As parent firm posts record profits, Berlitz teachers strike back

Question: How do you get to be on the Forbes list of the world’s billionaires? You might inherit your wealth, take risks and get lucky, or work for it. For Soichiro Fukutake, owner of Berlitz’s parent company Benesse, it’s a case of “all the above.”

For Benesse Corp. and its president, things are looking up: Net sales totaled ¥384 billion in fiscal 2007 (which ended March 31), an 8.4 percent increase over a year earlier; operating profits hit ¥34.9 billion, up 11.4 percent on fiscal 2006, according to the company’s Web site, which boasts of “the fifth consecutive year of record-breaking performance for the company.”

Benesse’s “Language Company” sector — dominated by flagship Berlitz — was running a loss back in fiscal 2004, but profits have been increasing by about a couple of billion yen a year since then. The sector now accounts for some 16 percent of the parent company’s total sales and 18 percent of its profits.

However, the fact that Fukutake is sitting pretty at No. 843 on the Forbes rich list — with a personal net worth of $1.4 billion — is not lost on a number of rank-and-file teachers at Berlitz Japan.

“Benesse boasts openly on its Web site about the success of its ‘Language Company’ sector, mentioning Berlitz Japan in particular,” notes longtime Berlitz teacher and Begunto (Berlitz General Union Tokyo) Vice President Catherine Campbell.

The language teachers of Begunto didn’t need a math class to put two and two together, and in April 2007 they began “shunto” (spring) negotiations for a “base-up” raise and bonus.

“Until 1993, all teachers at Berlitz would get an annual base-up raise in addition to a seniority increase,” says Campbell. “Since ’93, when Benesse bought the company, there has been no across-the-board base-up increase.”

Teachers can, however, get raises via a performance-based evaluation system. Begunto fought against the introduction of this process, which Campbell calls “extremely subjective.”

Despite the fact that relations between the union and management have in the past generally been good — evidenced by a number of successfully negotiated settlements, says Campbell — after a year of negotiations Begunto’s main grievances are unresolved.

On Dec. 13, 2007, Berlitz managers met at the Roppongi Hills Grand Hyatt for what Campbell calls “an extravagant party.”

“This was not typical, but indicative of the extraordinary profits in 2007,” she says.

To many Begunto members, it looked like managers were enjoying the fruits of teachers’ labors while thumbing their noses at the union’s demands. The party spurred Begunto into more drastic action: That evening, while managers enjoyed fine foods and beverages, teachers went on strike, picketing outside the ritzy hotel.

Less than two weeks later, coincidentally, The Japan Times published an article headlined, “Unusual message from Keidanren: It’s time to raise wages.” Keidanren (the Japan Business Federation) encouraged member firms to pay workers more, “emphasizing that both earnings and employee income must rise to maintain the economy’s growth potential.”

In calling for the parent company to redistribute more of the profits back to regular workers, Begunto teachers were encouraged not only by statements by Japan’s largest business group, but also from the country’s prime minister. In “a rare move by a government leader amid intensifying annual labor-management wage talks,” according to a March 7 article in The Japan Times, Yasuo Fukuda echoed Keidanren’s call for firms to raise wages.

According to Begunto members, teacher salaries at Berlitz are comparable to those at other “eikaiwa” (English conversation schools) such as Aeon, Geos and ECC. Union Vice President Paul Baca notes that eikaiwa schools generally pay new hires ¥250,000 per month, essentially the minimum wage for foreigners to secure a working visa.

Also in common with other eikaiwa, Berlitz offers contracts of less than 30 hours a week, which means the company avoids having to pay benefits such as health insurance and pension payments. “This is why they don’t offer a ‘full-time’ contract,” reckons Baca.

However, even though standard contracts are for 26.6 hours — supposedly not full-time — working hours come close to 40 when you add in time spent between classes and on lesson preparation, which teachers don’t get paid for, Baca says.

When he came to Japan 10 years ago, Baca thought maybe he could make English teaching a career.

“Berlitz used to offer contracts with health insurance, pension, and wages higher than the legal minimum and even its competitors,” Baca explains. “Unfortunately those days seem to be gone. Hence we are fighting to get them — Benesse’s Web site says they made record profits thanks in particular to Berlitz Japan.”

