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Temp workers: Helping or hurting Japan’s future?

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Every week in central Tokyo, a group of middle-aged men gather to shed their old corporate identities. Most were managers in large Japanese companies, but were either let go or have taken early retirement. The Institute of Social Human Capital, a business school, helps them reset their lives. In lesson one, old job titles are banned: out with bucho (middle manager); in with nonsense names like chiroriro.

For years, these men rode a career escalator in big companies that rewarded them less for skills than for loyalty and hard work. With that system contracting, they must rekindle their ambition and talent. The experience is akin to emerging from prison and casting off the institutionalised habits of a lifetime. In effect, the school tries to cure them of big company disease.

The cliché of jobs for life in Japan has rarely been less true. Fewer than 10% of Japanese companies retain lifetime employment now, according to Diamond business magazine. Reforms introduced by former Prime Minister Junichiro Koizumi a decade ago liberalised the labour market, accelerating the growth of part-time and casual work. Current Prime Minister Shinzo Abe continues supporting that trend.

Since Abe took office in December 2012, the number of irregular workers — often earning less than half the pay of their full-time counterparts with permanent employment contracts — has jumped by over 1.5 million people, according to statistics by the Ministry of Health, Labour and Welfare. Casual and part-time employees number nearly 20 million, almost 40% of the current Japanese workforce.

For international recruitment firms, this is good news. “We are major advocates of temporary, flexible workers,” says Jonathan Sampson, managing director at Hays Specialist Recruitment in Japan, whose parent company operates in 33 countries. The growth of the temporary workforce is a sign that people want to take advantage of rising business confidence but are not yet confident of making long-term decisions, he adds.

“In an economy where there is positivity but uncertainty, it is allowing businesses to respond to the opportunities that are here at the moment,” says Sampson.

The driving forces of workforce casualisation are complex. Rather than being saddled with the costs of keeping workers on payroll for life, corporations are demanding more flexible employment arrangements. Some firms are rewarding workers for merit, rather than length of service; Hitachi, Toyota Motor and Sony have all recently announced a shift away from seniority-based pay scales.

On the supply side, young professional Japanese are increasingly shying away from the job-for-life security sought by their parents (and grandparents) at big firms, say recruiters. For the professionally mobile, the recovering economy offers opportunities: there are 1.2 positions for every jobseeker in the country. Professionals with bilingual skills are in particularly short supply.

Recruiters are helping to fill the gap in payrolls, especially in Japan-based foreign organisations, and in Japanese companies looking for bilingual staff, says David Swan, managing director, Japan & Korea, at Robert Walters. His firm has enjoyed three years of “solid double digit growth” in the country; and Swan expects that to continue, saying, “There is enormous potential for growth in our business.”

Most observers support a system that better rewards talented young workers and that recalibrates the balance away from Japan’s overprotected middle-aged male workforce. Some warn, however, that a more flexible labour market means more winners and losers. Sociologists blame the low quality of new jobs being created under the Abe Administration’s policies for feeding the growth of Japan’s working poor.

Last year, the Japanese government recorded 16% in relative poverty rates — defined as the share of the population living on less than half the national median income. That is the highest on record. Poverty levels have been growing at a rate of 1.3% a year since the mid-1980s. Along the same definition, a study by the OECD in 2011 ranked Japan sixth from the bottom among its 34 mostly rich members.

Casualisation is contributing to a less egalitarian society, concludes Kaori Katada, a sociologist at Hosei University. At the moment, millions of young casual workers still live at home, rent-free, with mum and dad, whose generation drove Japan’s post-war boom. Once that generation passes, she adds, underlying poverty will become more evident.

Swan of Robert Walters says Japan cannot go on overpaying people who don’t deserve to do well and penalising those who do. “One of the problems with the labour market now is that permanent employees are overprotected, and the age-based system means payment-and-reward is stacked in favour of those who are older,” he says. “Deregulation means you get to a point, hopefully, where the rewards are more equality-distributed to young people and to women.” (He underscores that his company has a high placement rate for women.)

Few firms would disagree with that. One problem with the changes taking place, however, is that they may result in less equality by rewarding a minority of skilled high-fliers. Another dilemma is that such corrections work against the government’s inflationary creed. Inflation-adjusted real wages have actually fallen during most of Abe’s tenure, complicating his administration’s plan to raise consumption and end years of overall deflation. As a result, part-time workers have been earning less money.

