It is just that if you have to cut jobs, you cut where they will, in the long run, cause the least damage. Given that with what appears to be a hard brexit on its way, something that would render European business more complicated if conducted from the UK, that would be a good place to start.
However, I am not going to blame Brexit yet. In fact, the irony is that because Brexit is more like a slow moving car crash, it will often not be clear (even if it is suspected) that restructuring is directly related to Brexit. It would only be seen on a large scale, if enough companies do it, over a protracted enough period, such as a large enough change in GDP over a sustained period of time.
That does not mean I do not think that Brexit will not hurt the UK. Ninety percent of economists agreed that it will cause serious damage to the UK economy, and unlike Michael Gove, I do believe in experts (otherwise, why do we pay doctors so much money and expect them to go to school for so many years). However, as with climate change, you cannot take a single event and point to it as evidence. it is a change in pattern that provides the evidence.
0 ( +1 / -1 )
While it is true that a cheaper pound makes a country's exports more affordable, one of the problems the UK has is that it actually does not produce that much that can be exported (well, financial services, if you will, but with free trade agreements generally not including services, that is not going to happen). A manufacturing infrastructure needs to first be built up...something which, once article 50 is invoked, is a bit late in the day to do. So there is a limited positive side to the depreciated pound....And there are non-tariff barriers (customs inspections, paperwork for clearing customs - so more 'red tape').
In the meanwhile, since the UK imports more than it exports, a devalued pound actually makes people poorer, so their purchasing power goes down. So demand (domestically, anyway) will not improve.
1 ( +3 / -2 )
First, the PC market has been in serious decline for the last 5 years, so PC makers are all in trouble (or PC components makers). Hence AMD/ATI's troubles.
Intel has been a bit better because it has so much money and controls most of the shrinking PC market (although, to be fair, it is starting to stabilize - industrial PCs are still a solid market - it is the consumer market that has taken a big hit).
Having said this, from what I read, it sounds like Fujitsu is in the services sector, providing IT services. Therefore, while it is quite likely that this is simply a restructuring that was in the cards (although even if it were Brexit related - very few companies would actually say it for fear of irritating a part of their potential market), the fact that the UK is likely to be out of the common market in the next couple of years makes the UK more vulnerable for job cuts/investment cuts - which will eventually often translate to job cuts - when companies feel they need to restructure.
After all, you would rather cut something that may have to be eventually restructured anyway if the market in which you operate is about to significantly change rather than in a place that is likely to be stable (when such a choice is in the cards).
4 ( +5 / -1 )
Probably, Fujitsu was looking at restructuring anyway, but given the uncertainty in the UK, and the likely loss of favorable market access to the EU, if there are a number of sites where cuts can be made, the UK seems a good place to start, since in the advent of a chaotic Brexit, some of those jobs would have been moved anyway...so why not get ahead of the ball.
Also, as Moonraker says, there is a serious underappreciation of the freedom of labour movement (I add the word 'labour' because the fact is that the freedom of movement is, in fact, constrained - after 6 months an EU citizen living outside his/her home country can be asked to show that they are in employment or that they have the funds to support themselves or they can be made to leave). It levels the playing field because while companies can move around, so can workers, making it harder for companies to blackmail governments (which government wants to advertise that its policies are increasing unemployment?)
2 ( +4 / -2 )
There would be a simple solution, if the government had the strength of character to act. Penalize those companies that develop their business models on a plentiful supply of temps beyond a short period of time (say 6 months to a year - beyond that, it really is not a temporary situation any more）. And make the penalties punitive, so it will actually hurt employers and not just a tiny slap on the wrist.
There is no shortage of workers who would love to become 'seishain' who are stuck in temp ('hakken') living month to month or quarter to quarter (the luckier ones from year to year - but never really sure where they will be in 3 or 6 months. They will not buy homes, cars, things which would cost a lot to move if they had to relocate. While I am not convinced it would magically solve the problem of driving Japan's economy, it would provide a boost, and that is something that at this point is desperately needed.
1 ( +1 / -0 )
Like many things in Japan, it's mostly the system that is wrong, not the individuals in it. Hate the game, not the players.
