Hi Blog. I’ve been sitting on this information for over a month, sorry, but here’s another article from the ever-informative Terrie’s Take, regarding how the economic downturn is influencing Japanese companies’ employment decisions.
As might be expected, at the first sign of any trouble, the first to be fired are the NJ workers. Those brought in under a questionable visa regime from 1990 to save Japanese industry from “hollowing out”, turns out the cost-cutting long-hour NJ workers have the least job security. People might argue that laying off foreigners first happens anywhere, but Japan has stricter glass ceilings by nationality. Employers in Japan have issues with letting foreigners (except maybe a few token high-profile bosses) actually graduate out of contract labor (as can be seen most effectively in Japan university system) into becoming “real employees”; heaven forbid if NJ in Japanese companies actually got managerial roles over fellow Japanese co-workers. Even the Japanese Supreme Court has ruled that that kind of discrimination is legal. Anyway, Terrie focusses upon the restructuring numbers below. Arudou Debito in Sapporo
Subject: Terrie’s Take 492 — Job Cuts in Full Swing, ebiz news from Japan
Date: November 3, 2008 12:49:14 AM JST
* * * * * * * * * T E R R I E ‘S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.
General Edition Sunday, November 2, 2008 Issue No. 492
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The global nature of the financial meltdown over the last 4 weeks has meant three sure outcomes for major businesses here in Japan: 1) there is no market in which to seek safe haven, 2) even the healthiest of large companies is having to batten down the hatches for a rough 2009 — this is of course what is killing the stock market, and 3), a lot of people are going to lose their jobs.
The job-cutting aspect has already started in a number of Japanese manufacturers, but looking at the employment figures put out by the government, you wouldn’t know it. This is because, we suspect, Japanese firms are cutting the easiest-to-trim sections of their workforces first, and thus the numbers won’t become apparent until the cuts go deeper into their core full-timer workforces early next year.
According to the Ministry of Internal Affairs and Communications, the nation’s jobless rate actually fell, from 4.2% in August to 4% in September — with about 2.71m people out of work. This means that the workforce currently numbers around 63.95m people.
As with most things, the USA is much quicker to reflect the reality of the current turmoil, and there the unemployment is already at around 6.1% of the workforce, with about 479,000 new jobless registering last month. This is significantly up from the 332,000 who were unemployed a year ago, although less than the peak 499,000 registering after hurricanes Ike and Gustav hit several months back. Apparently U.S. companies have already cut 760,000 jobs in the last 9 months.
So is unemployment really down in Japan? Or is this the calm before the storm?
Experts in the USA are predicting that the unemployment rate there for next year will rise to 8% or more, a surge of 30% over the current rate. Now, 400,000 newly unemployed is already considered a recessionary environment in the U.S., so with even more people set to lose their jobs, fear will increase and consumer spending will drop even further. Most Japanese exporters either make products for global consumers, or tools for companies that do, and either way they’re going to be hit by the downturn. Although the delay in layoffs may be longer, because Japanese firms are reluctant to take the PR hit that comes with layoffs, the fact is that there is already a precedent for letting people go in an acceptable manner — being set by Matsushita and others back in the late 1990’s. So we believe that the job cuts are not long in coming.
Or, more correctly, perhaps we should say that the job cuts are already happening, but the local media is downplaying the trend…
First to go have been the foreign workers in overseas plants. Two weeks ago, Nissan announced that it would cut its workforce by 1,680 people at its Barcelona assembly plant — one of two major plants the company has in Europe. This is almost 1/3 of all the people working at that facility and represents the halting of one of the 3 production shifts. Sales of vehicles in Spain have plunged 24% in the last 9 months, and when the numbers finally come out at the end of the year, we expect that sales for this current quarter might be almost non-existent. Indeed, Peugot has said that it expects a 17% fall in auto sales in Q4 in Western Europe. We think the final numbers will be worse and Japanese firms will share blood shed.
Certainly Toyota knows this, and so the company is laying off another category of “outsiders” — non-permanent workers at its factories here in Japan. Apparently the company employs 6,800 contract workers, also known as fixed-term workers, a number which is 2,000 down from March and 4,000 down from the peak of 10,800 employed in 2004. Back then, non-permanents accounted for 30% of the company’s total workforce. The thing about these contract workers is that so long as they are employed for less than 36 months, then the company can flexibility lay them off in times of hardship — as will many other companies around the country now that Toyota has set the pace.
In addition, in Q2, June-August this year, Toyota laid off an extra 8,000 temporary workers — for a total of around 10,000 redundancies so far this year. Are you seeing these numbers in the major newspapers? Not really. This is probably because Japan’s number one advertiser is sitting on an estimated JPY4trn (US$40bn) of cash reserves (not including other assets) which make it difficult for the company to defend its actions in the Japanese context of being needed to be seen to be looking after your own. In this respect, the message clearly is that you need to be a full-time employee to be considered “one of the Toyota family”. Otherwise you’re just a squatter.
Now that Toyota, a core company in the Japanese industrial complex, has been able to lay off so many people and yet has drawn no protests from the politicians, bureaucrats, or press, this portends badly for a large number of Japanese working in other companies and who are also not full-time employees. Some readers may recall that out of 64m (approx.) workers in Japan, a full 33.5% (as of 2007) are now part-timers, contract employees, temps, freeters, or otherwise non-permanent workers. For these people, the on-going downturn represents a high likelihood that many of them will be handed termination notices over the next 3-6 months.
