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Sunday, Aug. 27, 2006

MEDIA MIX

'Disguised contracting' gets proper airing in media . . . with results


The main front page story of the July 31 Asahi Shimbun was about the prefectural labor bureaus cracking down on major manufacturers for improper employment practices; in particular, something called giso ukeoi, or "disguised contracting."

Contractors and subcontractors are a vital part of Japan's economy. They allow large manufacturers greater flexibility in developing new products by outsourcing certain activities to smaller factories. In a normal gyomu ukeoi (administrative contracting) relationship, the larger manufacturer contracts with a smaller manufacturer to handle part of the production process, usually in the smaller manufacturer's facilities.

With giso ukeoi, the larger manufacturer brings the smaller company's employees to work in its own facilities. These workers take orders directly from the contracting company's managers. However, since they were formally hired by the contracted company, the larger manufacturer is not responsible for them, administratively or otherwise.

This situation leaves the giso ukeoi workers in a kind of gray zone. They do not receive the same benefits and rights as do employees of the larger manufacturer. Nor are they subject to the protections afforded employees of temporary agencies. If a temp works at a client company for a year, according to Japanese law the client company must offer that worker a full-time position.

Using giso ukeoi laborers, large manufacturers get the benefit of experienced workers without the usual high cost of experienced workers. In the current global economy, where Japanese manufacturers are facing stiff competition from other manufacturing powers like China and Taiwan, ukeoi has become a strategy for holding down labor costs. Manufacturers who use giso ukeoi keep wages low because they deal with ukeoi companies, not the workers themselves. And they can dismiss or replace workers whenever they want and for no reason.

Another Asahi article singled out one ukeoi worker at a Canon subsidiary in Oita Prefecture in Kyushu. The worker, a college graduate in his early 30s, has to stand all day at the assembly line. He says the work doesn't require much skill, and that he has no illusions about advancement or pay raises.

In March 2004, the government passed a Labor Dispatch Law that allows temp services to provide factory labor. Since then the prefectural labor bureaus have looked into the spread of giso ukeoi. Of the more than 600 companies that use contracted labor, the labor bureaus estimate that about half are in violation of labor laws.

According to the Asahi article, the labor bureaus have been sending warnings to such companies for at least two years. The Health, Labor and Welfare Ministry conducted a survey in 2004 and estimated that there were 870,000 ukeoi laborers in Japan at the time. What's more, most of the workers who replied to the survey were under the impression that they were temp workers, not contracted workers. When I read this a red flag went up in my mind. Two years? More than 300 companies and 870,000 workers? Why is this news now? Why wasn't it news last year?

Actually, it was. It's just that the media covering it don't answer to advertisers. The muckraking weekly Shukan Kinyobi has mentioned giso ukeoi in its coverage of labor disputes, and the Communist Party organ Akahata has made something of a crusade out of the issue. In addition, there are blogs and Internet Web sites that have talked about the problem. There's even one in English.

So why did it take the Asahi, as well as the other vernacular dailies who also started covering the issue at the same time, so long?

The July 31 article mentions that the Asahi's research has uncovered a number of cases of giso ukeoi that occurred "in the past two or three years." However, the article doesn't say if this research was conducted before or after the labor bureaus publicly named companies that were carrying out giso ukeoi.

Canon and Hitachi were the companies cited in the headline, but the article also mentions Nikon, Toshiba, Fuji Heavy Industries, Toyota and Komatsu. All of these companies advertise heavily, and my guess is that the newspapers didn't think it was worth the trouble to cover the issue. But since it was the government who announced the names of these companies, the mainstream press was let off the hook. They could now cover the story freely.

Suddenly, giso ukeoi problems are being reported in all the dailies (I still haven't seen it covered on TV). One of the bigger stories involves a Matsushita plasma-TV factory that opened in Sept. 2005 in Amagasaki, Hyogo Prefecture. In order to attract jobs to the prefecture, Hyogo offers a subsidy to manufacturers based on the number of workers they hire. Matsushita applied for and received about 245 million yen for six full-time workers and 236 temps. However, it was revealed -- first by Akahata -- that Matsushita was planning to change over to ukeoi workers after they received the money. This is essentially fraud, and Matsushita defended itself by saying that when they applied there was "no distinction" made between contracted workers and temps, but Hyogo officials countered that they had, in fact, "explained the difference clearly."

The media attention worked. Matsushita has since said that it will hire 360 full-time workers at its Amagasaki plant. On Aug. 1, the day after the Asahi story broke, Canon CEO Fujio Mitarai, who is also the current chairman of Keidanren, the Federation of Economic Organizations, said his company would look into its labor practices. It just goes to show that when the mainstream media does its job, it can make a positive difference. But how ironic is it that it was a government bureau which prodded them into action?



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