Looming layoffs: Which workers are at greatest risk?

TOKYO —

“These days, the percentage of regular company staff members in their 40s who will still be with their company at the time they reach the age of retirement will be 10% among manufacturing companies, 20 to 30% among financial firms, and 40 to 50% among businesses in the service sector. Among most of the other categories, I suppose nearly all of them will be ‘restructured’ before then.”

Tomoyuki Suzuki, a hiring consultant, makes this dismal prediction in Spa! (Jan 22).

A panel of five commentators tell the magazine that the indications for long-term job stability are not good, and likely to get worse.

“Until fairly recently, restructuring adopted two types of patterns,” says Norifumi Mizogami, a business journalist. “Employers either invited workers to apply for early retirement, or to accept a transfer to a subsidiary. In the case of the latter, those who had been shipped out to subsidiaries have begun returning back to the parent companies—which means there aren’t even any posts open at the subsidiaries.

“As for early retirement, conditions have been becoming worse year by year,” he adds. “Ten years ago, workers who retired early could receive the equivalent of 48 months of salary. Now they’re lucky if they can get 12 months.”

Harutaka Konno, director at an NPO, notes that a number of techniques are typically applied to force out workers. For instance, there’s the tried-and-true use of “power harassment” to badger workers into resigning. Another method is to give staff members a choice between working under an annual contract or quitting, and then afterwards invoking the contract terms to get rid of them.

“In effect these are the same thing as restructuring,” he says.

Spa! identifies six types of staff who are seen as the most vulnerable to being restructured out of their jobs. They are:

- Members of the “skills-up tribe.” These are staff who do well on the TOEIC exam (700 points or higher) or who acquire certification in some skill. (“If your score stands out too much, the company might start wondering why you’re not more productive.)

- Those in departments that can easily be staffed by outsourcing. (“The time is coming when people who can only perform routine jobs will definitely be cut.”)

- “Ace” employees. As strange as this may seem, the practice of dismissing the most competent workers is not rare, particularly in cases where a company has changed owners and the new boss wants a complete “reset” to ensure he’ll have staff who are compliant.

- Business travelers. Being allowed to travel for the company is regarded as a privilege and attracts the envy of others. Some people make the mistake of posting photos about their business trips on Facebook, perhaps mentioning that they enjoyed some tasty local food. Work is not play—so this is asking for trouble.

- Workers around age 40. Also referred to as “dankai junior” (children of the baby boomers) who were born around 1970, they represent what may be the last large spike in Japan’s population, and their numbers mean greater competition for a smaller slice of the promotion pie. As economic growth slows, they are regarded as equivalent to “excessive bad debts” and therefore more likely to be eased out.

- “Ikumen.” These are family-oriented male workers who take advantage of the 2011 employment equality law to apply for extended leave, to spend time with their wives after giving birth. The figure last year reached an all-time high of 2.6% of workers. Because firing them violates the law, men who were so dismissed have successfully sued their employers; but nothing ends a career faster than beating one’s employer in court.

The Spa! panel also looked at moves toward restructuring broken down by business segment, and gave a favorable sunshine symbol only to construction companies and infrastructure-related firms for 2013. The outlook for retailing and distribution firms was cloudy; and manufacturing firms were partly cloudy. A forecast of cloudy followed by rain went to liability insurers; steady rain went to producers of consumable goods such as cosmetics; and the two worst sectors, with thunderstorms forecast, were companies in the pharmaceuticals and systems development sectors.

  • 4

    tmarie

    So they're getting rid if the smart, family type guys who speak English and don't mind traveling abroad for work?! They very same guys that if anything, are the type if worker Japan needs more of. Unreal. Though not surprising. When will companies get with the times? Space workers and slave work environments haven't been work for two decades now.

  • 13

    ChibaChick

    Jesus. My husband is 40, travels a lot overseas on business, is a wonderful family man, is about to start an evening school Masters degree to "skill up" and has good relationships with everyone in his company.

    This does not bode well.

    Does anyone know how the market is faring for 39 year old strippers? Just askin`......!

  • 0

    tmarie

    Hosts seem to to well in the money - though the clothes they wear is enough to discourage any smart guy I think!

    Chiba, I think these are the two bit companies without a clue. Rakuten, Uniqlo, Honda, Toyota, softbank... All seem to want guys like your husband. It is frightening though that they want to get rid of those with a clue! Japan Inc, for the most part, still doesn't get what changes need to be made from within.

  • -2

    tmarie

    And that have said slave workers in my first post!

  • 4

    CanadianJapan

    I'm working for a Japanese company and I will be leaving (voluntarily) in a few weeks. I'm still amazed when reading the first paragraphs of this article.