The problem, as with any system, is that it has been copied blindly. Rotation to broaden the skills of all employees and so that they understand the different sides of the business is not bad, as long as they retain a core skill and that is what they largely focus on (but, having gained an understanding of different parts of the business).
If well managed, a seniority based system does reflect increase in experience. However, it requires active and careful management to ensure the more senior people have worked on 20 different projects over the years rather than the same (essentially) project 20 times....
But, the problem is that this requires careful monitoring and people speaking out, something which does not happen.
My suspicion is that Japan has been too successful in the past for its own good. Having been as successful as it has been, no one wants to touch the system for fear of breaking it, when in fact, occasionally breaking something is what is needed, in order to keep learning and gaining new lessons.
In addition, the Japanese market is either too large for its own good, or not large enough. It was large enough 30 or 40 years ago, when the baby boomers were bringing up families so that many companies could survive perfectly well focusing on the Japanese market alone, and thus insulated themselves from the outside world (and thus, opportunities to learn new techniques/technologies). But it was not large enough that when the boomers started retiring they could keep on going at it as they had been and are now suddenly struggling as they have to compete with the rest of the world but have no idea how to do so.
5 ( +5 / -0 )
A major reason that people stay with companies for life is that they do not develop skill sets in their workplace that transfer to any other company.
Companies seem to develop their own training systems and internal qualification systems so that switching companies means having to start from scratch. It makes employees unable to transfer, as experience and knowledge acquired along the way of limited value (since at least a significant part of what they might bring is company specific - especially with the rotation system which prevents them from becoming true specialists/experts).
2 ( +2 / -0 )
And wasn't Britain the 2nd richest country less than a century ago? So, something went and is going very wrong with that island.
It also had to turn to the IMF for a bailout in the mid-seventies, at the time it was joining the EC. It's economy had been in a shambles. It's now among the leading economies in the EU (comparable to that of Germany). It's really hard to see how the EU has been bad for the UK>
1 ( +7 / -6 )
Given their track record in recent years, the more unanimous economists are about going in a particular direction, the more I want to go the opposite way.
The question is whether these are the economists that the media prefers, or a sample of all economists. The media economists often have business interests and are thus not necessarily the most unbiased of sources.
Academic economists, on the other hand, are not the likeliest to be media darlings, because they tend to couch all their statements with caveats and tend to talk in shades of grey rather than black and white. They tend to require some time be given to their statements as they tend to be nuanced, so it's much harder to grasp what is being said in a 30 second spot. Unfortunately, most of the economists we see in the media are of the variety that the media prefers (for obvious reasons) and they are also the most likely to be unreliable.
0 ( +3 / -3 )
'Nearly half of Japan's EU investment flowed to the UK last year'. The key word is NEARLY. It still means more than half the investment flowed to the rest of the EU bloc. Thus, while the UK vote for Brexit is a major headache, it is still relevant to, at most, half of Japanese investment in the EU, so I would not get too upbeat about the prospects to the UK.
Moreover, economic forecasts (never mind the doom-mongering that the remain camp undertook out of desperation) all suggested that the UK would become poorer in the long term, which means that its attractiveness as a market is more likely to decrease than increase. The problem is that all assumptions of the state of the UK market are based on current conditions, which will change (the question is by how much and in what direction - although there is almost unanimity among economists in terms of the direction - in a negative direction) when the UK does leave the EU.
Moreover, if there were a migration of industries from the UK to the EU, then it would be the UK that would be potentially moribund and the EU would gain a boost. In fact, if I were in any of the other EU countries, I would be working hard to poach business away from the UK (and there are signs of this happening on a limited scale for now - cosmetics vendor Lush has already started transferring operations to the continent - banks are already staking out real estate in Dublin, Paris, Frankfurt).
6 ( +11 / -5 )
While it is true there are may be flaws in the gathering and disseminating of statistics, as long as they are consistent, i.e., the methodology has not changed, then you are comparing apples with apples and oranges with oranges, so trends, when they are strong enough, are meaningful.