The outlook for students at the Institute of Social Human Capital encapsulates some of these issues. Few of its graduates can expect to enjoy the same pay, or conditions, that they enjoyed as corporate warriors, now that they have become foot soldiers again. Yet, some alumni with niche skills may do well in a deregulated market, says a director of the institute. “They have to find their own way.”

Recruiters today favour labour reforms that create a truly merit-based system. The biggest change needed, however, is not legislative but cultural, says Sampson of Hays: “We have to work past the stigma that’s associated with temporary contract employment here.” He says any discussion on casualisation must account for two different types of people: “Those who genuinely see the value, the flexibility and lifestyle of being a temporary worker”; and others who desperately want a full-time job.

The latter will take a part-time job for different reasons, he says: to earn a living, “or to gain insights or opportunities that they wouldn’t get [otherwise] — a foot in the door,” explains Sampson. “We speak on behalf of the professional skilled and qualified — people with very niche skillsets.”

On average, he points out that 26% of his company’s temp jobs become permanent positions over two years’ time. “If that’s your real goal — a full-time job — a one-in-four chance is not bad.”

© Japan Today

©2020 GPlusMedia Inc.

22 Comments
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I really hate the distinction between permanent and temporary work. It just creates two classes of workers, the few at the top who cannot be fired easily and the rest at the bottom who often allow themselves to be exploited in hopes of one day being able to join those at the top. We need to go back to the days when a job was a job and you only had a job as long as your employer needed you.

These days, many 'temporary' contract jobs are essentially permanent where the contracts are extended for years on end, and 'permanent' jobs at troubled and bankrupt companies like Skymark Airlines obviously turn out to be temporary after all.

I accept that any change might mean giving companies a bit more flexibility in firing people even when they aren't in financial trouble (and some people are not going to like that), but this meaningless and artificial two tier system of workers we have is poisonous.

14 ( +15 / -1 )

“Deregulation means you get to a point, hopefully, where the rewards are more equality-distributed to young people and to women.” - David Swan, managing director, Japan & Korea, at Robert Walters.

Actually, Casualisation is a euphemism for job disposability. The real benefit is "part-time workers have been earning less money." As an additional benefit, the "legacy costs" of older workers are eliminated completely. So a 'once upon a time' win-win is now a win-lose and a kick in the pants wage drop to see the worker out the door.

Promoters of this newly disposable human being are riding the wave of skill-less job demands and a resultant societal desperation that ends with exhaustion and depression. Few are energized by the prospect of termination at will and the stigma of feast to famine earnings. Many will also find the cycle of shame and failure so devastating suicide rates will likely explode.

Jonathan Sampson, managing director at Hays Specialist Recruitment in Japan may believe a 26% chance of stability is a bonanza for employers but what this ignores is the 74% who will never have more than a year or two of steady earnings and the opportunity to do much beyond saving for the next job loss and months of unemployment.

If this is advantageous to families and societal harmony neither Jonathan Sampson or David Swan need answer this, it looks like they are too busy selling desperation as a work ethic to satisfy the obsessive greed that demands individuals' failure as a measure of corporate success. The new sign of success will be how many were let go not how many maintained steady and loyal productivity.

11 ( +12 / -1 )

They work in poorly paid jobs for hourly rates and many do not pay taxes or pay into pension system. Benefits are all but non-existent. Moreover, people working part-time are less likely to marry and have children. If Japan is to solve its demographic problem, it will have to tackle the labour issue. Japan needs to narrow the gap between over-protected permanent workers and under-protected non-permanent ones. That coddling one section of the workforce does not serve Japan’s interests well. Simply making life less cushy for permanent workers is not likely to do any good on its own. The big push should be on improving the wages and conditions of temporary workers. It should be made far easier for them to migrate to permanent jobs and for workers of all descriptions to move more freely between companies.

3 ( +6 / -3 )

They don't have to make the part timers full timers. They just have to add more safety nets to the part timers. Part timers need

Health Insurance Unemployment insurance Higher Salaries (double the minimum wage) Bonuses

Do that, and you will have growth, stability, and even more babies

2 ( +3 / -1 )

The biggest problem with the system is that temporary staff agency takes away about 35% and not pay transportation fee or pension so you are required to pay though out of your share.

