Business / Corporate

Death of 'jobs for life' fuels 4,955% surge at Tokyo firm

by Yuko Takeo

Bloomberg

The breakdown of Japan’s lifetime employment model has been good news at least for the operator of one of the country’s largest jobs websites.

So has the arrival of Prime Minister Shinzo Abe, whose policies helped send Japanese companies’ profits to record levels and demand for staff to the highest in 23 years.

Dip Corp. surged 4,955 percent through Friday since elections were called that brought Abe to power in 2012, the biggest gain of the 1,887 firms in the benchmark Topix index. It’s risen almost five times more than the next-best performer, as companies flock to the site to advertise for workers.

Dip is cashing in on the new Japan, where almost 4 in 10 workers no longer have the job security that characterized the nation’s economy through its 1980s boom. With a bill to loosen labor laws set to pass the Diet, Dip’s chief executive officer says the jump in the company’s shares is justified by the company’s growth outlook.

“Investors have been pricing in our future worth,” Hideki Tomita said in an interview in Tokyo on Aug. 7. “Fewer companies will be willing to hire regular workers.”

Nonregular employees rose to 37 percent of the workforce last year from 15 percent in 1984, according to the health ministry. As economic growth stalled, companies became less willing to hire full-time workers, turning instead to part-timers who are easier to lay off and often receive less pay and fewer benefits.

Dip benefited from an early foray into online job advertisements and TV commercials featuring a popular girl band called AKB48, says Masanori Minami, an analyst at Ichiyoshi Research Institute Inc. in Tokyo, who covers the company.

“When the overall market picks up in Japan, you see this especially in the part-time sector,” Minami said.

Japan’s currency has weakened more than 25 percent against the dollar since Abe came to power, helping send profits for companies on the Nikkei 225 stock average to record heights. In July, Japan’s jobs-to-applicants ratio rose to 1.21, the highest since February 1992.

Dip listed on the Mothers market in 2004, and switched to the first section of the Tokyo exchange in December 2013. Under Abe, its performance is racing ahead of the second-best performer, Jamco Corp., whose shares rose 1,021 percent through last week. None of the three analysts covering Dip has a sell rating, according to data compiled by Bloomberg.

Until now, temporary workers who are dispatched by agencies in Japan had to be made permanent after three years if a company wanted to keep them employed. A law to remove this restriction passed the Lower House in June, and is expected to be approved in the upper chamber soon, according to the Sankei newspaper. This would make it easier for companies to keep workers in less stable roles indefinitely.

While Dip’s main website, Baitoru.com, targets young Japanese who move from one part-time job to another, staffing the country’s convenience stores and karaoke bars, a second site that focuses on temporary workers stands to benefit from the change.

Unsurprisingly, the 49-year-old Tomita is all for it. Japan’s current labor laws are “warped,” he says.

The company has been doing fine even without looser rules. Operating profit surged more than 19 times from ¥248 million ($2 million) in the year ended February 2013 to ¥4.8 billion two years later.

“Their share price may have risen too far,” says Nobuyuki Fujimoto, a senior market analyst at SBI Securities Co. in Tokyo. Dip traded at 36 times earnings as of Sept. 4, more than twice the multiple on the Topix. Many other companies provide job information on the Internet, and tougher competition could eat into Dip’s market share, Ichiyoshi’s Minami said.

Dip was founded in 1997 in Nagoya, an industrial city west of Tokyo known for its proximity to Toyota Motor Corp.’s headquarters. Tomita set up the company after his father’s teaching materials business collapsed.

“Becoming a salaryman wasn’t an option,” a relaxed Tomita, clad in a black polo shirt, said from Dip’s headquarters in Tokyo’s Roppongi district. “Starting my own business was the only choice.”

While benefiting from Japan’s shift away from permanent employment, Tomita has different ideas for his own company. Some 86 percent of the staff are full-time employees, and Tomita plans to hire at least 300 employees next year. At least at Dip, the death of Japan’s jobs-for-life model is meaning more permanent posts.

“We try to hire people straight out of college, and make sure they have the resources to grow,” says Tomita. “We try to show that the company takes care of people.”