Whether working one hour a month or 10 hours a month or 600 yen per hour as opposed to 2500 yen per hour should be included is different, but since previous measures have used the same measures, they are comparable, and if any trends do become evident, then they really do represent a change in pattern. The use of definitions that are questionable may simply make it harder to estimate how close the country is to full employment and therefore how healthy is the real economy (real for most people, that is).
1 ( +1 / -0 )
I agree wholeheartedly with what you say. The reason for wanting inflation is that the value of money increases (in terms of purchasing power) by holding on to it when there is deflation. By increasing inflation, you are forcing companies to figure out ways of going out and looking for productive uses for this money in the bank account. Given that your capital investments (machinery, tools, etc) will have to be replaced due to wear and tear, in an inflationary period you might as well go out and invest the needed amounts before your cash reserves lose their value.
I agree with accumulating cash is not more useful than buying Haitian penny stocks. But it is one of the limitations of QE. Most of it goes into purchasing bonds which puts money into those who already have cash reserves, who then go out and invest it into more equity (shares) which drives up the stock market (which may be good for pensioners) but does not do much for the economy.
That is why a stimulus package should target those who will go out and spend it on things that will stimulate the economy. Say, all households whose income is less than 2.5M yen for singles and 3.5M for families (possibly adjusted for regional variations - on 3M you do nicely in Kumamoto but not so much in Tokyo). I can assure you that a single mother on 2.5M who gets 100k or 200k, either as cash, or vouchers, will go out and use it, whereas someone on 10M will likely take whatever they get and put it into the stock market (in all likelihood). Apart from making these people's lives easier, there is a very high probablity that they will make use of it. It could even be something as frivolous as 100K to be spent on lodging and transportation for a weekend getaway....to be spent over a 6 month period (in case people are concerned that this would only be saved away rather than put to use). First, in the situations I mentioned, less than 2.5/3.5M PA, the people are not likely to have much money to spend on a holiday but it
As for the population shrinkage, I agree. Viewed in this context, Japanese economic performance is actually quite respectable, when it is on a per capita basis (adjusted for the size of the working population). But I can also assure you that employment stability and the ability to plan makes a big difference.
I came back to Japan a year ago, on the basis of a 'haken' contract, just to see what the labour market is like and also to refresh my Japanese, which I was forgetting rapidly, after 7 years since my PhD, and I can tell you that most of my decisions are made on the basis of possibly moving on (so why spend a lot of getting too comfortable? What if I move? etc. I could get a car, but public transport in this area, while not great is better than in the UK, why spend money on it if in a year or two I may decide I have had enough and move on - and if I did not have that option, in case my income stream was interrupted）. The irony is that it helps Chinese and Vietnamese manufacturers more than Japanese ones, as I purchase the cheapest...why spend a lot if you may move around and then moving it with you becomes expensive?
Of course, as I have argued before, one person does not make an economy, but my own example illustrates the pressures you put on people when put into these precarious situations (ok, my income is quite decent, but then I have a PhD - and it would be even better if it was a permanent position - but then I always have the option of heading back to Europe or Canada so I am under less stress than a Japanese person).
1 ( +1 / -0 )
Ok. First observation. An economy does not consist of one individual. Just because one person does something does not mean anything. Over a large enough population, you will have all kinds of interactions, none of which alone will change anything, but cumulatively will change patterns of behaviour.
Even if everyone did go out and buy beer....for argument's sake, the breweries would have to start expanding production. As long as the increase in production could be handled by existing infrastructure, the effects would be limited. Yes, you would have to hire some extra workers, but that would be it. But, if you expand it enough that infrastructure has to be increased, then you also start creating construction and manufacturing jobs (for the equipment to brew the beer).
And we have not even touched upon the distribution networks that would have to expand. If everyone did go out and buy beer, chances are supply chains to the stores you buy the beer at would have to be increased.
If this drives down unemployment, and it will one way or another, it will become increasingly an employee's market. Do you think Walmart started increasing salaries and benefits out of altruism? Of course not. They started having increased turnover as other jobs became available and people moved on.
