In Taiwan, an old-fashioned globalization debate

Analysis: A proposed Taiwan-China trade deal would mean cheaper stuff for consumers, but might also wipe out low-end local industries.

Global Post, May 23, 2010

TAINAN and LINKOU, Taiwan — Cabdriver Chang doesn't like the deal.

Weaving through traffic in the balmy, temple-studded southern city of Tainan, he lets loose on why a proposed Taiwan-China trade deal — the Economic Cooperation Framework Agreement (ECFA) — is bad for Taiwan.

Taiwanese will lose jobs, he says. Taiwan's president is "selling out" the island. And Taiwan firms can't compete with the dirt-cheap "China price" made possible by low-wage labor.

"Take these, for example," he said, tugging on the worn, dark gray pair of pants he was wearing. "These pants are made in China, and I bought them for just NT$200 (about $7). The same kind made in Taiwan will cost you NT$1,000."

Asked about the apparent contradiction of railing against cheap Chinese imports while wearing a cheap pair of Chinese-made pants, he just laughed.

So goes the ambivalence of a globalized age. Trade deals like ECFA promise cheaper stuff for consumers in wealthier countries like Taiwan or the U.S. But wages for most workers in such countries are likely to stagnate, and some in low-end industries will lose their jobs.

Nowhere are feelings more mixed than in today's Taiwan, where the government is negotiating a deal that would bind the island more tightly than any other country in the world to China's behemoth economy.

Taiwan has the added anxiety of negotiating with a rising political and military force that has vowed to one day absorb the self-ruled island, by force if need be.

But, to a surprising degree, the debate on ECFA in Taiwan is shaping up as a classic — if more pointed — argument on the pros and cons of globalization, mirroring similar conversations from Brazil to Botswana.

In a late-April TV debate with the pro-ECFA president, anti-ECFA opposition leader Tsai Ying-wen barely talked about politics, focusing instead on economics. ECFA will worsen income inequality, mostly benefit big conglomerates and put many Taiwanese out of work, she said, as the two sides commit to scrapping most tariffs over the next decade.

"You're talking about the first two or three years," Tsai told Taiwan president Ma Ying-jeou, chiding him for low-balling potential job losses. "But in the next seven or eight years we have to eliminate most tariffs. How many people will be affected then?"

Ma, for his part, said Taiwan's trade with China, the island's chief export market, will "definitely" increase after the deal and that he would not allow Taiwan's sovereignty to be hurt. He accused Tsai's party of fear-mongering, saying it was "exaggerating the negative effects" of the deal.

Interviews with business bosses, workers, government officials and locals here illustrate why trade deals like ECFA create so much anxiety and uncertainty. The gains are often intangible, spread economy-wide and over long stretches of time, and so don't mean much in day-to-day terms to the average "Chou."

The threat is much easier to grasp. Cheap Chinese stuff could overwhelm the island, putting Taiwan firms out of business and hundreds of thousands of workers on the streets, the deal's opponents say.

"We can't compete"

Such are the fears of hand-made shoemakers, clustered in the Tainan area in southern Taiwan, and in the north around the capital Taipei.

Over tea at the Taiwan-made Footwear Development Association's office in Tainan, association chairman Yang Rong-de and local industry official Chiu Fu-yin said ECFA will put their business in peril.

Right now, they said, Taiwan's small firms can still make money selling hand-made shoes, because a high tariff of more than 40 percent on Chinese-made shoes makes them sell for roughly the same price as Taiwan-made shoes.

But if ECFA is passed, that tariff protection could come tumbling down, and consumers like cabdriver Chang would buy Chinese instead.

Footwear industry spokesman Yang said Taiwan's entry into the World Trade Organization in 2002 wiped out a third of the jobs in the island's hand-made shoe industry. Another half of the remaining employees could be out of work if tariffs on Chinese imports are scrapped, he said.

Such workers are typically less-educated and don't have the specialized skills needed to thrive in a globalized world. Many will likely end up in low-end service sector jobs, or unemployed.

In a worst-case scenario, Yang and Chiu said they might have to move their businesses to China or elsewhere. Both are preparing to hand off the business to their sons; neither wants to see their sons leave to set up shop abroad.

"If ECFA is signed, our factories will move to Vietnam or other countries because their workers are cheaper than ours," said Yang. "Signing ECFA will hurt our next generation."

The blow might not be immediate, they acknowledge. Taiwan's current tariff on imported Chinese shoes will run through 2012, they said, and they may be able to extend it another five years. They say they need to buy at least that much time to adjust to the China threat. By then, they hope, Chinese wages and materials costs will have risen enough to create a more level playing field.

Currently, workers in a hand-made shoe factory near Tainan make above $630 a month; their Chinese counterparts across the Taiwan Strait make less than half that, said shoemakers.

"If the tariff on Chinese shoes went to zero today, it would be 'game over' for us — we'd be finished," said Chiu, chairman of the Yifeng Leather Company in Tainan. "We can't compete."

The government has already identified shoes as one of 17 traditional industries likely to be harmed by ECFA. It's set aside a $3-billion, 10-year fund to help such firms upgrade, but Yang and Chiu just don't believe they'll see any of that money.

An edge for machinery makers?

Nearly two hours north by high-speed rail, H.H. Huang presides over a sprawling machinery business that should benefit from the trade deal.

