Big-name firms using dodgy labor practices

Some of Japan’s biggest manufacturers are skirting labor laws in a practice that allows them to avoid responsibility for the safety of “subcontracted” workers.

The system also leaves the workers vulnerable to low pay and sudden dismissal.

These companies have been repeatedly warned by prefectural labor bureaus to change their hiring practices, but many offenders have not complied, the sources said.

For the past two years, prefectural labor bureaus around Japan strengthened checks into labor practices at factories and plants. Bureau officials said they were especially concerned about the practice of major companies using “fake subcontractors” to fill their work force.

Ordinarily, subcontractors are independent corporate entities that produce parts for the company commissioning the work. Those subcontractors are responsible for the training and safety of their employees.

However, the “fake subcontractors” do nothing more than dispatch workers to the commissioning company.

In the last fiscal year, prefectural labor bureaus found 358 of the 660 companies investigated were using that system to gain workers.

The problem is that these workers are neither employees of the company where they work nor workers dispatched by a temporary staff agency.

The ambiguous status of these workers means that it is unclear who is responsible for their safety. They can also be fired at the whim of the commissioning company.

The companies where the workers perform their tasks give the instructions to those workers, not the so-called subcontractors.

Legal revisions allowed manufacturers to use workers from temp staff agencies from March 2004. And labor bureau officials have repeatedly instructed the companies to convert workers from the fake subcontractors to those from temp staff agencies.

Those instructions have largely gone unheeded.

Companies are obliged to offer full-time positions to workers from temp staff agencies who have worked for a certain period of time. If the companies use the workers from the fake subcontractors, they never have to give them full-time positions.


The workers dispatched by the fake subcontractors are in a very weak position.

Most are between 20 and their mid-30s. They receive almost no bonus money and little in the way of raises. Their pay is about half of what full-time company employees receive.

In addition, many of these workers are not registered with the social welfare system, meaning that once their contracts end, they have little possibility of collecting unemployment benefits.