The worst crisis in a century is eroding the Japanese economy as a growing number of “nonregular” workers lose their jobs. The unemployment rate in December reached 4.4 percent, up 0.5 percentage point from the previous month — the steepest increase ever. The labor ministry estimates that by the end of March a total of 124,802 nonregular workers will have lost their jobs since October. An association of staffing agencies estimates up to 400,000.
During the yearend and new year holidays, as many as 500 jobless people rushed to a makeshift tent village set up in Hibiya Park in Tokyo to accommodate those made homeless. The number became so large that the ministry had to open its auditorium to take in some of them.
This is not the first time that workers in Japan have lost their jobs due to a recession, but never before have social problems stemming from unemployment been so serious. The reason for that is a sharp increase in the number of nonregular workers who can be fired easily, who are not paid enough to save money, and who have no recourse when they lose their jobs.
According to the “White Paper on Labor and Economy,” the percentage of nonregular workers in service industries increased from 24.6 percent in 1992 to 39.3 percent in 2007, and from 17.7 percent to 22.9 percent, respectively, in the manufacturing industries. A more serious social problem has arisen in the manufacturing sector where laid-off workers must normally leave company-provided living quarters.
Japan has very seldom experienced a serious unemployment problem because corporations tended to cope with a recession by transferring their employees, restricting employment of new recruits, refraining from filling vacancies caused by retirement of elderly workers and temporarily sending workers home. This time, however, Toyota Motor Corp., which is so rich in cash that it is sometimes referred to as “Toyota Bank,” took the early action of laying off nonregular workers.
Other automakers and electric machinery manufacturers have followed suit. The management of these corporations claims that such action, taken to meet the declining demand for their products, is necessary to fulfill their accountability to their stockholders.
Unfortunately, however, no adequate social safety net is provided for these nonregular workers under the social security system. Those who work fewer than three-fourths of “regular” working hours are not required to take part in health insurance or welfare pension schemes. Unemployment insurance is not extended to those who work fewer than 20 hours a week or who are not expected to be employed for more than one year. The government’s livelihood assistance is, as a practical matter, closed to workers in their 30s, 40s and 50s. The government’s labor policy obviously failed in deregulating the dispatch of workers by staffing agencies without providing an adequate social safety net for the workers. It is only natural, therefore, for the Japan Labor Union Confederation (Rengo) to insist that all nonregular workers be covered by the unemployment insurance, health insurance and the pension system.
Large-scale dismissals of workers in various industrial sectors seem to have made consumers less willing to spend and to have exacerbated the recession. The mining and manufacturing production index for December showed a record decline from the previous month, and private-sector orders for machinery (excluding shipbuilding and electric power) for October-December showed record declines from the previous quarter, indicating that the whole economy is collapsing. It is no wonder, then, that a number of corporations have started preparing for a second round of dismissals to reduce their workforces.
All these have given rise once again to the idea of implementing the so-called work sharing, aimed at avoiding layoffs and having workers share the reduced amount of work at a reduced pay. This idea was a hot topic of discussion during past recessions triggered by the global oil crisis and a steep rise in the value of Japan’s yen currency, but never became popular because (1) the principle of paying equal pay for equal work has not been established in Japan, (2) working hours are not rigidly controlled, and (3) labor unions strongly oppose any pay reduction.
More important than introducing the work-sharing scheme, however, is to improve the prevailing work practices under which corporations force employees to work overtime without extra compensation in violation of the Labor Standards Law, and workers take an average of only 50 percent of the paid holidays they are entitled to.
First, a change is needed in the working environment where many have died or committed suicide due to excessive work. The labor ministry must take stern measures against labor law violations while the unions must work more toward protecting the workers’ rights by amending their policies that are overly collaborative with management.
The desires of American corporate management have been reflected in the ways in which Japanese labor laws have been amended of late in allowing corporations to receive workers dispatched by staffing agencies.
The American Chamber of Commerce in Japan (ACCJ) made a series of recommendations to the Japanese government in its “2006 Business White Paper.” Among them were: permitting corporations to lay off workers or reduce the workforce based on reasonable managerial judgment, introducing a white-collar exemption in the overtime rules under the Labor Standards Law, eliminating the requirement that companies offer direct employment to dispatched workers in certain circumstances, eliminating limitations on dispatching periods and improving the discretionary work system by expanding the scope of eligible workers.
But the ACCJ paper fails to refer to those American labor practices that are quite favorable to workers, such as having layoffs begin with those who have served the company for the shortest period, giving rehiring priority to those with longer periods of service and not forcing anybody to a new workplace. These conditions are the envy of middle-aged and elderly workers in Japan.
Shortly after taking office, U.S. President Barack Obama signed an executive order supporting labor-union activities inside companies — a major shift from the labor policies of the previous administration, which leaned heavily toward corporate management. The Japanese government, too, is called upon to revise its posture of listening only to the demands of the U.S. business community.
Kiroku Hanai is a journalist and a former editorial writer for Tokyo Shimbun.
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