His firm, Dees Hydraulic, is headquartered in an industrial zone in Linkou, a suburban wasteland of cracked pavements, glass shards, jumbled shop fronts, traffic jams and wandering packs of wild dogs.

Dee's makes massive hydraulic presses for factories, mostly car factories stamping out car body parts with robot workers on mammoth assembly lines.

He exports 90 percent of his machines, half of that to China, transporting them by road to the port of Keelung from there to the world. He can't fly them out because some of his machines are heavier than an airplane, he says.

Right now, machines like his face tariffs of 6 to 9 percent in China. If ECFA is signed, those tariffs could be scrapped, making his products more competitive in what's now the world's No. 1 machinery market.

He's not worried about competition from Chinese companies, because Taiwan has a very small market for such machines, and firms like his are far ahead of their Chinese counterparts in technology and know-how.

But Dees Hydraulic doesn't fit the neat narrative of a firm that will gain from ECFA. Huang says he already has a factory in China focused on the Chinese market, and there his main competition is a Chinese firm, Tianjin Forge.

Huang says he's more likely to take advantage of ECFA by making lower-tech presses in China at his factory there, then exporting them tariff-free back to Taiwan for more value-added, before re-exporting them to markets in the Europe and the U.S. But even then, he said, "For my company, actually the effect of ECFA won't be very big."

Most of his staff are highly skilled engineers whose jobs are safe as long as Taiwan maintains an edge in their industry. Indeed, skills like theirs are at a premium in a globalized age, which helps account for the widening income gap between high-end and low-end workers worldwide.

Asked if he'd boost payrolls after the trade deal and its increased business, Huang said no. "It's not necessary to hire more people," he said. "What we need is to improve the skills of the people we have."

He said the Taiwan government hadn't done a good job explaining ECFA, and should work harder to build national consensus before signing the deal. "The government shouldn't be in such a rush," he said.

Dees Hydraulic illustrates how economists' tidy arguments and eye-catching graphs often have little bearing on any specific company's business decisions. Trade deals like ECFA are just one small factor among many.

For the machinery and machine tool industries, the value of the Korean currency, the won, is a far bigger concern than Chinese tariffs, said Wang Cheng-ching, president of the Taiwan Association of Machinery Industry.

That's because sector-wide, Taiwan machine firms' main competition is South Korea. Over the last two years, the Korean won has depreciated by almost 40 percent, says Wang, essentially giving their products a 40 percent pricing advantage over their Taiwan competitors in key markets like China.

That's given the Koreans such an edge that they nudged past Taiwan exporters last year to grab the fifth-largest share of the global market for machine tools (at $2.6 billion by production value), relegating Taiwan to sixth place (at $2.4 billion).

He says his association asked the Taiwan government for help but was told nothing can be done. "The currency change is terrible," said Wang. "For Taiwan, it's very difficult. Everybody's worried about it."

Still, Wang backs ECFA as a way to normalize economic ties with China and says it will be a long-term boost for his industry, especially if Taiwan can move on to sign similar deals with other key markets.

Faced with Korean currency games, they can use any help they can get.

Enter the experts

Deals like ECFA always look good on paper — or on PowerPoint. And most economists have never met a trade deal they didn't like.

The principle of comparative advantage — the theoretical bedrock of globalization — will unerringly show overall gains to the economy through such trade. Open bilateral trade plays to each country's respective strengths, the theory goes.

So it is with ECFA, where the winners are expected to be Taiwan's capital-intensive industries such as machinery, and China's labor-intensive industries, such as handmade leather shoes.

"China has a huge market and Taiwan has a relatively strong industrial base," said Taipei-based Standard Chartered economist Tony Phoo. "So more cross-strait trade and investment flows will be positive for both China and Taiwan's economy."

Researchers at Taiwan's Chunghua Institution for Economic Research prepared a study for the government showing that cross-strait trade liberalization could add 1.65 percent to 1.72 percent to Taiwan's GDP, create a net of 260,000 jobs and lure nearly $9 billion in new foreign direct investment in the seven years after the deal is inked.

Of course, such economic models say nothing about how such goodies are distributed within a country. Taiwan's opposition echoes a frequently made argument that, more often than not, the gains will go mostly to large corporations, padding top executives' salaries and shareholders' dividend checks. A small number of highly skilled workers benefits, too.

The vast majority of workers, by contrast, don't usually notice much change after a trade deal — except cheaper imported consumer goods on store shelves, and the possibility of being pink-slipped if they're unfortunate enough to work in an uncompetitive industry.

Even some investment bankers caution that the benefits of ECFA, if it's signed, may not be immediate. Negotiations are reportedly bogged down over what to include in a so-called "early harvest" list of industries to see the first tariff cuts. China and Taiwan are still gunning for a late-June deadline.

But that means ECFA could well end up being mostly technical agreements — on "rules of origin," dispute settlement and the like — with harder tariff reduction talks scheduled for later on most items.

"In the longterm it should be very beneficial, it will remove a lot of obstacles," said Tay Her Lim, of investment bank CLSA, about the deal.

"But like any fundamental change, it will take time, and ECFA is just the first step," said Lim. "ECFA is just a small little piece of the puzzle."

Original site

What will Beijing do?