And it still does not invalidate the argument that spending money stimulates the economy, as long as workers are seeing the benefits. WW2 was a fiscal stimulus on a historic scale. It brought down unemployment and increased living standards for decades.
As for the argment that making money is the foundation of an economy, that is silly, unless the money is put to productive use. I can collect a lot of bills with the nice digits 100 or 1000 printed on them and then put them under a mattress. How does that help the economy? It is not going to create a demand for a worker to provide me a product or service....
The stimulus packages do not help because most of them focus on giving more of these coloured notes with the digits of 100 or 1000 to those who already have big bank accounts. Same as putting them under a mattress.
2 ( +4 / -2 )
Unbelievable that this type of "solution" has become an almost normal part of the daily discourse about the economy and policy.
Except that WW2 was the world's largest ever stimulus package. The money that everyone claimed did not exist back in the thirties suddenly existed (all it took was the excuse that our societies were under attack). However, regardless of the causes, it caused government spending on an unprecedented level (I am talking about North America here - since Europe and Asia also had the task of reconstructing what had been demolished) and it pretty much got back full employment and 30 years of growth...so it does work.....if the goal is to help the population rather than the wealthy classes.
0 ( +2 / -2 )
Give XXX,000 yen coupon to every family in Japan, be sure this will be spend, instead of justification money for pork barrel project that will just end of some (and same) pockets.
But in yesterday's article stating that business was unimpressed with the stimulus packages and BoJ easing (Japan Inc not enthusiastic over Abe's stimulus, BoJ easing), there were admonitions not to turn to helicopter money (which is exactly what your suggestion is)....
So Japan Inc wants a free hand to do whatever it wants (hire day workers with no constraints, fire at will, not pay almost anything, no commitments to employees), it wants money to subsidize what should be its own investment, but nothing that will help the average person....so it is not going to happen, even though you are right, such a move would actually stimulate the economy more than anything else. Moreover, this could even be guaranteed if the money, issued as, for instance, vouchers, had a time-limited value.
The fact is that if it were tried, it would do more to stimulate the economy than anything else that has been tried. However, it will not be tried due to political pressure by business groups. And so it will go on, business groups arguing against any measures that will help their ultimate consumers, but then complaining if any attempts at stimulus do not go into their own pockets, and then further complaining about the precarious state of the economy for not investing.
0 ( +2 / -2 )
Don't you just despise these idiots?
40% plus of workers are on rubbish part time and contract contracts, so of course there's little demand in the economy. And there never will be as they never address this problem do they? The Japanese economy will never recover. These idiots are just playing games.
Hence the need for structural reforms, although not of the kind that most of the inept senior management in Japan (and to be fair, most of the world) wants, which, in general, means making it easier for workers, aka consumers, to be made disposable.
I would say that the main problem in Japan is the high cost of a permanent worker: I have lived and worked in Canada, the US, the UK, and Japan, and nowhere else do companies pay transportation subsidies, or subsidies for children, or retirement bonuses (one to two years of salary).
Apart from distorting other markets (public transportation, for instance, where companies no longer charge the most that the market will tolerate - instead charging what businesses will pay since transportation fees then essentially become a business to business transaction - and housing, since one of the determining factors in choosing where to live becomes what transportation subsidy your company pays rather than what you would actually want in a community), it makes hiring a permanent worker significantly more expensive., it removes the responsibility for social welfare from the government, where is where it really should be.
Restructuring is also a major nuisance. It is made unduly hard, and part of that, I feel (although I have to be careful here) is also the government's abdication of its responsibility for social welfare. It should be easier for companies to restructure, but that would mean having a proper safety net for those whose positions may be cut due to changes in the corporate structure or corporate strategy.
But there is also internal corporate bureaucracy too. As we have more and more of these temps, companies are complaining that they cannot find skilled (and increasingly, unskilled, also) workers. But then, there are plenty of skilled (and I mean highly skilled, including PhDs in engineering, sciences, etc) who are languishing in these dead end temp jobs because either they are over 40/45 - which is already an improvement - it used to be 30 to 35 - or because they moved around too much (so who is going to go work at a startup - even if that is where much innovation happens - when it may fail and you may then find yourself unable to move into a proper career again?). Unfortunately, that is something the government cannot do much about. Until there are a few more "Sharps" (ie., being taken over by foreign owners to prevent bankruptcy), the corporate culture will not change.
