Japan’s “working poor” at risk as recession hits

When Miwa Takeuchi found out her part-time clerical job had been outsourced to a Japanese temp staffing agency and she’d have to work longer hours for lower pay, she was relieved. At least she was still employed.

Three years later, Takeuchi, a single mother and one of Japan’s growing ranks of “working poor” who struggle to get by on annual income of $20,000 or less, takes a darker view.

“When I thought about it, I realized that the more I worked, the less I got,” she said. “I started out as a regular worker, but … over the past decade, I have just gotten poorer.”

Takeuchi is not alone.

A decade of corporate cost-cutting and labor market deregulation has transformed Japan’s employment landscape. More than a third of all employees are non-regular workers without job security — part-timers, contract workers and temps — and more than 10 million are “working poor.”

That’s a sharp contrast from the 1980s, when more than 80 percent of workers had job security and most felt middle class.

Now, as the global financial crisis sweeps over the economy, non-regular workers risk being hit fast and hard, raising concerns the slump will be steeper and the impact more concentrated on the most vulnerable compared to past downturns.

The number of fixed-term workers at Toyota Motor Corp, for example, fell to 6,800 last month from around 9,000 in July-September last year in response to weaker demand, a spokesman for Japan’s leading car maker said.

“In countries with a high level of atypical work conditions, in many cases precarious working conditions, there is a much greater risk that in times of recession these groups are hit first and most,” said Michael Forster, a social policy analyst at the Paris-based Organisation of Economic Cooperation and Development (OECD).


A 2006 report showing poverty in Japan had risen to one of the highest levels among the OECD’s 30 member countries, largely because of the gap between regular and non-regular workers, shocked many and helped put the topic on the political agenda.

“Japan already has the fourth-largest ‘inequality’ levels of all major countries. Who would have predicted this just 10 years ago?” Ichiro Ozawa, the leader of the main opposition Democratic Party, said in a speech at a recent party convention.

“If we continue to ignore inequality, our economy will eventually stop functioning and Japanese society will collapse.”

The Democrats have made improving job security and shrinking income gaps a key part of their platform ahead of an election that must be held by September 2009 and could come sooner.

An OECD report this month showed income gaps shrank somewhat between 1999 and 2004, mainly because the rich became less wealthy. Yet the report still ranked Japan fourth among its member countries in terms of poverty, defined as those living on less than half the median income.

Not to be outdone, the ruling Liberal Democratic Party (LDP) is promising subsidies for firms that hire so-called “senior freeters” — part-time job hoppers aged 25-39, many of whom graduated during Japan’s 1994-2004 “Employment Ice Age,” when firms struggling with economic stagnation shied away from hiring.

“Companies can’t just invest in capital goods. They have to invest in workers too or they won’t buy things,” said LDP lawmaker Masazumi Gotoda, who helped draft his party’s proposals.

Such older “freeters,” estimated to total nearly 1 million last year, have become what media call a “Lost Generation,” trapped in unstable, low-paying jobs lacking unemployment benefits or health insurance.

“We have had a very rigid employment scheme in which recruits to large companies are limited to those who just graduated … so those who graduated during the ‘Ice Age’ cannot get good jobs even when the economy recovers,” said Naohiro Yashiro, an economics professor at International Christian University.


Among the most vulnerable are daily temps who find employment through staffing agencies and earn about 7,000 yen ($70) a day at factories, construction sites and in other low-skilled jobs.

“I never know whether I’ll have a job until the evening before,” one 36-year-old man who works as a daily temp, mostly on delivery trucks, told a recent symposium on the topic.

“A job might last a week, or there might be no work at all, so I don’t have a fixed monthly income,” the man said, adding that he survives only because he lives at home with his parents.

Activists and labor lawyers argue that while the system helps companies fine-tune employment in response to ups and downs in the economy, the cost to society as a whole is heavy.

“At a micro-level, companies may feel that this is good for them to be able to adjust employment easily, but if large numbers of people cannot support themselves, social uncertainty will rise,” said Shuichiro Sekine, secretary-general of a temp union.

“Many workers will have to rely on welfare, and that’s a big loss for society overall.”

And though politicians talk of remedies, activists such as Chieki Akaishi of support group Single Mothers’ Forum are wary.

“They’ve realized they must listen to such people or they can’t get votes, but they aren’t trying to change the fundamental social framework to include equal pay for equal work and equal treatment for regular and non-regular workers,” she said.