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Japan's part-timers in full-time trouble

The global economic slump is taking its toll in Japan, where full-time workers have long felt secure. But many employees are now part-timers and temps, and they are being cut.

January 29, 2009|John M. Glionna

TOKYO — Kudo lost both his job and his home on the same cursed day. His construction boss told him to pack his things and clear out of the company dorm that very afternoon.

Just like that, the single 30-year-old from the northern island of Hokkaido joined the ranks of Japan's burgeoning economic underclass. He slept on the subway and camped out at a Denny's, pretending to read a book while sneaking catnaps. He spent his days at a pay phone, dialing for work.

He eventually pitched a tent in a Tokyo park, where he made his toughest call of all: to his parents, to let them know he was living on the street.

"They were worried," said Kudo, a serious, rail-thin man who asked to be identified by a nickname because he was ashamed of his plight. "It was the last thing I wanted to do."

In the world's second-largest economy, the global financial crisis has forced part-time workers such as Kudo to face a harsh new reality.

Over the last few years, temporary employees have gone from being a rarity in Japan to accounting for one-third of the workforce of 67 million. They enjoy far fewer protections than full-time workers -- placing their necks squarely on the layoff chopping block.

By March, the government predicts, 85,000 part-timers will fall prey to haken-giri, or temporary-worker cutbacks -- a relatively small number compared with U.S. layoffs but high for a nation where job security has long been a staple.

On Wednesday, embattled Prime Minister Taro Aso made the plight of part-timers a major piece of a proposed stimulus package. Aso pledged to create 1.6 million jobs, partly by turning part-time jobs into full-time ones.

Economists warn that Japan's current hard times could prove even worse than those of the 1990s -- the nation's so-called lost decade of economic stagnation -- and become the most severe economic setback here since World War II.

Every week, it seems, the news gets worse. Exports have fallen at a record pace as the global slowdown has stunted demand for the nation's signature products: cars and electronics.

As a result, industrial production recently plunged more than at any time in half a century. Corporate giant Toyota announced its first operating loss in 70 years, and Sony reported its biggest-ever annual loss, nearly $3 billion. This morning, Sony announced that its profit in the three months ending Dec. 31 plunged 95%, from 200.2 billion yen ($2.2 billion) a year earlier to 10.4 billion yen ($115 million). The figures were in line with preliminary results.

Like scores of Japanese manufacturers, both companies have taken draconian steps, including stinging job cuts, production suspensions and factory closings. And in another sign of the ferocity of Japan's unemployment problem, many companies say the layoffs will soon include full-time workers as well.

It is the decline of Japan's blue-chip companies that has caught everyone's attention. During the 1990s, large multinational firms like Toyota and Sony relied on overseas markets to avoid losses. Now those foreign customers are no longer buying at the same volume.

"Toyota and Sony were globalized and remained competitive -- they were untouchable," said Sheila Smith, a senior fellow for Japan studies at the Council on Foreign Relations. "Now the tidal wave from outside has landed and the untouchables have been touched."

In the 1990s, most workers were full-time employees with job security that made it more difficult for companies to lay them off.

Not so today, when many have temporary work contracts.

Unemployment is now approaching 4%, less than half the California rate but high enough by Japanese standards to cause near-panic.

"There was huge public criticism of Toyota laying people off," Smith said. "And when Canon, another successful company, cut staff, they got walloped in the media. It was like, 'How could you do this?' They had only cut 1,300 workers, not 130,000."

The job purge has prompted rare street protests. Last month, thousands marched in Tokyo's main business district, chanting: "Toyota, stop cutting seasonal workers. We workers are not disposable!" Others yelled, "Sony, stop massive firing!"

In a move to illustrate the plight of workers, labor activists created a tent city in a Tokyo park near the homes of government officials. They expected 180 unemployed people to show up for housing and job counseling, but more than 500 attended.

Many restaurants are ladling out free soup to homeless workers.

Analysts say the two-tiered labor system is causing social unrest.

"You can't have a class system in your labor market," said Robert Feldman, head of economic research for Morgan Stanley Japan Ltd. "Part-timers and young people are not treated the same. You need to have equal rules for everyone."

The roots of the problem date back to 2004. In response to employer claims that they needed cheap labor to remain globally competitive, Japan amended laws to permit giving temporary workers less pay and fewer benefits.

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