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‘Black’ firms exploit staff, ‘black’ state taxes them

by Mark Schreiber

Once upon a time, a newly hired employee in Japan would enter into a covenant under which, by unspoken agreement, he or she would endeavor to remain with the company for at least three years. The period it takes for persistence to be rewarded is reflected in an old saying that goes, “ishi no ue ni mo sannen” (“even the coldest rock will warm up after three years”).

Some time ago, however, it became clear that growing numbers of young Japanese no longer possessed the patience and fortitude of earlier generations. By the early 1990s this phenomenon spawned the short-lived term “Narita taishoku,” referring to new hires who would start working at a company the first week of April and then, for whatever reason, fail to return to work after the Golden Week holiday that runs from the last week of April through around May 5. The term was a spinoff from the better-known “Narita rikon,” a term applied to couples who abruptly went their separate ways upon return from their overseas honeymoon.

According to Ministry of Health, Labor and Welfare statistics, the worst job sectors for workers quitting within three years are (with percentages in brackets) hostelry, food and beverage businesses (51.0); education and educational support (48.9); and jobs in lifestyle-related or recreation fields (45.4). In contrast, the percentages of workers who walk away from jobs in manufacturing (17.6), mining and other raw materials (13.6) and public utilities (8.8) are considerably lower.

Increasingly, the media have laid the blame for this phenomenon on companies known as burakku kigyō (black businesses). These are described by author Ryu Nitta as companies where management has no desire to reward workers, and where labor laws are intentionally violated. Their wages tend to be comparatively low, working hours are long with unpaid overtime, and employees are often subjected to “power harassment” at the hands of their supervisors.

In the run-up to the Upper House elections in July, reporting on black companies spiked when Liberal Democratic Party candidate Miki Watanabe, founder of the Watami group of companies, campaigned for one of the 48 proportional seats up for grabs. While the LDP won a landslide victory, Watanabe, despite support from Prime Minister Shinzo Abe, went down to defeat — due in no small part to the media’s exceptional efforts to paint Watanabe as a slave driver.

After the elections, this reportage concerning the machinations of the black companies continued unabated. Spa! (Sept. 3) featured a blogger’s second annual “grand prix” for “the most evil corporations of the year,” which were, in descending order, Watami Food Service, Okayama city-based Cross Company Inc., Tohoku University and Benesse Corp. On Sept. 18, NHK’s prime-time “Close-Up Gendai” news program devoted a half-hour of coverage to the phenomenon, and suggested that the Ministry of Health, Labor and Welfare may be turning its attention to grappling with the problem.

Some companies have increasingly come to fear being unfairly tarred with a “black” brush. All it takes is a post by one resentful employee on Twitter, and within one hour of the post, some 800,000 people have heard the news. And for companies so labeled, the repercussions can be quite serious. Last March, Nikkei Business (in its April 15 issue) found that 91.5 percent of students it questioned said they would either decline to work for a firm reputed to be “black,” or their interest in joining such a firm declined. And 61 percent of the survey subjects said they would be disinclined to patronize the products or services of such companies.

Yet recent developments suggest the problem can only get worse: In October, the evening tabloid newspaper Nikkan Gendai ran several articles about a proposed aspect of “Abenomics” that would give the green light to the establishment of “special employment zones” that provide for immediate dismissal of workers for such minor infractions as showing up late for work. The concept is reported to be the brainchild of former Finance Minister Heizo Takenaka, a Harvard-educated former bureaucrat who presently sits on Japan’s Industrial Competitiveness Council, an advisory group to the prime minister.

Tsukuba University professor emeritus Yaroku Kobayashi voiced his opposition to such zones, which he fears would become a springboard for “transforming Japan into a country where it’s easy to fire workers.” After an outcry, plans to relax rules on dismissal in these zones have reportedly been abandoned.

But why stop with companies? In its cover story of Oct. 11, Shukan Kinyobi described Japan as a “black nation.” Economic journalist Tomohiro Takeda cited statistics that put Japan’s real individual tax rate relative to its ratio of national income at 7.2 percent, as opposed to 13.5 in the U.K., 12.6 in Germany, 12.2 in the U.S. and 10.2 in France. This “black tax system,” he claims, gives preferential treatment to the wealthy, particularly capital investors and physicians in private practice, who are able to avoid taxes through a variety of loopholes.

Takeda estimates that cutting out such loopholes so that the affluent are taxed at rates similar to their counterparts in Britain and Germany would bring in as much as ¥10 trillion in additional revenues. So, before boosting the consumption tax, he argues, Japan should increase taxes on the wealthy.