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Eased regulations on the dispatch of workers and corporate cost-cutting efforts have worsened income gaps, the Health, Labor and Welfare Ministry said in an annual labor report Tuesday.

Further aggravating the problem is the opening of more fields for which workers can be dispatched, resulting in a rise in nonregular workers, including part-timers, seasonal and temporary staff, the 2010 White Paper on the Labor Economy says.

Long, stable employment is an effective way to achieve economic growth, the report says, noting the importance of developing human resources in terms of enhancing the ability to add value to goods and services.

The report, comparing employee annual incomes in 1997 with those in 2007, notes the country saw a rise in low-income workers with annual pay of between ¥1 million and the mid-¥2 million level during the 10-year period.

Major corporations increased nonregular employees, causing a surge in low-income workers, a worsening of income gaps and eventually a slowdown in income and consumption growth, it notes.

The white paper, in an analysis of corporate employment behavior, says companies were determined to cut labor costs and hire work-ready personnel instead of training employees fresh out of school.

To achieve growth, the ability to create added value must be improved, the report says, underscoring the importance of handing down techniques and knowledge among workers on the basis of long-term stable employment.

Firms have come to place more importance on “raising” new human resources, the report says, noting both management and labor are re-evaluating traditional practices, including lifelong employment and seniority-based pay.

The government should put energy into achieving macroeconomic stability and support corporate efforts to develop human resources, the paper says.

The labor dispatch law, which went into force in 1986, originally allowed the dispatch of workers in only 13 fields that require high-level expertise, including interpreters and translators.

However, the limit was lifted in principle in 1999. From 2004, the dispatch of workers to manufacturers was also allowed.

A large number of nonregular workers lost their jobs and consequently dwellings after the 2008 collapse of major U.S. brokerage Lehman Brothers triggered the global economic crisis.

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