8 ( +8 / -0 )
The problem is simple, the cost of living in Japan is too high. Because it is too high, people consume less, and have fewer children. That is the only cause of the problem, and the only thing which needs to be addressed.
The cost is too high or the incomes are too low. Ultimately, what matters is the difference between income and expenses.
The thing is you can tolerate a slightly lower income if you have some degree of stability. Credit is of limited risk if you can plan ahead. What you cannot have is credit under volatile conditions (or very limited credit). Hence, if you have some measure of being able to predict your income, you can afford to start making investments for the longer term rather than having to put away for the rainy day when it eventually does come.
0 ( +0 / -0 )
One of the problems in the Japanese system is he severity of bankruptcy law. A bankrupt in Japan is akin to a criminal, and bankrupts lose the right to vote, and to get full time employment. Companies and individuals will pull out all stops to avoid bankruptcy, even if this means borrowing money they likely cannot repay, or, on a larger scale, hide or shift debts, roll them over, or somehow put off the day of reckoning as far as possible. But that day eventually comes. JAL went bankrupt a few years ago, and they are still paying the price. Ordinary Japanese shun JAL for ANA, and the airports refuse to give more slots to JAL. If you asked people 15 years ago what their favorite airline was, they would say "JAL." But ask them now, and they will all say "ANA." And if you ask them for a reason, they will almost invariably say "because JAL went bankrupt."
One of the possible measures about restructuring, perhaps? Allow bankruptcy to be an opportunity for the viable parts of a business to be spun off and the deadwood to disappear. It would bring back the concept of managed/manageable risk to Japan. Investors would know that when they invest there is a chance they may not get all their money back and so they would think about the business model and its viability before plunging money in.
If there is no reform to the bankruptcy law, the Japanese companies will be sold off at bargain basement prices and purchased by foreigners (look at Sharp) and then there will be wholesale restructuring, which would be much worse than a controlled and managed change in the whole corporate environment.
But if people really do prefer ANA because it has not gone through a bankruptcy restructuring, then it is not only Japan Inc, but all of Japan that needs a lesson in how business works and about how the rest of the world is evolving.
6 ( +6 / -0 )
The problem is that the structural reform that Japan needs is not the one they think they need or want.
They want the birth rate to increase but then they go out and hire, in some cases, more than half of their staff from temp agencies, workers who are on short term, less paid roles. The problem is having a family is a long term commitment, but the families' income streams are short term, variable, and uncertain. The employers themselves could at least start helping out in addressing the problem by shunning these agencies.
Yes, some structural reform could help, but once again, not the kind of reform that they would necessarily like. For instance, I understand the need for flexibility, so temping should not be made overly difficult. But, after two years the temp should either be made permanent or the role should not be replaced for at least a couple of years (i.e., headcount would be reduced by one every time a two year temp contract expires - unless they hire the person permanently - after all, if the role is needed for more than 2 years, it is hardly what one would deem a temporary situation).
Admittedly, there are things the government could do to make this a bit easier. Get rid of this transportation subsidy. This is effectively a business to business transaction. Companies know that many commuters have their costs covered by their employers, so the transportation companies are no longer competing as if they were targeting consumers. Thus, the usual competition that would arise is at least partially suppressed. Let the employees cover their costs, and then transportation, construction decisions will be based on actual needs, as decisions where to live will then be driven by actual needs by those who have to live and commute.
Also, why should permanent employees get one to two years salary upon retirement? If the pension system is not up to scratch, it should be reworked. But it is admittedly, not business' responsibility (or should not be) to provide welfare. It should be the governments' responsibility. If it is not up to scratch, then that is another area where I admit some structural change should be implemented.
