Japanese companies doing more firing than hiring: OECD report

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  • 14

    igloobuyer

    So a lot of unemployed are not claiming benefits, perhaps that's why Japan's unemployment rate always looks so low.

  • 9

    TumbleDry

    I've seen many temp workers being fired, err..., not having their contract renewed while many good at nothing regular employees remain.

    Got me angry that company did that. I'm left with some deadwood and cannot shake them off my project...

  • 19

    Yubaru

    So a lot of unemployed are not claiming benefits, perhaps that's why Japan's unemployment rate always looks so low.

    Japan's manner of computing statistics for the unemployed is out of step with other countries. People who are actively looking for work are counted, those whose benefits have run out (and most do between 6 months and 1 year) give up and are no longer counted. Also those under-employed, people who only work 1 to 2 hours a day or even 1 hour per week are counted as being "gainfully employed" hence the statistics of low unemployment here being smoke and mirrors to protect Japan Inc's image AND to keep the population from getting "worried".

    It's going to get a hell of a lot worse before it gets better. Japanese companies and the government have to actively participate together in a program of life-long education and training.

    There is some retraining available but businesses have to get involved too. It's far from being enough.

  • 12

    Disillusioned

    Yep, my Mrs' publishing company just cut 300 staff from a total of 1500 and not all were part-time workers. In a way it is a good thing. Japanese companies are starting to cut the loafing parasites and keeping the hard workers although, the most popular workers are the 'yes men' and these are the ones the companies keep. There was an article a couple of years ago that stated the highest risk demographic for retrenchment was men in their mid-40's studying to gain greater accreditation like, accounting, TOIEC, etc. This shows you that the companies don't want skilled professionals. They just want monkeys that will work 60 hours a week and say "Yes sir!"

  • 1

    sf2k

    Europe has done a lot in this area that I wish more countries outside, even my own, would try. Job sharing is one area that would get rid of the workers-until-midnight mentality and really get people working not pretending

  • 4

    Yubaru

    Graduating from a Japanese university is no longer an automatic ticket to life-long employment , yet companies too have to stop mass-hirings and start hiring based upon need.

    If companies, major corporations, start hiring practices based upon need and not numbers, students will start demanding more specialized education in college.

    Senmon-gakkou, or technical college's here, one's that are recognized by their prefectures and MEXT, are better places to get an education for young folks today as they specialize their courses to specific areas of need and many if not most get placed into decent jobs and career fields with chances for advancement and a future.

  • 7

    kibousha

    "Lifetime" employment is a trap, during the "good" times, companies promised that to keep job market from being competitive thus keeping wages low. "Lifetime" and "wisdom of old people" pretty much messed up human motivation, "oh, I'm good until retirement, no need to hone my skills in anything anymore, just keep doing what I'm doing, I gain greater wisdom the older I get!". Bad times come, you got no skills nor the attitude to make breakthroughs, got fired, skills from previous company is not applicable to anywhere else. Now, aren't you proud about how Galapagos your company was ? how Galapagos Japan is ?

  • 6

    Yubaru

    I would like to see some stats on unemplyed foreighners, but not Brazilians or Peruvians, but rather, North Americans and Europians.

    This would be next to impossible to get I will bet. Seeing as how many NA, or European's living here do not work in jobs that pay unemployment benefits, or if they do receive them, get little if any assistance from Hello Work in getting reemployed.

    BTW, why pick Brazilians and Peruvians only? There are many Chinese and Korean nationals here too!

  • 4

    jerseyboy

    It's going to get a hell of a lot worse before it gets better.

    Yubaru -- spot on. As the article says, until the word "flexibility" on both employers and employees sides is built into the system, things are not going to improve. Back in 2008 when I started my company in Japan, I wanted to hire a person who I had worked with previously at another company, but was currently unemployed. He insisted that I hire him according to the "Japanese standards", meaning in built-in annual increases, twice-annual bonuses, etc. When I reminded him that this was a start-up, and I could not lock myslef into those kinds of fixed costs, since there would already be the required insurances, he did not understand. So there needs to be changes in thinking among employers, employees, and the government if Japan is going to become more nimble and be able to move potential employees to smaller companies, where opportunities in the future may be.

  • 5

    warispeace

    This spiral down where companies cut wages and higher paying jobs which then lowers demand and brings further cuts is part of a major contradiction of capitalism that Japan will have a hard time managing in the coming decades because of the greying and shrinking population also impacting demand and because capital has been freed to exploit the poorest and least regulated societies.

