The important fact about Japanese wages today is that pay scales for regular workers have not fallen despite declining prices. This “downward rigidity” in seniority-based wages may be partly responsible for the growing presence of part-time workers and for the nation’s persistently high level of unemployment. This analysis, found in the latest government report on the labor economy, underscores continuous heavy pressure on companies to reduce labor costs.
The seniority-based lifetime employment system makes it difficult to slash the wages of regular workers, so employers try to cut payroll costs by letting go older workers who draw relatively high salaries. Staff shortages are covered by hiring part-time workers who can be paid much less than full-time employees. With fewer full-time jobs available, the jobless rate remains high.
Part-time employment has soared in the past several years as companies, large and small, have stepped up efforts to replace full-time employees with part-time and temporary workers. This is particularly true of midsize and large companies. In fact, various surveys show that this shift to part-time hiring — part of an escalating drive to reduce personnel costs — is reaching epidemic proportions across a broad spectrum of industries.
The young generation has a negative perception of the lifetime employment system, and with good reason. Company allegiance is no longer synonymous with lifelong service; regular workers are now considered to be almost as expendable as part-time and temporary workers. Even career-track workers in the prime of life may be suddenly forced to take early retirement if their organization falters. At home, jobless fathers are often regarded as “nuisances” because these former “corporate warriors” have little to offer when it comes to housekeeping and child care.
Seniority-based wages are part and parcel of the lifetime employment system. But many young workers believe — correctly — that they are not fairly rewarded under the age-indexed pay system. The fact is that employment is taking many different forms, thanks to the growing size of the service industry in the economy.
This is creating a new class of temporary, part-time or contract-based workers who hold more than one part-time job. Mostly young people, these workers apparently have little difficulty dividing their time between or among different firms. Indeed, working part-time appears to be an integral part of their free-wheeling lifestyle. But there is a big problem: the widening wage gap between regular employees and temporary workers.
According to the report, of the 60 million workers in 2001 (not including farmers and forestry workers), 24 percent were part-time workers who worked no more than 35 hours a week. Their numbers, which stood at 10 percent in 1980 and 15 percent in 1990, have continued to rise at an accelerated pace in recent years.
In 2001, the average hourly wage for regular workers was 2,778 yen, compared with 1,026 yen for part-time workers. The gap is unsettling: Regular employees are earning nearly three times as much as their temporary counterparts. Pay for full-time workers has also declined, but only slightly. As the report puts it, “the increasing number of part-time workers is helping to push down both the average number of working hours and the average level of hourly wages.”
Cost-conscious employers may be tempted to hire part-time workers as an easy way to pare payroll costs, but if such a practice becomes widespread it will likely impede efforts to build a vigorous economic society. For one thing, the huge wage gap may have a demoralizing effect on part-time employees. It is certainly unfair to pay them less than half what regulars get for doing the same work.
If nothing is done to improve this situation, job-hopping will become the norm among part-time and other temporary workers. That in itself may not be a bad thing, but if they continue to be treated as marginal workers, our economic society will lose vitality. They should be employed in a positive manner as a means of reinvigorating the work force, not just of cutting labor costs.
To that end, both labor and management need to work together to develop mutually beneficial solutions. The government, for its part, needs to turn around its labor policy to break the employment stalemate. Establishing a legal principle calling for the same pay for the same job will be a step in the right direction. Creating a system of “part-time regular employees” is another step worth considering. It is hoped that discussions on these and other forward-looking proposals will bear fruit.
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