All Eyes on China in North Korea Torpedo Case

AOL News

(May 20) -- World leaders harshly condemned North Korea today after a multinational probe squarely blamed the rogue regime for sinking a South Korean military ship in March and killing 46 sailors. But China, the world power with the most influence over the so-called "hermit kingdom," had a noticeably tepid response.

In Beijing's only public remarks, Cui Tiankai, China's deputy foreign minister, called the sinking of the South Korean warship Cheonan "unfortunate" and did not acknowledge North Korea's responsibility. The White House on Wednesday characterized it as "an act of aggression."

The crisis over North Korea has moved to the top of Secretary of State Hillary Rodham Clinton's agenda as she leaves today for a trip to Japan, China and South Korea.

China's response in the days ahead will be watched closely for signs of whether it's willing to join most of the world community in taking a harder line against North Korea.

But its cool reaction so far highlights China's special relationship with the otherwise isolated North Korean regime, as well as China's fears of instability on its borders and in the region.

Beijing is North Korea's key economic partner and treaty ally, giving it the most leverage on Pyongyang of any world power.

"China wants regional stability and peace in northeast Asia, and it wants to take things step by step," said Gong Keyu, an expert on China's relations with North Korea at the Shanghai Institute of International Studies. "That's why China didn't say too much about" the results of the probe.

"China wants to take a fair look and make things clearer, and then we can respond," she said.

China angered some in South Korea by waiting weeks to make any public statement on the March 26 ship sinking, even as other world leaders offered their condolences for the massive loss of life.

Gong said that China may send delegates, possibly along with North Korea, to South Korea in the coming days and weeks to seek clarification on the results of the probe. She said she personally is still not convinced that North Korea intended to strike such a deadly blow.

"I don't see a lot of reasons why North Korea would insist on doing this," she said. "Maybe they made a mistake. One possibility is they wanted to fire a torpedo to scare South Korea but didn't think it would be very, very serious."

She compared Pyongyang to "a boy who did something wrong, but didn't know it would be so serious, like breaking a glass -- he didn't know it would make his parents so upset."

South Korea, under pressure from hardliners at home to respond militarily to what they view as an act of war, is expected instead to take the issue to the United Nations Security Council. China will be key to that process, since it holds a Security Council veto and so can block any action.

But Gong said that China may use the Security Council's current focus on the Iranian nuclear issue as an "excuse" not to discuss the ship-sinking issue right away.

Another Chinese expert on North Korea, Zhang Liangui, told the Telegraph that China could be pushed to take sides at the U.N.

"South Korea's submission of its report to the U.N. will clearly force China into making a stance, and this will be a challenge," Zhang told the Telegraph. "This will be handled by the foreign ministry, but my view is that China, in accordance with its rising status as a major country, should not go against the rest of the world, but should consider its interests in line with the majority."

So why is China so loathe to turn the heat up on its loose-cannon neighbor?

A recent report by the Center for Strategic and International Studies, a Washington security think tank, gave several reasons.

China wants to preserve the status quo of two Koreas, and fears that instability in North Korea could hurt its northeast provinces. Beijing also fears that a crisis could lead to a massive flood of refugees into northeast China, and could result in a hostile North Korea on its border -- or a beefed-up South Korean and U.S. military presence just next door.

"The Chinese want to avoid a hostile relationship with their neighbor," Bonnie Glaser, one of the report's authors, said at a recent CSIS forum. "They believe that relationship remains exceptionally important."

Gong, the Chinese scholar, said China was trying to get North Korea to pursue economic reforms that could make it more self-sufficient, such as those followed by China itself since the late 1970s.

"We want to show North Korea that we are a very good model -- 'You can follow me,'" Gong said.

Meanwhile, she said the South Korean ship-sinking crisis could actually be an opportunity for the U.S. and China. "This is a very good chance for China and the U.S. to understand each other better," Gong said. "So I think things will be much clearer in the coming days and weeks."

Original site

Temps strike back, I

Temp Nation: The demise of "lifetime employment" in Japan

Wrenching change in the world's second largest economy. Now some are fighting back.

Global Post, May 18, 2010

Editor's note: Temp Nation is a four-part series on the structural changes taking place in Japan, the world's second-largest economy. With the demise of Japan, Inc.'s lifetime employment policies, more than a third of the country's workforce is now underworked and underpaid. This series examines how some temps are starting to fight back. It also investigates the impact on foreign workers, and the political response to this growing social and economic problem.

NAGOYA, Japan — For decades, Japan's big firms were famous for their deal with employees: The corporation was a big family that looked after its workers for life. In return it expected total dedication.

That was the Japanese way, and part of the popular 1980s American media narrative on the rise of Japan, Inc.

It's no longer true. Instead, more than 17 million people in the world's second largest economy are now "irregular" workers, or temps, according to government statistics.

That's nearly 34 percent of the workforce, up from 25 percent in 1999 and just 15 percent in 1984.

Such workers give Japanese firms a more flexible workforce, helping them keep down costs and cope with globalization. But temps are paid less than full-timers, have fewer benefits and are cast off when times are tough.

The global downturn of 2008 made that painfully clear.

From the last quarter of 2008 to the autumn of 2009, Japan shed 440,000 "dispatch" worker jobs, according to government numbers (some have since been re-hired, or shifted to other categories of temp work.) Temps living in company-provided housing lost not only their jobs but their homes, too.

