Matsushita sidesteps law to continue dodgy labor practice at factory

Matsushita Plasma Display Panel Co. (MPDP) rectified its illegal labor situation at a factory in July 2005, but implemented a similar system less than a year later after some shifty legal maneuvers, sources said.

The problem surrounds a plasma-TV manufacturing plant in Ibaraki, Osaka Prefecture, where between 700 and 800 workers dispatched from subcontracted companies are making panels.

Those dispatched from subcontractors fall into a gray area in terms of status under labor laws. Labor officials say many manufacturers are exploiting the ambiguous status of these workers by paying them low wages, absolving all responsibility for the workers’ safety or training, and wielding the threat of firing them at any time.

MPDP employees at the panel-display plant had been supervising the subcontracted workers at the factory.

But under the workers dispatch law, employees of a manufacturer cannot issue orders or instructions to subcontracted workers if the company does not have a contract with such workers.

The situation at the plant was viewed as illegal because the subcontracted workers did not sign any contract with MPDP.

The Osaka Labor Bureau in July last year issued an administrative warning to MPDP to correct its practice at the plant.

The manufacturer complied by concluding temporary labor contracts with all the subcontracted workers.

But in May, the company retracted all of the contracts. MPDP still wanted its own people to supervise the workers at the plant, but dispatching them directly to the factory would violate the workers dispatch law.

So MPDP “loaned” about 200 of its regular employees to several subcontracted companies for a one-year period under the pretense of “technical assistance.” They ended up at the same factory to supervise the workers.

Since the MPDP employees were now working for the subcontractors, they could issue orders and instructions to the uncontracted workers without violating the law.

The work content, status and salaries for the MPDP employees now working for the subcontractors remain the same. The salaries and social insurance premiums for the plant supervisors are paid by the subcontractors through extra subcontract fees paid by MPDP.

After the one-year loan period ends, the workers return to MPDP.

“We send our employees to subcontracted companies on loan to improve the skills of subcontracted workers because they don’t have the knowledge to deal with technical innovations,” an MPDP official said. “It is a temporary personnel transfer required for our business strategies, and this is not meant to violate laws.”

It is extremely rare for a manufacturer to send so many employees on loan to other companies that have no direct capital alliances.

Labor authorities suspect MPDP is simply exploiting a sort of loophole in the law to use cheap labor at the factory. They fear other major manufacturers may follow suit.

“We’d like to conclude whether it is appropriate or not after examining the actual situation,” an official at the Osaka Labor Bureau said.

An MPDP senior official admitted that subcontracted workers are easier to handle when it comes to labor adjustments.

Other major manufacturers have been found using subcontracted workers, who are much less costly than employees dispatched from temporary staff agencies in terms of safety control and labor procedures. In addition, labor laws state that companies should give temp staff employees the status of company employee after a certain period.