    Japanese workers must stop rolling over and become part of a global movement to discipline capital and especially the wealthiest 1%, which an Oxfam report shows own 48% of global wealth, with the top 80 wealthiest people having the same amount as half the people on the planet. Yes! That is 80 = 3.5 billion.

  • 4

    zurcronium

    warlspeace,

    On point. In addition Japanese firms, in large part due to the government led devaluation of yen, are sitting on trillions of yen doing absolutely nothing. That is a crime against society and is frankly just plain bad business. The LDP needs to tax those idle funds to make companies start to invest in Japan again. Otherwise the death spiral you note above will just continue.

  • 2

    JeffLee

    The 3rd arrow reforms could well reduce job security. That would drag down the economy even lower, since insecure workers don't spend, and Japan's core problem is insufficient domestic demand.

  • 0

    MarkG

    Less employees and increase output through working harder and smarter is the way of the future. Increase profits are the drive.

  • 3

    fxgai

    jerseyboy

    Interesting annecdote. I have heard similar stories myself. People don't want a bar of contract employment here if they can get a permanent position, because it's like a 'qualification' in and of itself, and once they have it they never want to leave it. Where I come from contract positions are often more highly paid than permanent positions, so it took me a bit of time to realise how to play the job market here.

    The government needs to completely overhaul the regulations to level the playing field and make work mean work, not some kind of partial welfare scheme for those able to get on that boat.

    At the end of the day, those supplying labour have nothing to worry about if they have the goods.

    zurcronium,

    Those trillions of yen belong to those firms. Japan is not a communist state. To get the idle funds put to work / invested, the government needs to improve the business environment so that it makes business sense to take such measures. Further draconian measures against businesses is hardly going to help. If capital isn't treated well there is nothing to stop it going elsewhere.

  • -4

    Jeff Huffman

    But, of course, Japan needs immigration for . . . Yes. Just what was the reason Japan so desperately needs massive immigration?

    There is no labor shortage in Japan. There are, however, as in all mature, post-industrial economies, too many people. Japan, the U.S., most of Western Europe, Australia are all over-populated in relation to their economies, desirable and usable space and environments.

  • 2

    Guy_Jean_Dailleult

    A "flexible workforce" is just code for slashing wages and taking away job security. And the crazy idea that paying people less and making it easier to fire people is how you fix an economy is just another economic myth put out by the corrupt and / or stupid. As others have commented above, the real problem is that large Japanese corporations are sitting on records amount of yen (dead money), and the changes being talked about will just allow them to suck more money out of the economy and run it down further. These guys make their hiring decisions based on demand for their products, not the "flexibilty" of the workforce, and it is nuts to think they will hire more people because they can now fire more people.

    Of course, things are different for people trying to run small businesses or start-ups who are not on the corporate gravy train, and don't have the ability to offer job security or higher wages. But running down the economy even further doesn't help those companies, it will just hurt them the same as it hurts workers. Small and medium size businesses and workers are on the same team, not opposite teams.

  • 8

    kurisupisu

    It is most peculiar how the Japanese government can give large sums of money to foreign governments yet at the same time it has one of the lowest spends on education in the OECD! Public schools here do not even offer computer studies. It is shameful how a hard working people are screwed by their own goverment ....

  • 3

    wtfjapan

    So a lot of unemployed are not claiming benefits, perhaps that's why Japan's unemployment rate always looks so low. exactly, normally there is a waiting period before you can even claim benifits, and then when you do get them its only for a short period of time. the pittance you do get is not enough to live on add to the the stigma/shame that is associated with being long term unemployed. to most people its just not worth even claiming it. yes Japans unmeployed rate artificially low.

  • 2

    Mizuame

    There's probably validity in Japanese employers wanting to invest in their staff - the resulting staff loyalty and development of staff proprietary expertise have been a big reason for Japan's economic success. University graduate gaijin taken on as permanent employees by Japanese companies tell me the first thing they are told is to forget everything that they have ever learned, and to give up ideas of thinking independently. They are then overwhelmed with inculcation of the company way of doing things. Their lifetime contracts are expensive, they become loyal employees, and the companies (the Toyotas, Canons and so on) are fantastically successful. Then there are prized consultants, who get paid well on short time contracts. For example, there is a genius who is used by all the companies to design their assembly lines. He moves from company to company on short term contracts. This is valid too, I think. Then there are smaller companies and government bureaucracies which also have legacy lifetime employment employment systems, which have become a burden, although government agencies have tax revenues to help them out. In recents years the smaller companies have managed to foot their wage bills by using in parallel, very cheap one or two year "contract employees". At the lower level, those contract employees with special skills (such as linguists) are usually remunerated poorly, and certainly at lower hourly rates than the lifetime employees. The unwanted legacy expensive lifetime employment structures, and the associated unfair contract employee/"freeter" paradigm is ripe for reform. In Western countries is it common now to pay contract employees at highter rates than regular employees, with obvious benefits to companies and workers too.

