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Thursday, June 26, 2008
Goodwill to liquidate temp agency
Double-dispatch arrests trigger firm's liquidation
Goodwill Group said Wednesday it will close its scandal-tainted temp staff unit Goodwill Inc. by the end of July because the health ministry is preparing to revoke its business license.
Goodwill Inc. said it will ask its clients to directly hire its temp staff assets or ask other temp staff firms to take them on by the end of next month.
Meanwhile, the company's 4,200 or so full-time employees will be asked to quit, it said, adding that the group is unable to transfer them internally because of financial problems.
Goodwill Inc. President Kazuaki Nakamoto will resign when the firm is liquidated to take responsibility for the closure. The other board members will quit on Monday.
At a press conference in Tokyo, Nakamoto said one major reason behind his company's collapse was that it placed too much emphasis on expanding.
Shinichi Horii, president of Goodwill Group, later apologized for troubling the people involved and said liquidating the temp agency had been a "tough decision."
The announcement came a day after the Tokyo Summary Court ordered the staffing agency to pay ¥1 million in fines for dispatching temp workers to companies that sent them on to work at other firms — a practice known as double-dispatch, which is banned by the Employment Security Law. Goodwill paid the fine Tuesday.
Double-dispatch is prohibited because it blurs the legal responsibilities for worker safety and other aspects of the working environment.
Three Goodwill employees were arrested earlier this month over their alleged involvement in double-dispatches. The company was also accused of illegally dispatching staff to work in unauthorized fields, including stevedoring and construction.
In a statement, Tokyo-based Goodwill Group said all negotiations for selling the temp staffing unit were put on hold following the arrests, which, combined with payment of the fines, increased the likelihood that its temp dispatch license would be revoked.
"Under such a situation, we judged that it is effectively impossible to sell the business and decided to liquidate it," the statement said.
The liquidation will be a blow to the temp workers who registered at Goodwill.
"The ministry should take steps to support the workers who will lose their jobs" by offering them unemployment benefits, said Shuichiro Sekine, secretary general of a labor union that represents temp workers at Goodwill.
But he also said the government needs to revise the working conditions for temp workers, who usually must accept low pay and poor job security.
In the past several years, Japanese companies have been hiring more temporary workers to cut personnel costs. But this has led to an increase in the so-called working poor, especially among the younger generations.
"Workers at Goodwill are switching to other agencies and are dispatched in a similarly illegal manner," Sekine said. "The problem will not end just by revoking Goodwill's license."
There are about 8,000 temp staff registered at Goodwill.
Chief Cabinet Secretary Nobutaka Machimura said the government will do its utmost to support them.
"We plan to set up a headquarters at the health ministry to instruct local labor bureaus to offer consultation and information on job openings," Machimura told reporters.
Goodwill Group withdrew from the nursing-care business in June 2006 after the Health, Labor and Welfare Ministry terminated the operating licenses of most of the nursing-care homes run by subsidiary Comsn Inc.
The problem prompted Masahiro Origuchi to resign as Goodwill Group chairman in March, while the group tried to rebuild its business with financial assistance from U.S. investment fund Cerberus and U.S. brokerage Morgan Stanley.
On Wednesday, Goodwill Group said it is considering moving its headquarters from Roppongi Hills and changing its corporate name.
In the nine months to March, Goodwill Group had a pretax loss of ¥7.9 billion, compared with a ¥6.9 billion profit for the same period a year before, and a ¥1.1 billion net loss.