Now, fed-up temps — as well as small, independent unions — are beginning to push back. They say big Japanese firms are exploiting loopholes and weak enforcement of labor laws to maintain a low-cost workforce of "permatemps" with little or no job security. And increasingly, they're taking their cases to labor bureaus and courts.

Many such workers are surprisingly sympathetic to the need for Japanese firms to stay competitive. They just think things have gone too far.

"It's necessary to limit workers' rights to some extent so that companies can stay in business," said one 45-year-old former dispatch worker at Panasonic Ecosystems outside Nagoya. "The problem is, companies are ignoring the law and using dispatch workers indefinitely."

The worker did not want his name used because he is suing Panasonic for compensation after being let go in 2009, but still lives and works in a community of loyal Panasonic full-timers.

In interviews here in central Japan's manufacturing heartland, he and other former dispatch workers and union leaders described factories where hiring schemes have created something akin to a caste system.

At the top are permanent employees — two-thirds of the workforce — who still have the old, stereotypical deal of mutual loyalty with their companies.

The other third are temps, of bewildering variety. There are part-timers, hired directly by the firm but typically working other odd jobs to get by.

There are "dispatch" workers, who make as little as half the salary of permanent employees for the same work and hours. There are "subcontract" workers, who can only take instructions from the subcontract firm, not from bosses or colleagues at their actual workplace. There are Brazilian and Peruvian workers of Japanese descent, who get paid even less.

And, at the bottom, there are Chinese, Vietnamese and other foreign "trainees," who can make as little as 300 yen (about $3.25) an hour. They pay huge sums to labor brokers to work in Japan, aren't covered by labor laws in their first year of work, and suffer harsh financial penalties if they quit before their contracts are up.

The temp trend even affects foreign English teachers, who have watched firms slash salaries and benefits in the name of cost-cutting.

Broad effects

The implications of a rising temp workforce go far beyond Japan's factory floors. The trend has contributed to lower consumption, sharper inequality, falling wages and a resulting "working poor" problem. Average wages in Japan fell nearly 4 percent in 2009, the third straight year of losses, with real wages (accounting for deflation) falling nearly 3 percent.

The temp trend is also a factor in lower marriage and childbirth rates, since temps with no job security are unattractive mates. The marriage rate was 5.8 per 1,000 people in 2008, down from more than 10 per 1,000 people in the early 1970s.

And the trend has increased pressure on full time, permanent workers, who have to take up the slack in workplaces filled with low-morale temps who have little incentive to work hard.

"Increased use of non-regular workers often creates heavier workloads for the remaining workers, who are expected to make up any shortfalls without concern for time," wrote Osaka-based sociologists Charles Weathers and Scott North in a recent article.

The 2007 Japanese Lifestyle White Paper survey found that 67 percent of regular workers believed their job burdens and responsibilities were much greater than five years before.

How Japan got here

Japan's stratified labor market didn't happen overnight, or by accident.

Until the 1980s "indirect" employment, or employment through a third party such as a dispatch firm, was illegal. In response to business pressure, the government began relaxing hiring rules.

Deregulation continued after Japan's economy went into a tailspin and entered its "lost decade," then accelerated under pro-business prime minister Junichiro Koizumi.

The "dispatch law" was passed in the mid-'80s. In 1999 the law was relaxed to allow dispatch labor in 26 specialized industries, according to Yasushi Iguchi, a labor economist at Kwansei Gakuin University, and in 2004 it was further relaxed to allow short-term dispatch labor in the manufacturing sector.

Large auto and electronics manufacturing firms led the way in a temp-hiring surge, driven by cost-cutting plans, Iguchi said.

"Automakers hired a temporary work force because that was a better fit with the 'just-in-time' delivery system," he said. "These workers are very flexible. They're 'just-in-time' laborers."
Toyota is typical. In 2000, the company began a program of aggressive cost-cutting, according to Saichi Kurematsu, chairman of the Aichi Prefectural Federation of Trade Unions, whose members include 10 Toyota employees.

Toyota targeted 30-percent cuts in the first three years, and 15 percent more cuts in the next three. Last December it announced planned cuts of an additional 30 percent, Kurematsu said.

To get leaner, Toyota boosted its hiring of temps, he said, some of whom then saw their salaries slashed. Dispatch workers assigned to Toyota earned 1,800 yen per hour in 2004 but made just 1,150 yen per hour by 2007, said Kurematsu. (Toyota declined comment on those numbers but noted that such salaries were determined by the dispatch company.)

According to emails from Toyota spokesman Paul Nolasco, the firm used a peak of 1,350 dispatch workers on its assembly lines in 2004, but no longer uses such labor on the lines.

He said Toyota employs roughly 70,000 full-timers and about 4,000 dispatch office workers. On its assembly lines, its workforce includes 2,300 temps on fixed-term contracts of three months to three years — down from about 10,000 such contract workers on assembly lines in mid-2008, prior to the downturn.

Temps on fixed-term contracts make less than 60 percent what permanent workers make on average, according to a report from the National Labor Committee. (Toyota said it does not comment on employees' salaries. But it noted that more than 2,000 fixed-term contract workers have been bumped up to full-time employee status since 2007.)

