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?