If the government is going to promote the temporary system and agencies they should also cap the amount these agency can take and make it transparent so trust can be restored beween staff and agency. At the moment the agency has too much strength and the staffs does not have anything to leverage for better conditions. The agency also does not negotiate with the company for promotions either so once stuck with an hourly wage it will not change unless you find a better job and quit the present agency in which case you have to work another 6 month to regain various fringe benefits(paid vacation) that is ensured by law.

6 ( +7 / -1 )

In short, the snake-oil-salesmen think that snake-oil is really good for your health and for society as a whole. Isn't that a pleasant surprise [/sarcasm]

6 ( +7 / -1 )

Lets not also forget that part time in Japan is 40 ~ 50 hours a week also... Also if a Japanese person does not pay into the social security portion of the Japanese system for enough years they do not get to collect benefits when they reach retirement age.... So I am sure the government is looking at all this part time work crap as a way to save money for the national budget in the future to boot...

1 ( +3 / -2 )

Swan of Robert Walters says Japan cannot go on overpaying people who don’t deserve to do well and penalising those who do.

Sure it can, but if it does it will keep going down the gurgler.

One problem with the changes taking place, however, is that they may result in less equality by rewarding a minority of skilled high-fliers.

OK. Guess it's better for Japan to keep going down the gurgler, rather than paying people what they are worth. Everyone should get poor together.

-2 ( +1 / -3 )

Of course the temp worker system hurts Japan's future. It's mind-boggling that anyone who isn't involved in selling temp workers isn't aware of it.

The problem isn't temp workers per se, but that there is so little permeability between the two systems. If skilled temp workers were regularly promoted into permanent positions, the system would work. But because that doesn't happen, you end up with the system we have now, where no temp worker has any need to improve themselves because self-improvement almost never leads to promotion. In fact, I've even seen temp systems that discreetly discourage self-improvement, likely because they don't want a skilled temp worker to expose how incompetent the unskilled temp workers they're foisting on their clients are.

The old system results in a few incompetent people at the top, sucking up the money and not getting anything done. The new system results in many incompetent or exhausted and underpaid people at the bottom not getting anything done, with their non-managing managing companies sucking up all the money. Both systems feed parasites who are nothing but drains on the system without producing value.

3 ( +4 / -1 )

Irregular income make it much harder for these workers to buy a house, apartment or a car, as they are not allowed to borrow money. Marriage can also be difficult too. Cue.... decreasing birthrate in Japan.

For the company, having a stream of temporary workers means that institutional memory is weak, there are fewer workers who know what the company did 3~5 years ago, while responsibility and authority are weakened, or limited to just a few key personnel. Human networking, one of the former core business practices, is no longer possible as staff come and go. Advances in IT have not compensated for the 'human factor'.

3 ( +3 / -0 )

Just to share an incident that happened just yesterday morning as Iam in night shift. I was asked by the Hancho San to change all the boxes filled with different plastic supplies lining an open steel rack. In the middle of doing it, the shain man heading the nearby open oven line admonished me in a very threatening voice. From my understanding, he was asking why do I have to do what I was doing, that I might mixed up things in there and everybody would have a hard time finding what they're looking for. You see, I am just in my 5th month. When I was asked to change boxes, I understand to change the boxes as well as make the supplies tidy as possible but I did maintained putting back in its original place all the supplies. Then the man just keep on talking that the other members of my line were already finished while I wasn't. So what I did is to confront him and told him he better asked the Hancho San as I was just following orders. And I added if you're sufferring from work stress then it means you're not capable of the working. To which I overheard him say, why do I answer back to someone who is a shain or regular staff like him. He's like a god for being a shain. Pity for the company!

0 ( +1 / -1 )

I recall that people used to make ¥5000 minimum per hour teaching English. Then, a company sounding like the name interaction came plowing through and hustled all the contracts and now farms out English teaching jobs to most people at minimum wage. Too bad.

3 ( +4 / -1 )

Much room for improvement here in Japan and all around the world.

0 ( +0 / -0 )

A temp worker don't have raise of salary, don't have seniority, don't have any hope, can be used like a mop with rotation schedules, no vacation, no pay holidays, no bonus, no company pension, can be rehired many times as you want with a bad economy. A permanent person have seniority, union (some companies does), company pension, bonus, have semi hope to have a stable life, standard schedule, pay vacations, pay holidays.

We need to be real here folks! Which is better for companies numbers?

