Some firms have neglected their legal requirement to report job-related accidents involving contract temporary workers to the labor authority. Others have left such workers without social security coverage. The practice must be stopped. But simply treating these workers fairly as temporary workers, as they actually are, won’t be enough. Employers should consider offering permanent jobs to as many of them as possible. 

http://www.asahi.com/english/Herald-asahi/TKY200608260115.html

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 maneuvers, sources said.

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

Those 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 themselves from all responsibility for the workers’ safety or training. The companies can also fire those workers at any time.

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

But employees of a manufacturer cannot issue orders or instructions to subcontracted workers unless the company has a temporary labor contract with them under the workers dispatch law.

The situation at the plant was viewed as illegal because the subcontracted workers did not sign any dispatch 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 dispatch contracts. MPDP still wanted its own people to supervise the workers at the plant, but letting them do so would have violated 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 from the subcontractors.

Since the MPDP employees were now working for the subcontractors, they could issue orders and instructions to the subcontracted 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.

http://www.asahi.com/english/Herald-asahi/TKY200608020071.html

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.

http://www.asahi.com/english/Herald-asahi/TKY200608010274.html

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.

http://www.asahi.com/english/Herald-asahi/TKY200608010134.html