Japan labor debate risks higher corporate costs
Written on January 14, 2009
Mounting layoffs of temporary workers as the recession deepens have catapulted unemployment to the top of Japan’s political agenda in an election year, raising fears of a regulatory backlash that could drive firms offshore.
The timing of the debate, which is intensifying as lawmakers gear up for an election that could see the long-ruling Liberal Democratic Party lose power, is politicizing a complex problem that requires hard choices about how to protect workers without cutting corporate competitiveness.
“Everyone wants to go back … to the Japan of the 60s, where there was strong employment and growth,” said Martin Schulz, an economist at Fujitsu Research Institute.
“But that is not the economy that we are in.
“Japan desperately tried to keep jobs in the country while companies were investing abroad, so they made the labor market more flexible … If they are going to turn back the clock on that in the crisis, companies will leave even faster.”
Japan is not alone in worrying about unemployment. A recent 22-nation survey showed the global economic crisis has made fears of joblessness the top concern, surpassing worries about poverty, social inequality, crime and violence.
Japan’s jobless rate rose to 3.9 percent in November, a far cry from the 7.2 percent hit in the United States in December.
Officials say the small rise masked an exit of discouraged workers from the labor force, and have forecast that 85,000 non-regular workers, including temporary workers, would lose their jobs between October 2008 and next March paydayloans.com.
NOSTALGIA FOR PAST
The specter of a rising jobless rate that could engulf regular employees is also reviving nostalgia for a bygone employment system and fanning criticism of a harsher U.S.-style capitalism that detractors say Japan should have shunned.
“The deregulation that weakened the Japanese economy, the dangerous financialization of the economy … these came from an ideology that held that globalization would create wealth, in other words, from an adoration of U.S. financial nationalism,” said a commentary in the conservative Sankei newspaper.
After a decade of corporate cost-cutting and labor market deregulation, more than a third of all employees in Japan are non-regular workers without job security — part-timers, contract workers and temps. That’s a sharp contrast from the 1980s, when more than 80 percent of workers had job security.
Extensive media coverage of some 500 homeless people who spent the New Year holidays in a tent village in a Tokyo park after losing temporary jobs has fixed attention on the problem of non-regular workers, among whom temps are the most vulnerable.
While firing regular, full-time employees in Japan is legally tough, laying off contract workers and temps is easier since they can be let go simply by not extending their contracts.
Nor are fixed-term employees usually members of the enterprise-based unions typical of Japan’s organized labor.
Filed in: business.