However, they can’t afford to not work. According to a recent Reuters article, there are now more than 10m “working poor” in Japan. The term apparently refers to those earning less than JPY2m (US$20,000) a year.
Lastly, it surprised us to learn in an AP article that the government does NOT track the number of jobless foreigners. Surprising if only because we’re all paying taxes and unemployment benefits. Maybe these aren’t counted either?
So, given that there are at least 755,000 foreigners (as of 2006) working here in Japan, and probably another 350,000 or so working illegally, you can bet that this group will be another at-risk segment to lose their jobs. The AP article says that the government HELLO WORK centers used to get about 700 foreigners looking for jobs each month, but in August due to the massive layoffs by auto manufacturers, the numbers of foreign newly jobless people doubled to 1,500 a month. Local officials note that the number of Japanese applicants has not changed appreciably (yet) — so clearly Toyota, Honda, and Yamaha are dumping on their Brazilian-Japanese and Chinese workers first.
Could be a bleak Christmas for many people.
5 comments on “Terrie’s Take on how NJ workers are the first to go in adverse economic conditions”
“People might argue that laying off foreigners first happens anywhere”
Unfortunately, it is true in the US, too. They have a law to encourage discrimination against aliens to protect its citizens.
8 USC Sec. 1324b(a)
“(4) Additional exception providing right to prefer equally qualified citizens
Notwithstanding any other provision of this section, it is not an unfair immigration-related employment practice for a person or other entity to prefer to hire, recruit, or refer an individual who is a citizen or national of the United States over another individual who is an alien if the two individuals are equally qualified.”
Let’s hope the new president will take care of this for foreigners.
— Thanks. The point is, as you keep missing in just about every one of our exchanges, HO, is that very few foreigners actually graduate beyond contract work in Japan. That is not the same thing you find in, for example, academia overseas, where in the US and Australia the “brain drain” has been very effective, and one of the reasons is because foreigners are also given administrative jobs. You just don’t get that much in Japan, and that must change.
Regarding your comment. Yes it is true that in the US we have that law, however the reality of the situation is it is not used to discriminate against foreigners. Large corporations, mostly in technical fields, constantly are arguing there are NOT ENOUGH H1B visas. Nothing needs to be fixed with this regards in the United States. As an engineer (and one who has helped obtain H1B visas for foreigners going to the US) I see this working the other way. US citizens are often discriminated against in favor of getting cheap labor. In actuality companies in the United States have layed off US citizens before foreign engineers in many cases as the cost basis of the US citizen is generally quite a bit higher.
About the new president “taking care of this for foreigners”…there is nothing to fix and in fact if Obama does anything in this regard it will be to protect American workers and jobs more (he spent 2 years campaigning in this way). You will see an administration that will be more isolationist than the Bush administration.
Regarding Japan – So what – foreigners are losing jobs. This is the way it should be. Japan should protect its citizens first. I wish my country would do the same. I have been in Japan over 10 years and own a business here. I employ Japanese engineers and also have employed foreign engineers. If the cost basis of a US expat engineer is higher and times are tough (and a tough decision needs to be made) I would likely lay off the expat for a variety of reasons. I can understand why the Japanese companies would want to let the contract workers go first. In fact the contract workers are well aware of the situation when they sign on the dotted line. If they do not wish to take that type of risk then they should not take the jobs. Whether right or wrong, this is the reality of the global economic system.
Debito I must take issue…we run in different circles… of that I am sure…there are quite a few more foreigners these days graduating beyond contract work in Japan. I have seen this trend over the last 10 years (especially in Tokyo, which has become much more of an international city). A bilingual engineer or technical person can very easily get a very high paying and good job in Tokyo….even now.
I guess I see this is a non issue…
administrative jobs? You mean like where `decisions` are actually left up to people without an asian face?
no that can`t happen. ITS JUST NOT RIGHT! How can someone who is destined to return to their home country possibly understand how anything works here…
After all, in our home countries jobs consist of smiling, being 陽気 and saying `Hey MAN! HOWS IT GOING` all the time. Right?
I don’t get the point of this posting. Sure Nissan laid off thousands of people in Spain, but if people aren’t buying their cars in Europe then they should stop making them. If they continue to make cars that no one wants to or can buy then they will end up like the US automakers. I don’t imagine any of the cars made in Spain are bound for Japan, so I don’t understand your argument about cutting the foreigners first. How many employees at the Spanish plant are Spanish Citizens and how many are gaijin (Japanese)?
Your comments about Toyota and the other Japanese car makers cutting temporary staff is misguided as well. The automakers have a core of employees that they use and then hire temps when the work increases and, guess what, they cut them when the work dries up. While there are a number of foreigners who have gotten cut, there are also a number of Japanese temps who have been cut.
I think what you need to examine is why more foreigners don’t graduate beyond contract workers. Is it because of their education levels? Is it because of their level of understanding of Japanese? Is it because they are actually only here on a temporary basis and are therefore satisfied with contract work? Why are so many Japanese also agreeing to contract work?
Companies are not in business to do charity work. We are in business to make products, turn a profit, and grow the business.
Before you start demonizing the Japanese automakers, maybe you should take a look at the business practices of Wal-Mart and do a comparison of how employees are treated and taken care of compared to large Japanese companies.
Having worked for a Japanese company for 8 years, I have first hand experience with how well Japanese companies take care of their employees, Japanese or foreign, in good times and in bad.
— Good for you. Are you on a contract or are you a regular (joukin) worker employed like every other Japanese full-timer?
You are very intelligent man. Please tell me what are you going to do when it comes to lay off people at your companies? Who will be first to go?