The economic fallout in Japan from the coronavirus has triggered a surge in nonpermanent workers seeking job-hunting advice, with some economists predicting unemployment could rise by over a million within a year, surpassing the fallout from the 2008-2009 global financial crisis.
“Your job ends in three days’ time,” a woman hired on a temporary contract for a front desk job at a Tokyo hotel was told by her boss earlier this month.
When she began the three-month contract in February, she was told the position was long-term and planned to renew in May.
But after occupancy rates tanked with the outbreak, she was told by the agency that dispatched her to the hotel the contract would terminate on expiry, with no chance of renewal.
The next day, the hotel laid her off even before that could happen.
“I want them to pay me until the end of this month at least,” she said. The agency, however, is only willing to pay until her last scheduled working day, she said.
On April 7, over 30 organizations, including the Japanese Trade Union Confederation and the Labour Lawyers Association of Japan, held a video conference to discuss the worsening economic situation.
“In early March we had a lot of enquiries about suspending business operations, but since late March it has centered on dismissals,” said one participant. Another said the situation in the labor market is “a battlefield.”
Regional labor unions also reported that companies had begun shortening temporary employees’ contracts in preparation for layoffs.
At the forefront of participants’ minds was the aftermath of the collapse of the U.S. housing market, which brought down storied investment banks Bear Stearns and Lehman Brothers Holdings Inc. in 2008. The ensuing global financial meltdown forced Japanese labor unions and nonprofit organizations to jointly set up a tent shelter at a Tokyo park for temporary workers who had lost both jobs and homes.
“Unlike the ‘Lehman shock,’ where temporary workers in the manufacturing industry were the hardest hit, this one is causing problems for people with all kinds of employment statuses,” said Ichiro Natsume, a lawyer from the LLAJ who spearheaded the video conference.
Economists are also keeping an eye on the pandemic’s impact.
Taro Saito, executive research fellow at the NLI Research Institute, said even at more than ¥100 trillion ($1 trillion), the government’s economic support package is insufficient. Saito said it was likely unemployment rate would rise to 3.9 percent from 2.4 percent in February, with the fallout from the pandemic not yet factored into the official data.
He also estimates the number of unemployed will hit 2.72 million in the fourth quarter, up from 1.56 million at the same time last year.
The pace will be faster than in 2008, when 940,000 people lost their jobs in the one-year period through the third quarter of 2009, he added.
But Shuichiro Sekine, secretary-general of Haken Union, an organization that supports nonpermanent employees, said companies may try to gradually cut payrolls instead of laying off people in one hit. This approach could make it tougher to quantify the scale of unemployment during the coronavirus recession.
“We are still in the early stages of the coronavirus impact. There is a high possibility it will ripple out to all industries and become even more serious than the Lehman shock,” he said.
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