    Harutaka Konno, director at an NPO, notes that a number of techniques are typically applied to force out workers.

    What happened to the good old pink slip? Japan needs to revise its employment law and fast. When an employer has to resort to these kind of schemes to fire employees you know something is very wrong.

    One guy at my company just got transferred from Osaka to Tokyo, all his family is down there... I didn't understand why he didn't quit and look for something else in Osaka. Then my Japanese colleagues enlightened me, at his age(late 40s) he won't be able to find anything else. Perhaps this technique should be added to this article, "ship a guy to another town far away from his family and hope he quits".

  • 8

    kibousha

    This is the reason I was considering leaving Japan two years ago, if not for a bunch of co-workers and good friends come together to build a new start-up. It's been a quite a roller coaster, but not having to deal with bully managers, senpai-kouhai bs, unnecessary long hours, incompetent dimwits, and the dangers of working too efficiently, are gold. It's ironic to think about it, that the only thing making me stay in Japan is work.

  • 7

    tkoind2

    This is short sighted thinking both for companies and for society. Why?

    Who does most of the purchasing, investing, supporting the economy and stabilizing society in general? The people they just described above. They are home owners or long term renters. They are prime consumers. They invest their savings. And they pay to raise their families. Remove this spending and reduce these incomes to lower levels and you gut the main source of economic activity in society.

    Who do the companies think buy their products and services? Again this is the group they plan to lay off. In 2008 I heard bankers wondering why no one was buying electronics from their client companies. Well... geniuses, you threatened their entire class with layoffs so they stopped buying. Any wonder that your client's products could not sell?

    I am in the age group and now thinking to start my own small business. I am tired of being threatened with layoffs every 3-6 months. It is killing me and my family. I would much rather place my faith in my own ability to manage and get income than continue to put faith in business who has no long term vision. But I am lucky, I have many things I can sell in Japan from skills to services and a place to do so from. But few of my peers are so lucky or so adventurous.

    Long term this paints economic disaster for Japan. Once stable families are afraid to spend, the entire economy will decline. What any society needs are companies that understand the relationship between what they do and how it impacts society over the long term. Go ahead a lay off people, but then don't be surprised when the economy fails and nothing sells. Companies you have to start thinking about the future of your country and society and not just about your profits and your stock holders. Or all will be lost. Wake up.

  • 2

    lucabrasi

    Companies you have to start thinking about the future of your country and society and not just about your profits and your stock holders.

    Exactly. But this is capitalism for you. Screw the people, let market forces have their way with society. Because the guys at the top, who have benefited most from the society they're destroying, will be the ones least affected. Let's hear it for free enterprise, folks!

  • 4

    fupayme

    Yup, start your own business guys, its the only way to go

    Sucks at first though, because you have to put in 16-18 hours a day to make sure it doesn't fail, and you work 7 days a week, but if you can make it, you don't have to deal with all the typical BS that comes with being employed by someone else

  • 4

    japan_cynic

    Well, I'm also (hopefully) on my way out through choice. Yes, sacking the brightest and best seems standard operating practice...

  • 3

    kibousha

    @fupayme, indeed.

    We set up our work so we can work from home. This is the best thing that ever happen. On weekdays, 5 o`clock sharp, I go home, have dinner with my kids, give them shower, play with them and put them to sleep. By 10pm, I am working again for an extra 2~3 hours. It's all yours, so you don't get the feeling of being slaved, and the time you put it equals the rewards you'll get in the future. Best of both worlds if you're a family man and a workaholic.

  • 7

    Virtuoso

    Thank US business schools, with their MBAs who are cynically trained to believe that the sole purpose of a company's existence is to pay out big dividends to shareholders, which can best be achieved by paying the workers as little as possible or laying them off in favor of outsourcing to India. Thanks to them, the entire corporate world is being turned into one that follows the keep-squeezing-until-the-juice-is-gone Bain Capital model.

  • -4

    tmarie

    What happened to the good old pink slip? Japan needs to revise its employment law and fast. When an employer has to resort to these kind of schemes to fire employees you know something is very wrong.

    You've just answered your own question. Japan doesn't HAVE pink slips - did they ever? The whole "you can't be fired" is what has caused Japan to rot. Aren't productive? No problem. Don't do your work well? No problem. Waste time with needless overtime and take the money for it? No problem. They then want to term around and force out the good workers who might actually have to great ideas but that might make the old gits look foolish. Egos speak louder than common sense and this is causing the decay of corporate life here. Add in that companies now are outsourcing and cutting and well you have a very unstable society that is drowning in debt with very little hope.

