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The demise of ‘lifetime employment’ in Japan

TOKYO AND NAGOYA, Japan — Though little noted outside Japan, the poor treatment of temps has been a domestic media focus, particularly since the mass layoffs of 2008.

TOKYO AND NAGOYA, Japan — Though little noted outside Japan, the poor treatment of temps has been a domestic media focus, particularly since the mass layoffs of 2008.

That’s fueled popular discontent and pressure on politicians to do something.

In response, Japan’s new center-left government, led by the Democratic Party of Japan (DPJ), has vowed changes. It took power last year in Japan’s first real political transition since World War II. For the first time in decades, a more labor-friendly coalition holds power; Rengo, the umbrella group of company unions, is a pillar of DPJ support.

In March the cabinet proposed reforms, approving a bill banning “dispatch” labor and one-day contracts in the manufacturing sector. The bill fulfills a key campaign pledge contained in the party manifesto.

“There were extensive discussions for more than a year on unemployment and harsh suffering, especially in the dispatch labor force,” said Tanioka Kuniko, a DPJ member of Japan’s upper house who represents Aichi Prefecture, including the Nagoya area, in an interview at her Tokyo office in January. “There was a party consensus to do something.”

Tanioka said the rise of temp work in Japan has increased income inequality and “destroyed” the tradition of senior workers training junior workers, since the former now fear being fired after imparting their knowledge. She said her party was also pushing labor reforms out of concern for basic human rights.

By way of illustration, she described a typical Japanese factory with three assembly lines — two fully automated, and a third line using human workers.

“Nowadays, when the economy is bad they [the bosses] discard the manual labor before they discard the machines,” she said. “Workers aren’t given as much regard as machines, and this is really degrading for the dignity of the people and of society.”

Cool response
So far, though, the DPJ’s proposed reforms haven’t impressed either business groups or workers. In a faxed statement, the Japan Production Skill Labor Association, a business group of temp agencies with hundreds of client factories, said the DPJ’s proposed measures “might be counterproductive.”

The group said the measures would actually increase unemployment, as businesses simply refuse to hire more full-timers. And it said the measures could lead to another round of “hollowing out” in manufacturing, as Japanese firms move factories abroad to access cheaper, more flexible labor.

“Compared to other countries, Japanese firms cannot easily lay off workers, due to regulations,” the group’s statement said. “But in the manufacturing sector, it’s common to have swings in demand for products. It’s almost impossible to deal with this situation with a fixed number of full time employees only.”

“So the purpose of using dispatch workers is to get the exact amount of necessary labor, ‘just in time,'” the statement said.

The Japanese Business Association, or Nippon Keidanren, declined requests for comment. But in a 2008 position paper, it said, “The worker dispatching system for temporary workers, which matches job-seekers with companies needing labor, plays an important role in adjusting labor market supply and demand.”

Meanwhile, independent union leaders, former dispatch workers and some labor economists say the DPJ’s reforms don’t go far enough. Companies will simply find ways around the new rules, they argue.

For example, since the downturn, firms have begun abandoning the “dispatch” model and are employing more temps under a separate category of “subcontract” labor, as well as more part-timers. “Subcontract workers have even less protection than dispatch labor,” noted labor economist Yasushi Iguchi.

Saichi Kurematsu, chairman of the Aichi Prefectural Federation of Trade Unions, thinks firms should be allowed to use dispatch labor for specialized skills, but for no longer than a year — after that they should be made full-timers. He thinks the government should strengthen the safety net for laid off workers, because some 10 million people — almost 20 percent of Japan’s workforce — are not enrolled in unemployment insurance.

The General Union’s Yamahara Katsuji said he was glad to see the government trying to change labor laws, even if their efforts weren’t sufficient. “People are angry because the reforms don’t go far enough,” he said. “However, the law couldn’t be made any worse so any change is good.”

He thinks the labor laws need a more radical revamp. “The dispatch law allowed indirect employment,” he said. “I think it would be better to do away with it completely.”

Sato Takeshi, chairman of the independent, Nagoya-based Solidarity Union, which represents about 80 workers, agreed. He said the dispatch law has resulted in “obscure forms of indirect employment,” and that “if we don’t go back to the situation that existed before the dispatch law, there will be no improvement.”

The human impact
For temp workers, it’s not just an abstract policy debate. One of those directly affected is a 44-year-old, former dispatch worker at Mitsubishi Electric.

In an interview at a union office in Nagoya, he described his work at a factory that he said employed about 1,000 temps and 2,000 full-timers. He worked in a unit making servo motors, which are devices used in a wide variety of machinery. He pocketed 1,120 yen (just over $12) an hour, far less than permanent employees doing identical work.

In 2008, he was let go with a week’s notice. All of the other 1,000 temps were also laid off, in stages, he said.

He asked that his name not be used because he’s one of three former dispatch workers involved in legal proceedings against Mitsubishi Electric.

The three are asking for recognition of their status as Mitsubishi Electric employees, which would give the company legal obligations, and 6 million yen (about $65,000) in damages each.

Mitsubishi Electric declined comment on the case, and did not respond when asked about criticisms of its use of temp labor. It said it employed 28,778 permanent employees and 5,256 part-timers as of September 2009.

The former dispatch worker at Mitsubishi Electric wasn’t impressed with the current government’s planned reforms, and said more sweeping change was needed.

“Looking at the proposed revisions of the dispatch law, I don’t think they’re any good,” he said. “Dispatch work will still be permitted in principle, which means people will still be able to be fired easily. I think they should just forbid dispatch labor altogether.”

While waiting for a court ruling, he’s taking care of a wife and child on a modest government job training allowance.