Growing Reliance on Temps Holds Back Japan’s Rebound

Firms Increasingly Add Part-Time Workers; Spending Power Lags

The rise of temps began in the 1990s as Japan entered its long slump and low-cost nations such as China posed unprecedented competition. To compete, Japanese companies shifted large chunks of their manufacturing capacities overseas. At home, cost-cutting came slowly, partly because layoffs were taboo.

Then, labor-law deregulation gave companies a new way to restructure, while keeping some of their treasured manufacturing capabilities in Japan.

Until the late ’90s, worker-friendly laws forbade temporary-labor contracts except for a few specialized areas, such as computer programming. A change in 1999 allowed temp agencies to dispatch workers to many more types of jobs. And in 2004, manufacturers were allowed to use workers sent by temporary-help agencies.

That change encouraged companies such as Toyota and Canon Inc. to start hiring temps en masse. At Canon and its subsidiaries and affiliates, the number of part-timers and temps nearly quadrupled from 2003 to last June, to about 40,000, according to securities filings. Full-timers are more numerous, at 127,000, but their numbers rose a more modest 24%.

Temps find it difficult to become full-time. When the economy began recovering about five years ago and companies needed more full-time workers, they got them by hiring fresh graduates. In a 2006 survey by staffing agency Pasona Group, two-thirds of companies responding said they were reluctant to make part-timers or temps full time. Many firms cited a lack of skills. Temps rarely get much training from their employers.

Longtime temps say conditions have deteriorated. Yoko Mitome, 49, was a sales executive at a travel agency for two decades, jetting about and planning package tours to exotic spots. She lost this $50,000-a-year job in 1998 as the employer sought to cope with falling sales near the bottom of Japan’s long slump. She got a temp job as an operator for international calls at a unit of phone company KDDI Corp.

Since then, the hourly wages have stayed fairly stable but the company has stopped paying transportation expenses and good-attendance bonuses, has shortened breaks and has shortened employment contracts to three or six months from a year.