Where are the unions?

Ironically, Japan has some of the most worker-friendly labor laws in the world. For example, there's no limit on the number of unions allowed at one company, and as few as a single worker are legally allowed to form a union.

The U.S. is responsible for that. Left-leaning American advisers drafted Japan's current constitution and related labor regulations during the post-World War II occupation.

But these days, Japan is dominated by large "company" unions that typically represent only permanent workers. Most come under the umbrella of Rengo, Japan's largest trade confederation with some 7 million members.

Rengo looks out for the wages of full-timers, but provides scant help for Japan's growing ranks of temps, most of who are non-unionized.

"These big trade unions have the same opinion as employers about everything," said Yamahara Katsuji, Osaka-based chair of General Union, a small independent union. "So they agree on the need for disposable workers in their factories."

Some top officials even rotate between union and management posts at the same company, he and others said.

"Nearly all major unions have close ties to management, inhibiting them from demanding improved work conditions," wrote sociologists Weathers and North.

Temp Nation the series:

The demise of fulltime employment
Fighting Panasonic
The foreign effect
A political solution?

Editor's note: This article was updated with the fact that the marriage rate was 5.8 per 1,000 people in 2008, down from more than 10 per 1,000 people in the early 1970s.

Temps strike back, II

Temp Nation: Fighting Panasonic

Two former "dispatch" workers at a unit of the Japanese appliance giant are suing the firm.

Global Post, May 18, 2010

KASUGAI, Japan — His bosses asked him to teach a co-worker everything he knew, said Makoto Nagae, 51. Then he was laid off.

When he complained to the local labor standards bureau, the six other temp workers in his unit were also let go. Five permanent employees stayed on.

Naturally, the other temps blamed him, at least at first. "They said, 'it's your fault,'" said Nagae, a reserved, skinny man who sported black designer glasses and a T-shirt with the word "Rumble" on it during an interview in March.

Since they were all good friends, Nagae was able to convince his former co-workers they'd all been wronged, he said. Still, they weren't willing to join him in a lawsuit against Panasonic Ecosystems, which owns the factory where they worked. Why?

"Because they're Japanese," said Nagae, in an interview at sun-lit hotel lobby here in Japan's manufacturing heartland. "They said, 'oh well, it can't be helped.' So they didn't try to fight. Japanese people are like that."

Asked what made him different, he said, "I was really angry."

Nagae is one of a growing number of Japanese temps who are fighting back against labor practices they say are increasingly skewed in favor of big companies and give scant protection to non-permanent workers.

Most only do so when they've got little or nothing lose. Nagae gave all his savings to his ex-wife, who lives with his two children ("There was a relationship" between his divorce and job troubles, said Nagae vaguely.) He now works as a cook at a yakitori (meat skewer) restaurant, and collects a monthly job trainee allowance from the government.

Nagae was assigned to Panasonic Ecosystems in August 2004 as a "dispatch" worker. As such, he was technically the employee of the dispatch firm, not Panasonic Ecosystems.

He became an expert at quality control work, which involved X-ray and other testing of electric components of ventilation equipment. He made 300,000 yen (about $3,200) a month. As the most knowledgeable worker in his unit, he often trained permanent employees.

Those permanent employees, five in his unit, made up to 500,000 yen (nearly $5,400) a month for the exact same work and hours, he says, and enjoyed benefits Nagae didn't.

In March 2009, just after training a permanent employee, the dispatch firm declined to renew his contract. He'd been a temp for nearly five years, even though labor regulations stipulate that most dispatch contracts should last three years maximum.

When he began a complaint process with the local labor standards bureau, Panasonic Ecosystems threatened to sue anyone in his unit who gave him information, he said.

He thinks he was singled out for downsizing because he was the top-earning temp, and because he was outspoken about how work should be done. "Whenever I was told to do work in a way I thought was wrong, I said so," said Nagae. "Panasonic came to regard me as troublesome."

Now, Nagae wants compensation from Panasonic Ecosystems, saying he was effectively its employee. He acknowledged that a recent court judgment in favor of another Panasonic unit in a similar complaint brought by former dispatch workers was a bad sign for his own case. "But I think it's still possible to win," he said.

Nagae clearly took pride in his skills, and even complained that the dispatch company sent people to his unit who weren't up to the job. He said neither workers nor companies were well-served by the temp worker arrangements.

"As a dispatch worker, it doesn't matter how hard you work, your pay doesn't go up," said Nagae. "And there's no chance of becoming a permanent employee, so there's no incentive for doing a good job."

In a separate interview, another former dispatch worker assigned to Panasonic Ecosystems explained why he's also suing the company.

"Because Panasonic is a company that represents Japan, it shouldn't tolerate illegalities," said the 45-year-old, dressed in a button-down, vest and glasses. "It's the first time I've ever taken anyone to court."

He did not want his name used because he still lives and works in the same community as many loyal, permanent Panasonic workers.

Starting in late 2007 he also did quality control testing on ventilation equipment, in a separate unit from Nagae. He made 240,000 yen (more than $2,500) per month, and said the factory then employed about 1,000 dispatch and other temp workers, and about 500 full-timers. For dispatch workers, "there was no possibility of becoming a permanent worker," he said, and many had been kept in temp status beyond the supposed three-year time limit.