2 ( +2 / -0 )

Joshua Degreiff

In terms of macro economy the company is not gaining anything since if majority of people becomes temporary worker within the contry it means people will not have much money to use resulting to a shrinking economy in which most companies would be dragged down as well.

At the end companies need to compesate their workers fairly if they want to ensure sustainability of the company.

1 ( +1 / -0 )

Temp work suits some people but one of the main issues in Japan is how cheap some of the companies are in terms of what they pay their workers.

Not uncommon in the countryside to see hourly rates of 650 or so yen for part time jobs. Way too low.

2 ( +2 / -0 )

Before coming to Japan, I read about how dedicated Japanese salarymen were, how hard they work and how they work really long hours.

Teaching English in large corporations in Tokyo soon disabused me of this idea.

The top management did virtually nothing. They played golf and made speeches. They drank Napoleon or "Johnny Kuro."

Upper middle management organised endless meetings and other mostly useless activities. They drank "Special Reserve."

Middle management did most the work of everybody above them. They didn't have time for English lessons. They drank Suntory Old.

The "hira sha-in," (office workers) were lazy and slow. They seemed to spend about as much time drinking tea and chatting as they did actually working. They drank Suntory Kaku.

Seniority was rewarded with a higher salary, big bonuses, less pressure and less responsibility.

Ability hardly came into it.

I'm glad things are turning around.

But it has a long way to go.

4 ( +5 / -1 )

The problem with this article is the likes of those interviewed, Jonathan Sampson & David Swan, work for work for recruiters that not only target specific / specialised roles, but predominantly hire from / for gaishikeis. This isn't the real landscape. Japan has never really had a 'mid-career' job market, as this is a sign of weakness for those of middle-age who are changing careers.

This is where the differences begin. In the West, mid-career opportunities are plenty & are often seen as a strength in candidates, as they've spent 10 or so years building their skills and are ready for something more challenging. Here in Japan, however, you're expected to be moulded by the company from the age of 22 and slowly work your way up. No performance-based incentives, just slave away in the same role until you're next in line for manager. Disregard the possibility that you may not be manager material, just do as the old boys' club says.

Japan Inc. is filled with endless glass ceilings. 'This is your age / gender / role, and this is what you'll be for the next (#) years'. Forget career development, because Japan Inc. follows its own watch. Temporary workers are only growing in numbers, as Japan Inc. will explore any avenue that cuts costs, even at the detriment of its workers. Ah, but all in the name of the company, right? Old boys' club stay rich, do nothing all day, then a golden parachute & amakudari position await upon retirement.

This is the Japanese dream & it's killing the economy.

4 ( +4 / -0 )

JapanGal - What does your comment have to do with the story of temp workers?

A temp job by Japanese standards is considered a regular job in the U.S., for all intents and purposes. In the U.S., temp means like a couple of weeks working the phones at an office where a regular employee is away on some trip.

It sounds like all a temp worker in Japan need to do is DO A GOOD JOB. If a company sees your value, then they are more likely to keep you. If they see you just sit on your butt, then yeah, you don't deserve to have a job at all. That's how it works in the U.S.

We will probably see poverty rates and subsequently suicide and/or crime rates go up as a result of this more relaxed employment system, but oh well, you take the good with the bad.

I was a bit surprised by Japan's poverty ranking, but in a culture where people without much hope of getting married (and there are a lot of them) live with their parents, then even living on half the average salary is not bad.

1 ( +1 / -0 )

Tiring

Good point you make. But sadly this is the society we are living, companies just seeks is numbers not well care of people. Temp workers supposed to have room for expansion and have a change to have a permanent job when permanent staff quit, die, move, retired. Other factor I have to point some companies are only hired permanent staff when they're "recommended" (friend or family memeber working in the company) I'm not agreed with that labor behavior they supposed hired for your skills nothing else. Let hope in the future companies seek other ways to make numbers not greedy way!

1 ( +1 / -0 )

Joshua Degreiff

I have a little more faith in people that leads companies, government and humanity in general.

Economists are more then aware of this and have wrote books on this very theme. Historians have also confirmed this stating how society grew with the birth of the middle class and made various comparisons with the medieval period when the economy stagnated with disparity in wealth.

It may not happen within the next 10 years but it will swing back eventually.

1 ( +1 / -0 )

Is this a trick question?

0 ( +0 / -0 )

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