Japan turns to 'work-sharing' to avoid layoffs

HIRAKATA —

Yasuo Igarashi spends a lot of time these days on the jungle gym with his daughter, after his employer joined the growing ranks of Japanese companies adopting “work-sharing” to ride out the global slump.

Common in parts of Europe, work-sharing means slashing employees’ pay and hours instead of firing people outright. Two or three people might share what previously was one person’s job.

The idea is that employees are required to share the pain of coping with hard times while everyone gets to keep their jobs—even if they’re paid less.

Work-sharing is the latest buzzword in Japan Inc. Proponents say it’s a good way to avoid American-style layoffs in a society that has long fostered lifetime employment. Toyota Motor Corp, Mazda Motor Corp, Toshiba Corp and Fujitsu Inc, have all taken up some kind of work-sharing. Nissan Motor Co and others are considering it.

Although critics say it’s merely a fancy way to disguise wage cuts, the practice is winning powerful supporters here, including Fujio Mitarai, the head of the major business lobby Keidanren.

The government is now considering earmarking public money for companies that take up work-sharing to curb surging joblessness as the world’s second-largest economy slides into what authorities are calling Japan’s worst recession since World War II.

Companies big and small are expecting losses or drastically dwindling profits. Thousands of job cuts have been announced in recent weeks.

At ASKK Ltd, a precision machinery maker in Hirakata, central Japan, with 50 employees, that counts Panasonic Corp, Sharp Corp and Toyota affiliates among its clients, no one has lost their job.

But Igarashi, a 30-year-old employee there, says his monthly pay has dropped by about 60,000 yen from the 270,000 yen he earned before work-sharing kicked in earlier this year.

Like many Japanese, Igarashi used to work six days a week and racked up a couple of hours overtime every day. Now he works only four days a week.

“It can’t be helped,” he said with a smile and a shrug as he toiled by his whirring machine. “I try to find things to do that don’t cost money.”

Igarashi has cut back on buying new clothes, and his wife looks for discount coupons for groceries. On the upside, he spends more time with his family, including going to the playground with his 3-year-old daughter.

A handful of Japanese companies experimented with work-sharing during a slowdown a decade ago, but this time more are adopting the practice than ever before as a way to survive the far more serious recession.

Work-sharing is catching on here for cultural, legal and practical reasons.

Many Japanese companies maintain the tradition of lifetime employment so work-sharing is a way to avoid firing regular workers. So far, most of the layoffs have involved contract workers, whose use became legal in recent years to skirt the regulations protecting full-time, salaried workers.

Labor laws tend to defend lifetime employment, usually requiring companies to provide hefty severance packages or risk facing lawsuits. If a company is in bankruptcy or losing money, it becomes easier legally to lay off workers.

At the same time, work-sharing allows companies to keep trained workers—and bring them back up to full-time quickly, once a recovery comes.

Work-sharing is routine in nations such as Germany and Switzerland, where the government provides unemployment benefits to make up for the income fall from lost hours, said Jenny Hunt, economics professor at McGill University in Montreal, Canada.

She said the practice is unlikely to be popular in the U.S., where companies prefer to “concentrate the misery in a few people,” and simply reduce workers.

“The income loss is spread over more people, and fewer people suffer the depression associated with unemployment,” Hunt said. “The economic advantage is that firms retain their workers who are experienced on the job.”

Work-sharing is taking various forms in Japan, and some companies aren’t even calling it that.

At Tourism Essentials Tokyo, a job-referral company, two flight attendants sent to an airline were asked to share one job, and one person’s pay, to avoid one of them getting fired.

At Fujitsu’s computer chip unit, the shifts at the 24-hour-running plants were increased from two shifts of 12 hours each to three 8-hour shifts so each worker had their hours and pay reduced by a third.

At auto plants across Japan, including Suzuki Motor Corp and Mazda, assembly lines are grinding to a halt on some days, resulting in a type of work-sharing. Toyota Motor Corp has announced it will carry out work-sharing at its U.S. plants but has not expanded that to Japan.

A recent survey by the Yomiuri newspaper found about half of its respondents, a nationwide sample of 1,077 people, support the idea of work-sharing, although they also expressed fears about lower pay.

Work-sharing is also finding acceptance in nearby South Korea.

A group of labor, management, civic groups and the government to tackle the financial crisis is preparing to soon announce measures that will include work-sharing as a key element, said Kim Soo-gon, a Ministry of Labor official.

The government plans subsidies for companies that maintain employment by sending workers on paid vacations and training programs, he said.

Work-sharing has created some problems, says Sadao Nagakura, an executive at ASKK, the precision equipment maker.