Campbell adds that teachers hired since 2005 are essentially paid less than those hired previously. Both make ¥250,000 per month, but new hires must teach 40 lessons a week while others teach 35 lessons a week. “That works out to a 12-percent cut in base-pay rate per lesson.”

Also of concern to Begunto are economic indicators that show the cost of living in Japan has been rising for a couple of years.

The current round of strikes are not unprecedented for Begunto. In 2005, members took industrial action over a variety of grievances: In July 2004, the union Web site called members to action over management’s alleged practice of assessing teachers negatively on their performance evaluation when students requested a different teacher; in October 2004, the issue was “the incredible shrinking teachers’ room.” Other issues included a teacher’s dismissal with just two hours notice; mysterious video cameras that some feared were for monitoring teachers; and the issue that sparked action this year — Benesse profits.

According to Campbell, the strike in 2005 forced management into paying the performance increase for that year, which they had originally frozen. Teachers received the pay increase for 2005 retroactively as a lump sum in January 2006. However, they didn’t win across-the-board base-up pay increases or bonuses — issues Begunto is still fighting for today.

The union claims it is working for improved conditions for all Berlitz employees, including secretaries and non-teaching staff, but not everyone is enthralled with their tactics. One teacher, for example, posted a three-page anonymous statement on the union’s board at Berlitz — a violation of an agreement between Berlitz and Begunto — laying into the union.

“Striking may be effective for Workers, but it is not effective for Professionals because the most immediate effect is Customer dissatisfaction,” the mini-manifesto read. “Customers simply find another professional to perform the required service.”

The teacher went on to note that “Benesse saved Berlitz from almost certain failure. Begunto seems strangely silent on this issue.”

Baca, however, points to a lack of transparency on the matter.

“Berlitz management will not tell us how much has been paid back (of the amount lent to reportedly bail out the company). Basically they are using the usual selective information-distribution policy to support their position, and denial and ignorance when information may be detrimental to them.”

Baca goes on to note that with students paying ¥6,000 or more per lesson, “The profit margin is unreal.” He calculates Berlitz’s labor costs at 25 percent, “extremely low for a service industry.”

Michael Mullen, HR Manager at Berlitz Japan, declined to respond to any of the questions raised in regard to this article.

As the time of writing, at least 55 teachers have conducted “spot strikes” at at least 16 Berlitz schools, most of these in greater Tokyo. Begunto says it is encouraged by the response: Some French and Spanish teachers have walked out, and several more teachers have joined the union. That adds up to teachers walking out of 275 lessons in the greater Tokyo area, at large schools in Ikebukuro and Akasaka as well as suburban locations such as Seijo Gakuen, Atsugi and Kashiwa.

Louis Carlet, Deputy Secretary General of the National Union of General Workers (Nambu), Begunto’s parent union, writes that Berlitz has been forced to “spend massive amounts of money and resources sending ‘shadows’ to cover the classes of potential strikers with strikebreakers.”

He refers to “caffeine cowboys,” managers that sit at coffee shops near schools, poised to rush over and cover classes for striking teachers. Despite these measures, many classes have been canceled, causing more lost revenue.

After Begunto members explained the stakes to covering teachers, some showed solidarity and stopped covering. Others continue to cover the stricken classes, which led some Begunto members to post a controversial poster on school bulletin boards quoting American author Jack London’s definition of a scab.

“After God had finished the rattlesnake, the toad, the vampire,” the poster reads, “He had some awful substance left with which He made a scab.”

When the eikaiwa giant Nova crashed in the fall of 2007, many pundits saw it as part of an overall decline of working conditions for eikaiwa teachers — “a significant and continuing downturn in wages across the whole eikaiwa industry,” according to Peter Sidell and Graeme Jarvie (Zeit Gist, Oct. 30).

“The reality is we are part-time workers brought in and treated like migrant workers,” rues Baca. “We provide a skill- and education-based service but are not treated as such. The government sees this — hence the (humanities and international services) visas — but the industry fails to in order to make profits at the teachers’ and students’ expense.”

Begunto teachers, convinced that Berlitz and its parent company are enjoying significant profits, are determined to reverse that trend.

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