In addition, they want free money for themselves (more money for R&D into IoT, robotics, other tech) but no helicopter money for the average person. Apart from hypocritical, it is also missing the point that what is lacking is demand. People are making do with the essentials given the large numbers of people who are in precarious jobs (and thus putting away money for when the rainy does come).
Also, with this obsession with stability, no matter how much money you throw at innovation, it will not happen. Innovation happens because people go out on a limb and take risks. When you take risks, sometimes you hit a jackpot, but other times you will fail (otherwise it would not be called a risk). But then those who take the risks and are not immediately successful are stigmatized...try going back to work for a regular company if you tried to set up an innovative business and then things don't work out...you are more likely to end up scrounging as an temp worker through an agency.
This attitude not something that the government to change. That is for businesses to change themselves....there is only so much the government can do...and most of it is in terms of helping the population directly rather than businesses.
And why all this need for technology? There are plenty of skilled people who could do some of the work themselves...but they have ridiculous policies that excludes a large part of the population from being hired to contribute to the company
3 ( +3 / -0 )
Aly Ruston. There is always Germany, with a large Japanese community, also, so they should be able to find people who can help them communicate with the European market (both in German and English - as there are many English speakers in Germany).
Bobsyauncle. While the UK was inside the common market, there were no customs controls, tariffs, or other barriers. And they still had a market of 440M people in addition to the 64M in the UK. As for the UK being tea drinkers, there are tea drinkers in other parts of Europe too (and most Britons drink basically black tea...not the green tea that this firm is involved with ).
2 ( +2 / -0 )
The UK will leave the EU. I personally am disappointed and I question if the outcome truly is democratic as the main platforms of the leave camp were lies (it only took a couple of hours for them to start unravelling) and the media (especially the BBC - well the Murdoch media was actively stoking the xenophobia but that has been known for years) was a spineless chicken as they did not challenge any assumptions by the leave camp (you can make trade deals? With whom? why are they going to spend time and money with a 64M person market rather than on a 440 M person market? You can have your cake and eat it...how does that work? Why will the EU allow that?). However, the contenders to replace the PM have taken the position that it was a legitimate vote so there is no going back (and with the fixed terms Parliament act it is harder to dissolve parliament, especially with a majority).
The challenge really is at what point (and how), is it made clear that they cannot be in the single market? Or that they have to accept freedom of movement? But not both....
Personally, a politician who would have the courage to challenge the assumption that immigration is bad could address the problem by showing how the UK would be in deeper problems without immigration, but no one of that calibre is in sight. And even then, there would still be anger as to be in the EEA the UK would still have to pay into the EU budget (an even larger amount than now - i.e., then they would really be paying the 350M as there would be no rebate).
0 ( +0 / -0 )
Not to mention all the EU citizens (not as many as Brexit would have wanted Britons to believe, only 5.3% of the population really - not insignificant - but still only 1 in 20 of the people in the UK) whose lives are on hold for however many years this thing drags out.
1 ( +3 / -2 )
Yubaru. The problem when comparing salaries is you also have to compare costs of living. Housing is a major cost, so that has to be a significant consideration. When I lived in Kumamoto, I was paying less than half the rent as in the Kansai area (and that is not even in the big cities). And Tokyo is also a lot more expensive, so higher salaries do not necessarily mean a higher standard of living.
Rather than pushing salaries, one of the things that has to happen is to get rid of these permanent temp roles. I understand the role of temps, but if a position goes on beyond two years, that is beyond temporary. At the same salary a person in a more permanent role is more likely to invest in the future as they can start planning ahead. You can afford to take on some debt if you have a reasonable prospect of having incoming in 6 months or a year down the road. If you are not sure about your job prospects in 3 months or 6 months, the propensity is, reasonably, to save.
2 ( +2 / -0 )
Lack of resources...a lot of companies are complaining they cannot find the skilled workers but then if you do not fit their perfect profile - i.e., straight out of university, or over 30, or having worked for a dispatch company, or having changed jobs too many times in their view - they will not even talk to people. So they auto-exclude 'resources' who could help them (and often 'resources' with the experience to prevent these cock-ups).
4 ( +4 / -0 )