Accustomed to working long hours, some employees found that cutting back undermined their morale. Another obstacle was that wives of male employees complained that they didn’t want their spouses at home, he said.

Side jobs are allowed, he said, and at least one worker has already starting working at a convenience store on Saturdays to supplement his income.

Nagakura, who has made a point of ending his work day at 3 p.m. lately, sees work-sharing as the best way to cope with a drop in orders that has erased about two-thirds of ASKK’s profit over the last year.

“There’s no work for them to do even if they show up,” he said. “I tell them to go on walks with their wives, holding hands.”

But Nagakura also sees the downturn as an economic opportunity to get ahead. He expects most rivals to go bankrupt in the next year or two before a recovery comes while his company rides out the recession in good shape.

“We are going to survive, and we are going to win,” he said.

___

Associated Press Writer ShinWoo Kang in Seoul contributed to this report.

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Latest 15 of 21 Total Comments Show All

mojibake at 02:28 PM JST - 24th February

Work-sharing wins the best plannist award for ways to reduce domestic consumption. Instead of laid-off people motivated to look for a job or be entrepreneurial, you have created a laconic society of penny-pinchers.

Great for the economy. Not.
shiuu at 05:47 PM JST - 24th February

Socialism: Let's all be poor together.
YangYong at 05:51 PM JST - 24th February

Shiuu: Poor? Hardly. It's time to know that you ain't gonna get everything.
Azrael at 07:10 PM JST - 24th February

I wonder if work-sharing hours cuts turns the Japanese work day from 16+ hours into 8 hours a day per person.
mareo2 at 09:51 PM JST - 24th February

But Nagakura also sees the downturn as an economic opportunity to get ahead. He expects most rivals to go bankrupt in the next year or two before a recovery comes while his company rides out the recession in good shape. “We are going to survive, and we are going to win,” he said.

That`s the attitude pal, keep the hope for your employes, thats leadership.
meiwaku at 10:46 PM JST - 24th February

Nice wives in Japan! The wives would rather have anything I think than having their husbands at home or as Gaijinocchio said actually having a healthy sex life after children. I am afraid that does not exist here. The men sure take the brunt of everything. They often get criticized for going out for "a little bit" but man! Can you blame them? But back to the story. A great idea! Things will turn around as they always do and then at least you still get your full time job back. That is why your mama always told you to put away a bit of money for when the hard times come.
Triple888 at 11:21 PM JST - 24th February

Work sharing is so communist/socialist!
toadold at 01:44 PM JST - 25th February

One reason work sharing isn't too popular in the US is the medical benefits problem. It is very expensive in the US due in a large part to the hefty medical liability insurance premiums due to the unrestrained punitive law suits filed. If you work share the tendency of some companies is to call you part time and provide no medical benefits.

The advantage to work share is you retain skilled employees who know the company system which let them come up to speed real fast when good times come again. I keep thinking of a cartoon I once saw showing a supervisor looking at a line of robots on an assembly line talking to another, "I keep wondering if I paid them a small wage would they buy some of our product?"
japanidol at 09:16 PM JST - 25th February

Socialism: Let's all be poor together.

you took the words right out of my mouth
GJDailleult at 08:46 AM JST - 26th February

I am shocked to see that some Japan Today readers don't know the definition of socialism or understand cause and effect. Truly shocked. The people in the article who are work-sharing are working for private companies, owned by private investors, not the government. They are doing it because of a breakdown in the international capitalist system, "socialism" has nothing to do with the problem. And the concept of work-sharing has nothing to do with "socialism" either.
boitoi at 11:09 AM JST - 27th February

shachou pls share your work to me, and your salary as well. a 50/50 share would be nice.
Altria at 11:24 AM JST - 27th February

3 8-hour shifts is cheaper than 2 12-hour shifts because they don't have to pay overtime. (Yes, factory workers actually do get paid overtime in most cases)
Jigg88 at 01:07 PM JST - 27th February

Seriously, can people please stop saying "socialism" all the time? Whenever the word "sharing" pops up, people are quick to point out that it's socialism.
OldGeezer at 09:30 PM JST - 1st March

Correct, it's not socialism. Individuals employed in private industry are reducing risk (chance of getting laid off) at the cost of reducing benefits (reduced wages). This is completely in accordance with the principles of capitalism. You don't have to embrace high-risk/high-reward in order to be capitalistic.
TrappedNTokyo at 03:52 PM JST - 2nd March

um why is this article relevant, anyone seen any Tokyo roadwork done lately. Two people to hold the flags, one to hold the shovel, one to hold the umbrella. Two people to remove the dirt, another 3 people to break up the asphalt, another person to get onigiri, 1 person to supervise and the other to fill in the hole. Nothing like cutting cost.