He was let go in April 2009 after the recession hit, along with hundreds of thousands of other dispatch workers across Japan. He said the dispatch firm refused to respond to his complaints about his contract, and that Panasonic keeps changing its legal argument. (At one point it argued that he was a "scientist," the worker said with a rueful laugh, and so was in a specialized category that could be employed indefinitely as dispatch labor.)

While fighting his case, he lives with his wife and two children in public housing, barely getting by on a 150,000 yen ($1,600) a month job.

"Violating the dispatch law means buying and selling people," he said. "Many people have been through similar things as me — why aren't they getting more angry about it?"

Panasonic Ecosystems is a wholly-owned subsidiary of the Panasonic Group, which declined comment for this article, saying it was company policy not to comment on pending litigation.
It also declined to provide details on its workforce or to respond to criticism about its use of temp workers.

Temp Nation the series:
The demise of fulltime employment
Fighting Panasonic
The foreign effect
A political solution?

Temps strike back, III

Temp Nation: The foreign effect

Not all of Japan's "dispatch" workers are Japanese. Teacher Andrew Sekeres, for one, grew up in Chicago.

Global Post, May 18, 2010
NAGOYA, Japan — Andrew Sekeres came to Japan in late 2004 with a strong interest in Japanese culture and two years of studying Japanese language and history under his belt.

Since then, says the Chicago native, his working conditions as an English teacher have grown steadily worse.

"In the last five years, things have changed dramatically," said Sekeres, 28, at an interview at a union office in Nagoya. "It makes me wonder sometimes why I'm still living here."

Sekeres is one of Japan's thousands of ALTs, or "assistant language teachers," most from the United States and Canada. The best such jobs come through the well-known JET (Japan Exchange and Teaching) program, which offer the highest salaries (more than 300,000 yen per month, says Sekeres, or about $3,200), in addition to good benefits and support.

But in line with Japan's broader labor trends, local school systems have in recent years turned to temp teachers as a cost-cutting measure. And firms are using a variety of complicated hiring schemes, Sekeres and others say, to dodge insurance obligations and slash salaries.

JET teachers have shrunk from 5,676 in fiscal 2002 to 4,063 in fiscal 2009, according to government figures. Meanwhile, non-JET teachers' ranks have swelled, and they now outnumber JETs in compulsory education, with 3,246 non-JETs to 2,819 JETs in elementary schools in fiscal 2009.
Sekeres' story shows what that means in practice for foreign teachers in Japan, and for the quality of English education for Japanese kids.

First he was at a private language school as a direct hire making a steady 250,000 yen a month (about $2,600). Then he worked for a "dispatch" firm that assigned him to teaching posts at Tokai City public schools.

In 2009 he was switched to a "subcontract" arrangement, working for another firm, Interac, that paid 245,000 yen (more than $2,600) a month seven months out of the year, but less in other months with school vacations (he made just 180,000 yen, or more than $1,900, in December, for example, and nothing for the month of August).

He clocked 35 hour weeks but was only paid for 29.5 hours so Interac could avoid insurance obligations, Sekeres says. (Interac has received bad press about this issue before).

And because of a Japanese law that bans direct supervision of subcontract workers by the host company, he was not allowed to receive instructions or guidance from teachers or staff at the school.
Foreign English teachers are supposed to team teach with a licensed Japanese teacher. But in practice, Sekeres taught English classes alone from 8 a.m. to 4 p.m., to most of his school's 800 6- to 13-year-old students, while the Japanese teacher sat in the back of the room watching silently.

"They don't like the system either," said Sekeres, about the Japanese teachers. "They can't tell me the curriculum, they can't tell me how to teach, they can't tell me anything. They have to talk to my company [Interac, the subcontracting firm]."

Worse, says Sekeres, after word got out last year that he'd contacted General Union for help, he was ostracized. "None of the teachers would talk to me," said Sekeres. "They don't want to side with someone who's rocking the boat. For them it could be dangerous."

Michael Normoyle, a 43-year-old volunteer at General Union in Nagoya, and a former English teacher himself, explained why schools are willing to use this bizarre "subcontract" arrangement.

"With dispatch workers, the people who manage the workplace have some responsibilities for employees' health and safety, but with subcontract work, they have none of these obligations," he said. "So they love this arrangement."

Last October, General Union filed a complaint on Sekeres' behalf with the local labor standards bureau, saying that Interac's arrangement with the Tokai City board of education violated labor law. According to Sekeres, the labor bureau ruled in his favor.

Meanwhile, he's moved to a part-time job at a private high school, making about 120,000 yen ($1,287) a month, and is supplementing that with other work.

Interac declined comment on Sekeres' case, saying in an emailed statement, "Interac is proud to make a contribution to society by giving respect to all of our staff and clients and performing fair business."

Other English teachers in Nagoya said some good opportunities are still available, but teaching English in Japan isn't what it used to be even a decade ago. Then, American and other college graduates could spend a year or two in Japan, get to know the culture and language, and save up money. In today's Japan that's increasingly difficult.

"The golden age for being an English teacher in Japan is definitely over," said Nagoya-based teacher Mike Miller, a friend of Sekeres' from Ottawa, Canada.

Most of General Union's 350 paid-up members are foreign English teachers working on "casual" or temp contracts. Despite some small victories, Normoyle, the union volunteer, is pessimistic. He plans to leave Japan soon, after 15 years.