  • 5

    Reckless

    My old school JP company is laying off (early retirement) and kindly giving the old geezers 3-5 years pay up front. However, only the good ones who know they can get rehired are taking it!

  • 2

    Garthgoyle

    BTW, why pick Brazilians and Peruvians only? There are many Chinese and Korean nationals here too!

    I'm pretty sure JapanGal wasn't trying to say anything discriminatory. Maybe her comment has to do with the fact that both Brazil and Peru have ties with the Japanese government that allow their people to come work in Japan without a lot of process to obtain a visa.

  • 2

    fxgai

    GuyJeanDailleult,

    A "flexible workforce" is just code for slashing wages and taking away job security.

    I hesistate to put it so frankly, but that seems to me like the type of scaremongering we hear from all the vested interests.

    Job security is typically obtained through, as a supplier of labour, "producing the goods". People who provide value to their employers have nothing to worry about as part of a flexible workforce. On the contrary, their employer will have an incentive to increase their wages and improve other parts of their employment conditions so as to keep them at their workplace, or else the worker may hop off to greener pastures elsewhere.

    Such a system is better for the employers as they will see a more highly motivated and productive work force, and better for the employees because they will be better rewarded for their work. This is how it should be. Japan should try this.

    kurisupisu,

    It is shameful how a hard working people are screwed by their own goverment

    With the exception of those who didn't vote for LDP, people get what they vote for.

  • -3

    Nathaw

    with older, less educated employees and those on temporary contracts at highest risk of remaining jobless

    Japanese market is saturated and consumer confidence is very low. Those older and less educated people will be on permanent vacation if they will keep living in Japan. Japan is the land of setting Sun. They should take risks to migrate to other nations like JT posters.

    Better taking risks rather than being as long term chronic unemployment. Abe has already used three arrows therefore he has no solution for long term unemployment.

  • 3

    LHommeQuiMent

    Even after two decades of recession and major macroeconomic policy failures, Japan has low unemployment rates when compared to western economies.

    Hidden unemployment (lies, damned lies and statistics) explains some of it, but the major problem in Japan is underemployment. Japanese economy cannot create enough well-paying, stable jobs so people involuntarily accept part-time jobs or lower-paying full-time jobs.

    When compared to US, wage setting process is more flexible in Japan (weak unions, bonus payments over salaries, unpaid extra-hours etc.). US economy reacts to demand and supply shocks by laying off workers, in Japan they adjust wages.

    Also female non-participation is a major factor in Japan. Many Japanese women who leave their job do not return to labor force and thus contribute to labor market flexibility. In western economies women are competing with men for well-paying jobs, this is not the case in Japan.

    Now that Japan is slowly moving from welfare capitalism to Anglo-style shareholder capitalism and expecting economic growth through deregulation (third arrow of Abenomics), real unemployment is expected to rise in Japan too.

  • 3

    BNlightened

    It's amazing how hollow and empty Abenomics turns out to really be, once you scratch past the glossy facade its creator packaged it in to sell to the public. After three years, his economic Potemkin Village sure looks pretty on paper, but where's the substance? I see nothing but negatives for the average Mr. Hiro and his "shining" female counterpart.

    Ten years from now, Japan will look back and conclude that while his predecessors were terrible, it was during Abe's tenure as "strong leader" when the nation truly went off the rails for the majority of its hard-working citizens.

  • 2

    Yubaru

    I'm pretty sure JapanGal wasn't trying to say anything discriminatory. Maybe her comment has to do with the fact that both Brazil and Peru have ties with the Japanese government that allow their people to come work in Japan without a lot of process to obtain a visa.

    It isn't all that hard for American's to get visas here either, and it's possible to self-sponsor as well. I have a number of friends who have done it and still live here on their own as well.

    Either way it's not information that Japan actively collects it seems, and either way it such a small percentage of the overall workforce anyway that it wouldnt make much of a difference either.

  • 5

    GW

    Japan as many have correctly commented is in dire straights of its own making.

    The labour market is too rigid, the mid career hiring is just not there for the most part & this is a huge problem.

    The DeadWood........another massive problem, but it needs dealt with, in the meantime EVERYONE suffers, people cant get raises, companies cant fire poor employees, both spiral downwards.

