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Tuesday, Jan. 20, 2009

Temps in manufacturing: Safety valve, but no net

Staff writers

A day before Christmas, temporary worker Yoshinori Sato, 49, received his dismissal notice from Isuzu Motor Co.

News photo
Cut adrift: Temp workers who lost their jobs march near the Diet in Chiyoda Ward, Tokyo, on Jan. 5. SATOKO KAWASAKI PHOTO

He can stay at a company dormitory until the end of this month. Beyond that, his fate and income are question marks.

"Politicians do not understand how horrible our situation is," Sato said. "They should have established a safety net a long time ago."

He feels firms should be required to turn temporary workers into permanent employees after a certain interval.

On the recent political debate over reregulating the dispatch of temp workers, however, he said employment in manufacturing is fine as long as there is a safety net to help people who are suddenly let go as the economy tanks.

He wants to continue working at an Isuzu factory, but that prospect may hinge on a possible government attempt to reinstate the ban on temp workers being sent to manufacturing industries.

"The number of unemployed workers will increase" if companies cannot hire temporary staff, said Taro Saito, a senior economist at NLI Research Institute. If manufacturing companies are barred from hiring temporary staff, they will have to lay off full-time workers to cut labor costs when the economy sours, like at present, he said.

Government regulation of temp workers started in 1986. They were mainly allowed to engage in clerical work, because at the time it was thought this would provide more opportunities for people seeking part-time work, including housewives raising children, analysts said.

Deregulation in 2004 allowed manufacturing firms to hire temporary staff. It was a time when companies needed to slash excessive labor costs amid a decade-long economic slowdown that started in the 1990s. Employers also needed to pare labor costs to survive harsh price competition with emerging economies in Asia and other regions.

With the relaxed labor dispatch law, the number of temp workers jumped to 3.84 million in fiscal 2007 from 1.07 million in fiscal 1997, according to the labor ministry. Temp workers engaged in manufacturing numbered 460,672 in fiscal 2007.

Business leaders had upheld the temp worker system as beneficial both to workers and employers — until recently.

"When it works, the system gives workers options. And corporations can be flexible in their human resources strategies," Tadashi Okamura, chairman of the Japan Chamber of Commerce and Industry, told reporters Jan. 6.

Masamitsu Sakurai, chairman of the Japan Association of Corporate Executives (Keizai Doyukai), agreed. "It is a meaningful system both for workers and manufacturers to hire temp staff, and that has meant a lot," he said.

However, having the convenience to hire temp workers created an unstable — and at times dangerous — situation, particularly when temps are not provided sufficient training on workplace hazards.

The relaxed labor dispatch law has seen a surge in nonpermanent workers killed or injured on the job, particularly in manufacturing, rising to 5,885 in 2007 from 667 in 2004.

Now with the global financial crunch, temp workers find themselves in a precarious state in terms of livelihood. They are the first to be axed.

According to the labor ministry, 85,000 nonpermanent workers — 96 percent of them in manufacturing — have either been or will be laid off by March.

Temp workers in manufacturing who lose their jobs in many cases also lose their housing, because it has been provided by the manufacturers.

This point was driven home over the yearend holidays, when some 500 jobless people, mainly idled temps, gathered in Tokyo's Hibiya Park to seek shelter and food.

Sakurai, who acknowledges that hiring temp workers has its merits, also says that companies should not take the easy recourse of just axing them when market demand, and hence production, heads south. The government must also step in and make sure those who lose jobs have financial protection.

Before the temp staff system debuted, companies faced difficulty in cutting labor costs because their workers were guaranteed lifetime employment. Many firms offered early retirement over the past decade by paying extra money to those who agreed to exit early, but this was a time-consuming and expensive strategy.

The Democratic Party of Japan wants strict limits placed on temps working in manufacturing, but business lobbies oppose it.

"Banning temp workers at manufacturing firms would be going too far," Sakurai said. "We should establish a safety net (for them) instead."

Saito noted that curbing temps in manufacturing would not have a positive impact on the economy.

Companies instead should narrow the gap between the salaries and working environments of full-timers and temp workers, he said.

Fujio Mitarai, chairman of the Japan Business Federation (Nippon Keidanren), said Jan. 6 the country needs to consider work-sharing programs.

"To solve the current labor problems, the corporate sector should create a safety net together with the government and take every step to expand employment. The idea of work-sharing is one option for a company that needs to adjust employment," he said.

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