"To be honest, I'm feeling a bit hopeless now because my union's not having much success protecting the jobs of our own members," said Normoyle.

"There are huge problems here, because Japanese corporations and the government are interested in foreign workers merely as an expendable resource, not as human beings."

Temp Nation the series:
The demise of fulltime employment
Fighting Panasonic
The foreign effect
A political solution?

Temps strike back, IV

Temp Nation: A political solution?

What are Japanese politicians doing about the wrenching economic changes? Not much, workers say.

Global Post, May 18, 2010
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.

Temp Nation the series:
The demise of fulltime employment
Fighting Panasonic
The foreign effect
A political solution?

Futenma flap

Japanese Leader Under Fire Over Okinawa Base

AOL News, May 19

Taipei, Taiwan -- Japanese Prime Minister Yukio Hatoyama has tried to please everyone on the thorny issue of moving an unpopular U.S. Marines air station. But so far he's pleased no one, and on Friday he faces what could be an uncomfortable discussion of the matter in a meeting with U.S. Secretary of State Hillary Clinton.

In his electoral campaign last year, Hatoyama raised hopes that the Futenma Marine base might be moved completely off the island of Okinawa, where residents have long complained that they bear a disproportionate burden in noise, safety concerns and environmental impact from U.S. troops and aircraft.

But once in power, he quickly came up against pressure from the U.S. to honor a 2006 deal that would relocate the Marines to another site on the island, which hosts more than half of the 47,000 U.S. troops in Japan.

Hatoyama's fumbling of the affair has strained U.S.-Japan ties and taken attention away from his government's ambitious domestic agenda of sweeping reforms. Now there's even talk that Futenma could be his political coffin nail.

"It is not an exaggeration to say that the government has been mortally wounded by the dispute over Futenma, not because of the government's position per se but because of its inability to take a position," Japan politics expert Tobias Harris wrote in a recent commentary.

"Arguably it is due to his mishandling of Futenma above any other issue that has led Hatoyama to be branded as a poor leader, for good reason," Harris wrote.

Some 17,000 Okinawans protested on Sunday, ringing the Futenma air station and demanding that Hatoyama make good on his campaign promise to give the Marines the heave-ho from the base, which lies in a heavily populated area. But officials and residents in other sites eyed as possible alternative hosts for U.S. Marines have loudly cried, Not in my backyard.

Hatoyama's own coalition partners have slammed him, saying he should step down if he can't find a solution by his self-imposed end of May deadline.

Meanwhile, U.S. officials and the foreign policy establishment have wrung their hands in frustration. Lately the tone has turned icy, with President Barack Obama famously giving Hatoyama only a few minutes of "face time" at a working dinner of world leaders in April, even as he held extensive talks with the heads of much smaller countries.

Perhaps the most fed up are the Japanese people themselves. They voted for Hatoyama's party last August hoping for change, only to see Hatoyama fumble with Futenma and other issues. The latest polls showed his approval rating has fallen to between 19 and 23 percent, down from 77 percent when he was inaugurated last September.

Hatoyama's next chance to come up with a workable plan is Friday, when he's reportedly due to meet with Clinton.

But the latest murmurings from Tokyo aren't encouraging. Kyodo News reported that the U.S. had rejected Hatoyama's latest proposal, which reportedly would have tweaked the 2006 deal by shifting some Marines and training facilities off Okinawa to sites elsewhere in Japan.

Yet some say the controversy isn't entirely Hatomaya's fault, arguing that Washington has pushed the new Japanese government too hard just as it's trying to get its footing after the country's first real political power shift since World War II.

Akikazu Hashimoto, a professor of political science at J.F. Oberlin University in Tokyo, noted that the previous government had also failed to win approval from Okinawans for a Futenma relocation plan. He said Hatoyama's cabinet members had offered "too many opinions" on Futenma, while Hatoyama himself has been consistent, at least in recent months.

"He said the Okinawan people should be burdened with one base, and the rest of the air bases should be outside Okinawa," said Hashimoto. "I believe he has not changed this perspective and this view."

Hashimoto said the government was likely to miss the end-of-May deadline and put off a decision until the fall, at the latest. "I think it will take longer," said Hashimoto. "The May deadline is not so important."

But others emphasize that Japanese bases are critical to overall U.S. strategy in East Asia and to fulfilling obligations in Article VI of the 1960 U.S.-Japan Security Treaty. They're exasperated that Hatoyama doesn't seem to see that bigger picture and is refusing to honor the 2006 deal.

At a recent forum in Washington, former Deputy Secretary of State Richard Armitage criticized Hatoyama, saying, "Not having a Plan B in mind when you announce that you don't want to take Plan A is a little irresponsible, in my view."

He called the Futenma controversy "an entirely self-inflicted wound by our Japanese allies" and said that Hatoyama's government was "apparently not accepting the Futenma relocation plan simply because it happened to be the plan of the previous government."

Armitage said the flap had essentially put U.S.-Japan relations on hold for eight months.

Still, he and other observers are urging policymakers in Washington and Tokyo to move past the controversy as soon as possible and patch up the relationship.