    Companies doing well have been raking the $$$ in bigtime most of the last 3 decades BUT they always say ""we are waiting for better/more stable times blah blah......"" until they will share any profits, point blank its BS of the highest order. Companies doing always spout this rank & the "taxes are to high"(to get corporate welfare!!!), meanwhile they rack it in, upper management get huge bonuses, the rest are told to wait for "better times" the masses have been sold down the river big time for over 30yrs

    Japan is in for sever pain no matter what it does but we are all witnesses to the current do little or nothing & the country is rotting at a high rate.

    The future is dim here for sure

  • 1

    The-Rat

    Good Call Guy. Conservatives don't realize that Japan's meteoric rise in the 50s and 60s and 70s was due to people have job security (though at a horrific price of working six days a week, for 14 to 16 hours a day). And just HOW much money does a corporation need to have before it starts spending? Apple has more money than several countries combined! In short, if workers have no money, they don't SPEND. And that is why no one is spending as wages suck and Abe wants them to suck some more with "job flexibility." And conservatives, whine away, whine away about how much your Ayn Rand doctrine is so great, but when you are 50, the boot will come for you! And then you might want a little government "regulation" or social security, like Ayn did and claimed!

  • 0

    bruinfan

    I hope none of these companies are getting a tax break, and also I hope none are getting the benefit of Japan's national budget money sent as a "gift" to foreign countries (see my earlier post about this).

  • 1

    sangetsu03

    This spiral down where companies cut wages and higher paying jobs which then lowers demand and brings further cuts is part of a major contradiction of capitalism that Japan will have a hard time managing in the coming decades because of the greying and shrinking population also impacting demand and because capital has been freed to exploit the poorest and least regulated societies.

    Japan's workforce is a contradiction of capitalism, where unncessary workers with unrelevant degrees earned from mediocre universities have for decades been hired into lifetime jobs. These workers are promoted, in the true sense of socialism, by seniority, rather than by performance. Companies have long done this in order to enforce the traditional Japanese heirarchy system which is based mainly upon age. Since employees are paid by seniority, rather than performance, they don't perform. And when employees don't perform, companies don't perform either. And when companies don't perform, then neither does the national economy, nor the country it exists in.

    There is very little capitalism in Japanese companies, or in Japan intself. Business in Japan is based on relationships between companies and regulators, with the free market playing less part than you would believe. That is why it is collapsing under it's corrupt and inefficient weight.

    The "poorest an least regulated" societies you mention are quickly becoming less poor. As their peoples have more jobs, and more income, capitalism asserts itself, greed and/or ambition grows in-step with increases in opportunity, education improves, along with the general well-being of everyone who lives in these countries. But I suppose you would rather these numberless poor remain in eternal poverty so you can continue to earn more in an hour than many of them do in a month?

    Places like America, Canada, and Australia were "exploited" by freed capital a few centuries ago, to the benefit of us all.

  • 0

    Guy_Jean_Dailleult

    I hesistate to put it so frankly, but that seems to me like the type of scaremongering we hear from all the vested interests.

    Yeah sure. People who are seeking to protect their incomes and livelihoods are "vested interests", while those peddling policies that would reduce those incomes are enlightened altruists just trying to help and who have no skin in the game.

    Don't let the evidence hit you in the head. The trillions of yen in dead money being held by Japanese corps shows they have no interest in rewarding people for the "value" they provide. In fact, that money (economic rent) comes directly from NOT rewarding them, as shown by the total breakdown in the relationship between productivity and compensation over the last 35 years. But it's OK I guess, in Fantasyland there are always "greener pastures". And Santa Claus, and the Tooth Fairy, and the Easter Bunny, and...

  • 0

    fxgai

    Yeah sure. People who are seeking to protect their incomes and livelihoods

    People like that produce the goods in their work and generally have nothing to worry about. If someone really has marketable, valuable skills and experience, even if they are laid off, guess what? They STILL have those marketable, valuable skills and experience. Where is the disaster?

    Getting laid off doesn't make someone instantaneously useless - unless they are, harsh to say, useless to begin with - hence getting laid off in a lot of cases. In that case, sure such people don't have job security. But that's the incentive they need to improve themselves. And through improving themselves they can better contribute to society.

    People just sitting around getting paid doesn't actually help the greater economy much. People can contribute more to the economy than just spending a pay check, I believe.

    The trillions of yen in dead money being held by Japanese corps shows they have no interest in rewarding people for the "value" they provide.

    Well gee, work is not a social welfare scheme per se. Wages will only go up when it is in the interests of the corps for them to go up - e.g. to keep their valuable workforce from jumping to greener pastures.

    in Fantasyland there are always "greener pastures".

