry.

Such small temp agencies are vulnerable to the decisions of their clients, according to the union spokesman.

“Their client companies are cutting jobs midcontract, because if they wait until the contracts end in March, the government may have endorsed policies that bind them to continue employing temp workers. So they are cutting jobs at the same time as other companies, seeking safety in numbers,” he said.