Specter of Deeper Job Cuts Keeping Public on Edge
Proliferation of contingent employment becoming source of
controversy as times get tougher; gov't facing crucial short-,
Masahiko ISHIZUKA (Councilor, Foreign Press Center Japan, and Lecturer, Waseda University)
Job cuts - and the prospect of more of them coming - have
suddenly emerged as one of the most pressing concerns in
Japan. While the worst of the unfolding economic crisis
appears yet to come, the startling speed of deterioration is
its signature characteristic. Nowhere is this more keenly felt
than in the job market, leading to considerable societal
Such mighty corporate names as Toyota Motor Corp., Honda Motor
Co., Nissan Motor Co., Canon Inc., Sony Corp., Sharp Corp. and
the like have, one after another, announced job cuts by the
hundreds or thousands in the past couple of months. Cuts are
spreading into many other firms as well.
During the post-bubble economic difficulties of the 1990s,
Japan underwent extensive corporate restructuring that
eliminated redundant jobs in significant numbers. That said,
the kind of immediate impact on jobs that we are witnessing
today is something that has never been experienced before.
Aside from the rapid contagion of the current global financial
and economic crisis, fueling controversy is the fact that the
contingent workforce has increased exponentially in this
country over the past decade. These are contract workers,
part-timers, temporary staff, dispatched workers and the like,
who are lumped together as "nonregular employees." In one
measure, they account for 34.5% of the total workforce, or one
out of three workers falls into this category.
The implications of this are that Japanese society is
increasingly insecure, due to the vulnerability of such
workers who can be easily and casually dismissed when times
get tough for employers.
Many contract workers are being told that their contracts - up
to three years by law - will not be renewed, or that they will
be terminated even before their terms end. Dispatched workers
are even more vulnerable, as they are being cut off
immediately. For employers, these people are expendable and
provide a convenient cushion against rough business
There are public protests, but the fact remains that it is
legal for employers to get rid of these workers. Behind the
increase in contingent workers is the relaxation of labor laws
that used to restrict such employment practices, presumably to
protect workers' job security. But deregulation was advanced
under the Koizumi government as part of its reform agenda,
giving companies greater flexibility in managing the size of
their workforce to fit business conditions. In 2007, the
worker dispatching law was amended to allow manpower agencies
to send workers to manufactures for assembly work.
Such deregulation was considered to be beneficial for workers
as well, since if it were not for the relaxed rules, employers
would not hire as many workers as they might hope to have.
According to its supporters, it contributed to job creation.
But that was a time when the Japanese economy was at long last
beginning to recover from a prolonged post-bubble slump, and
industry was finding itself in fresh need of manpower.
In those days, such a sudden and precipitous deterioration of
business conditions worldwide as is happening now was
virtually unimaginable. So too was the dismissal of large
numbers of contingent workers in such a short space of time,
and only at the beginning of what is considered likely to
become a very long and deep recession.
Not only workers, but also employers and the government have
been caught off guard by this sudden turn of events. Faced
with angry dismissed workers and a public that is sympathetic
to their plight, employers are embarrassed. All they can do is
argue that they will not be able to survive if they do not
take relentless action.
Basically, they are right. And that leaves it to the
government to provide temporary help to those who have lost
their jobs. Many have become homeless, since they were ousted
from the company dormitories that came with the job.
For the government of Prime Minister Taro Aso, which is
struggling with a spectacular downturn of the domestic economy
and an increasingly worried public, job-related measures have
become a matter of utmost importance. The government will pay,
for example, a certain amount of money to companies that
decide to keep temporary workers even if they are unneeded, or
companies that hire workers dismissed by other companies.
However, two basic - and difficult - questions are being
raised, and this is a time for the nation to ponder them.
Corporate social responsibility has been a popular concept for
some time. But is employment not the ultimate way for
companies to fulfill their CSR? If this is not CSR, what is?
A most plausible answer to this question is that for
companies, survival is the alpha and omega. Unless a firm
survives to make earnings, everything will be lost, including
whatever employment it can offer. It can also be argued that a
company does not exist for employees only. Nevertheless, the
re-regulation of labor practices is a trend gaining momentum.
Another question relates to the division between regular
employees and nonregular ones, as the former's job security
takes precedence over the latter's. Regular employees can
remain in their jobs at the expanse of nonregular workers at
times of contingency. In Japan, the gap between regular
workers and nonregular workers is especially wide in terms of
wages and working conditions. Is such a society peaceful and
If things get worse, even regular workers cannot be spared. As
Honda Motor President Takeo Fukui put it so bluntly at a
recent news conference: "If the yen remains strong at the
current level of ¥90 or less to the dollar, even regular
employees in Japan will have to be eliminated in the next
fiscal year as we will be forced to relocate production
overseas." The company's mandate, he said, "is not to lose
Major Japanese manufactures - and hence the Japanese economy
that has heavily depended on them - have taken a steep plunge
because they depend on foreign markets, which have collapsed
amid the global financial crisis.
Weak domestic demand was a prominent feature of Japan's anemic
economic recovery from early 2002 through early 2008. That, in
turn, was blamed on stagnant wages as firms, despite record
profits, were thrifty in passing profits on to workers, citing
the need to maintain a competitive edge with foreign firms.
A relatively weak currency rate, low interest rates on
deposits and low wage increases formed a vicious circle that
has kept domestic demand weak. This has made the shock from
the downturn in overseas markets, coupled with a spike in the
yen, all the more wrenching.
In the short run, the government must rush emergency measures
to soften the impact of rising job losses. But it is also a
time to contemplate long-term strategies to promote domestic
demand in earnest, an issue that has long been left
(Originally appeared in the December 29, 2008 issue of The
Nikkei Weekly, reproduced here with permission.)