"At some point, we cannot let base issues, as fundamental as they are, continue sucking the oxygen and energy out of the much broader and critically important agenda we have with Japan," said Michael Green, former director of Asian affairs at the National Security Council, speaking at the same forum.

Original site

The French Connection

Corruption in Taiwan: The French connection

The latest about the biggest scandal you've never heard of.

Global Post, May 13, 2010

TAIPEI, Taiwan — His body was found bobbing in the surf off Taiwan's east coast in 1993.

To this day, no one is sure exactly how or why Navy Captain Yin Ching-feng died.

But many here have long suspected he was murdered because he was about to blow the whistle on massive corruption in a $2.8-billion deal that sold six Lafayette-class French frigates to Taiwan.

The "Lafayette Affair" has dragged on for nearly two decades and has involved at least eight bizarre deaths, multiple court cases, hundreds of millions in frozen Swiss bank accounts and high-level government probes in both Taiwan and France that have reached deep into the corridors of power.

"The scandal was perhaps one of the biggest arms corruption cases in modern history, with literally bags of money of being traded back and forth between China, Taiwan and France," said Wendell Minnick, Asia bureau chief for Defense News.

"It had the feel of an international spy thriller, with eight mysterious deaths. Two of them either jumped or were pushed off buildings."

Last week, a Paris-based court of arbitration ruled that the French company behind the deal, Thales (formerly called Thomson-CSF), owed Taiwan 630 million euros (about $800 million) for violating terms of the contract — codenamed "Contract Bravo" — that forbade commissions to middlemen.

If the decision is upheld, French taxpayers will foot 70 percent of the bill, because a state-owned shipbuilder had the main stake in the contract, according to Le Monde.

Thales disputes the finding and has said it will appeal for a reversal through all available channels.

The finding has put France's defense industry under the spotlight again, as it faces separate allegations of graft involving the 1992 sale of fighter jets to Taiwan and other weapons sales to Malaysia and Pakistan.

Thales is accused of greasing the wheels for the politically sensitive sale of warships to Taiwan by using middlemen to dole out hundreds of millions of dollars in kickbacks from slush funds in Swiss bank accounts to politicians and military officials in Taiwan, China and France.

The Lafayette case "tells us how arms companies would take advantage of the fact that Taiwan was rich, isolated and ready to buy at any price for weapons," said Jean-Pierre Cabestan, a French expert on cross-strait affairs at Hong Kong Baptist University.

At the center of the tortuously complicated case is Andrew Wang, an arms broker representing Thales in the deal. He fled Taiwan in 1993 after Captain Yin was found dead, and his whereabouts are unknown. (Taiwan's lack of extradition treaties with most countries makes it easy to escape the reach of the island's courts.)

Meanwhile, Swiss authorities have frozen hundreds of millions in Wang's bank accounts until various inquiries and court cases have been resolved.

Besides Captain Yin, other deaths connected to the case include Yin's nephew; a Taiwan bank official connected to the Navy; Thierry Imbot, a French intelligence agent and son of a former head of the French spy service; and Jacques Morrison, a former Taiwan-based agent for Thales, according to a book by Thierry Jean-Pierre.

Imbot fell from his Paris apartment and Morrison also plunged from a high window.

A Taiwan government investigation concluded in 2001 that some $400 million in kickbacks was doled out in the deal. Six Taiwan navy officers, including a vice admiral, were charged with corruption that year. A ruling is due next month.

France followed up with its own probe, which at one point ensnared current president Nicolas Sarkozy. But documents that supposedly implicated Sarkozy in accepting bribes for the Lafayette deal were later ruled to be fakes.

In 2008 a French judge halted the probe, citing a lack of evidence. The French government has refused to release documents related to the case on grounds of national security.

Hong Kong Baptist University's Cabestan said classified documents are believed to list prominent French politicians on both the right and left who took bribes in the Lafayette deal, and possibly high-ranking Chinese officials as well. All received payouts in exchange for allowing the sensitive sale to proceed (China sees Taiwan as part of its territory and angrily objects to any arms sale to the island).

That secret list is a ticking time bomb in French politics, said Cabestan. "That's what the French public is most interested in, and what French politicians are most worried about," he said.

"Every time a new defense minister comes in there's an attempt by the judiciary and courts to get access to the list," said Cabestan. "But then the new minister looks at the list, and realizes it’s a bombshell. And so it remains classified."

"I think it will remain classified for many years, until these people are dead or retired," he said.

Now, some in Taiwan want to probe possible kickbacks as part of a multi-billion deal selling French-made Mirage fighter jets to Taiwan in 1992. The same middleman, fugitive Andrew Wang, is suspected of accepting kickbacks in that sale, too.

France promised China in 1994 that it would stop selling weapons to Taiwan. That leaves the United States as the island's sole major arms supplier.

Defense News' Minnick said the Lafayette scandal "reshaped the way Taiwan conducts arms deals" and made the island dependent on slower, pricier purchases through the U.S. Defense Security Cooperation Agency.

The U.S. angered Beijing in January by approving $6.4 billion in defensive weaponry to Taiwan, but Washington has not yet responded to Taiwan's request for more than 60 advanced F-16 warplanes.

Relations between China and Taiwan have improved considerably in the last two years, but Taiwan still faces a rising military threat from the People's Liberation Army, according to Taiwan's defense ministry and the Pentagon.

Original site