  • 2

    Peter Payne

    One of my things is, Japan needs more people willing to start their own companies. The guy who made Nissin, Momofuku Ando, started the company at the age of 40 to pay off some debts. Come on Japan, you can do better than this.

  • 2

    samwatters

    "I am in the age group and now thinking to start my own small business. I am tired of being threatened with layoffs every 3-6 months. It is killing me and my family. I would much rather place my faith in my own ability to manage and get income than continue to put faith in business who has no long term vision."

    I salute you, Tkoind2! You are exactly what Japan needs now! A salute to people like you and a big, middle finger to the imcompetent old farts who run so much of this country's economy.

  • 5

    Disillusioned

    So, obviously, the secret to success in Japanese businesses is to be a young brain-dead follower with no free thinking what-so-ever. I guess it follows on pretty well from the high school education system. "The nail that stands up must be hammered down!"

    The Japanese labor-law reforms introduced a decade or so ago are full of loopholes that are frequently used by unscrupulous employers to 'out' any employee that is costing them too much to keep and not giving their heart, soul and free-time to Japan Inc..

  • 2

    Alex Einz

    this article is for Spa , its oriented at low income hang on the tree types and not for real working people who are actually career oriented... its is meant to make them at ease with their nothingness and as such, buy another copy of Spa.

  • 4

    Kabukilover

    Another method is to give staff members a choice between working under an annual contract or quitting, and then afterwards invoking the contract terms to get rid of them.

    Guess what? Gaikokujin Kyoshi or "visiting" lecturers have known this for decades. It's called the "sudden death" contract, euphemistically called "rotating out." Many of us (including me) warned that what the foreigners were getting the Japanese would also get. It has come to pass.

    Workers are now facing the hire--exploit--fire syndrome. My young relative was in that system but managed to escape to a government post where his rights as a worker are respected according to the law. One of the lucky few.

    The only advice I can other to workers here is (1) join or start unions with teeth and (2) don't have children.

  • 4

    Kabukilover

    Absolutely right, Disillusioned. That is why Japan is never going to have a Silicon Valley and Steve Jobs. It will always trailing behind, hoping that a few goodies will fall off Silicon Valley wagon.

  • 3

    Cos

    So they're getting rid if the smart, family type guys who speak English and don't mind traveling abroad for work?!

    In real life that guy is not employed in Japan.

  • 1

    avigator

    There is no security on anything. Not even in countries and their constitutions. Everything is so temporary in this World. Getting rid of company burdens means people who could become retirement eligible, or have already achieved high paying salaries. That way they can hire fresh temporary workers who will work for peanuts. Welcome to capitalism 101 and the main concept of "for profit" companies.

  • -1

    sfjp330

    Japanese people are so used to being wage slaves that they can't see that jobs lost to technology could be a good thing. The difference between the industrial revolution and the information/automation revolution, is machines have artificial intelligence. The software diagnosed the exact same problem as a highly trained engineer with years of experience did, and they don't complain. Even if you aren't replaced by a robot, do people really believe they will get out of this unscathed of companies restucturing?

  • 0

    Wakarimasen

    THe rubbish ones....

  • 0

    LFRAgain

    "Thank US business schools, with their MBAs who are cynically trained to believe that the sole purpose of a company's existence is to pay out big dividends to shareholders, which can best be achieved by paying the workers as little as possible or laying them off in favor of outsourcing to India. "

    Virtuoso is absolutely correct in this assessment. Everything Japan, Inc. is in the 21st Century is largely due to learning the absolute worst lessons from U.S. business management, which is so obsessed with the accumulation of wealth at any and all costs, that it can't see it's cutting its own legs out from under itself.

    Japan is gradually but most certainly buying into the mating call of U.S. MBAs, "Greed is Good" and running with it, to the detriment of society as a whole.

    Now we find ourselves in a nation where the most secure career is in . . . the service industry.

    It's a truly sad state of affairs.

  • 0

    ramses68

    2 thumbs for Virtuoso. Truth... Sometimes it sucks.

  • 0

    bokuwamo

    This has been going on for many years in Japan, just for some reason it is news worthy now? Has been going on in America just as long also, maybe a little longer. Getting rid of higher salary people and hiring lower salary people. You think this is something new, because of this article?

  • -1

    Serrano

    Mr. Suzuki has failed to take into account Japan has a new LDP prime minister, and it won't be long before the Abenomics boom brings the unemployment rate down to 3%.

  • -1

    Mike Critchley

    gave a favorable sunshine symbol only to construction companies and infrastructure-related firms for 2013

    Oh geez, I wonder why that is, eh!

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