    I grant you that there aren't many greener pastures in Japan, and that's something that Abe and team ought focus on changing.

    But just demanding privately owned business raise wages as Abe does is a stupid idea. Central command results in crappy results in overtly communist countries, why should it be different in Japan?

  • 1

    sangetsu03

    Don't let the evidence hit you in the head. The trillions of yen in dead money being held by Japanese corps shows they have no interest in rewarding people for the "value" they provide.

    Companies do not hold money unless they have no other option. Companies do not spend even a single yen unless they expect to get more than one yen in return. More than half of what my company earns is reinvested, and even then, growth is a struggle. Run your own company with your own money, and then see what your opinion is.

    Take a look at the world around you, and the economic situations therein. You have Japan in recession, Europe on the edge of recession, China growing at a rate less than expected, with America being the only bright spot. And were it not for the drop in oil prices, America would be much worse off.

    The governments of these countries have spent themselves so far into debt that they have skewed the basic economic fundamentals. Their massive debts have caused them to raise taxes, manipulate interest rates to zero, and raise the costs of living and doing business. These factors have the natural consequence of causing deflation, because as costs rise, consumption falls. as consumption falls, companies make less money. This results in less revenue, and further deflation, so governments begin printing money, somehow thinking that cost-push inflation will morph into demand-pull inflation. In Japan there is the added problem of a rapidly falling population. Much, or most of these "trillions" of yen have not actually been earned through sales or increased business, this money is simply the result of market capitalization pushed up by higher stock prices which were driven up by low-interest easy money poured into the economy by the central bank. If there is a "correction" in the market, as there often is, these trillions of yen could disappear overnight. Companies do not dare spend this money, it is not a solid asset.

    If you were a company, where would you build a new factory, hire more workers, or otherwise expand your business? In Japan? Red tape up the yin-yang, the second highest corporate tax in the world, a government debt which is two-and-half times GDP, and a falling population to boot? You can already see the answer by looking where companies are imvesting. It is not here,

  • 1

    Jeff Huffman

    The-RatJAN. 20, 2015 - 03:09PM JST Good Call Guy. Conservatives don't realize that Japan's meteoric rise in the 50s and 60s and 70s was due to people have job security (though at a horrific price of working six days a week, for 14 to 16 hours a day).

    No. It had primarily to do with a nation needing to rebuild, lots of cash infusion from the U.S. for military and civilian infrastructure, two wars in Asia where Japan figured heavily as a staging area and fixed exchange rate pegged to the dollar.

  • 0

    fxgai

    And were it not for the drop in oil prices, America would be much worse off.

    On this one point, I see it just a little differently.

    It was the free market incentive of high oil prices that led to innovation in the American energy sector (whereas government subsidies to alternative energy ventures appears to have been a relative (absolute?) failure). America energy producers adapted to those higher prices, figuring out how to extract oil from places they couldn't before, and now as a result America gets to reap more of the benefits of their energy consumption than the Saudis do.

    So It is America that has caused the drop in oil prices through their increased production, and this came about without any "leadership" from the central government. This is such an important lesson for all of the western goverments of the world who find their economies in malaise, as well as a few posters here at JT.

  • 0

    warnerbro

    “A significant fraction of Japanese workers are laid off each year and then face long periods of joblessness before finding work, often at much lower wages,” This is true throughout the Anglophone world as well, particularly in the "flexible" workforce of the United States. The NY Times just ran a piece recently about America's middle age unemployment problem.

  • 0

    itsonlyrocknroll

    Flexicurity"....Ho hum, another verbalism, the irregular mangled. I can only comment on my own experience predominantly investment in small medium sized enterprises, financial services software, and technology for the agricultural industry. Both would benefit from structurally reforming the employment market. It is a fallacy for a small company to exploit it's workforce. Only transparency in wage structure and reward can build trust and a dedicated workforce. Wage disparity destroys moral. Small technology businesses want to reward staff more on an appropriate level to there contribution. Investing in training and development.

    At present it is nigh impossible to create a more even playing field. I cannot excuse the behaviour of the large corporates. I can put my hand on heart and say the companies I am associated with clearly communicate the bottom line in a open and honest manner.

  • 0

    JBinJapan

    Perhaps this is a time when self-employment should be encouraged. While not as stable, self-employment provides an income, even in lean times, and great independence.

    The modern economy will require workers of the present, and future, to be more specialized. Internet and communication technology make self-employment that much more viable.

    One advantage of being self-employed, you gain more tax breaks, and write-offs, greatly increasing net income. Something salaried, full-time workers can't easily do.

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