May 11, 2016 2:10 pm JST

Japan's 'irregular workers' emerge as hot political issue

TOKYO -- Prime Minister Shinzo Abe's government is turning "irregular workers" such as part-timers and temps into a hot-button issue as Abenomics, the package of economic measures aimed at getting Japan's economy out of protracted deflation, appears to hit a snag.

"The Abe government will take steps to ensure improvement in the plight of irregular workers," Yasuhisa Shiozaki, Japan's labor minister, pledged at a May Day rally held at Tokyo's Yoyogi Park on April 29.

The annual event was sponsored by Rengo, the nation's largest labor organization. The group also is the largest backer of the opposition Democratic Party, which has long campaigned for irregular workers. "The government should not turn its back as soon as the upper house election is behind us," Rengo chief Rikio Kozu warned.

Abenomics

The prime minister was in his office March 15 when news came in that Toyota Motor struck a deal with its labor unions on a monthly pay hike. "Fifteen hundred yen?" he frowned. A year earlier, Toyota workers celebrated a 4,000-yen raise.

Abenomics is based on trickle-down theory -- that with a weak yen, leading Japanese companies can see earnings grow and in turn increase worker pay and capital investment, which will help wealth flow to smaller businesses and regional economies. Abe has seized every opportunity to press corporate leaders, such as President Sadayuki Sakakibara of influential business lobby Keidanren, to raise wages.

But the trickle-down effect is not seen in outlying areas. "Large companies are putting downward pressure on prices," a Rengo regional leader complains. Pay increases apparently slowed down before the anticipated benefits were disseminated.

Workers at smaller companies are seeing wages rise. "My employees will quit unless I give them a pay hike at all costs," says the owner of a small factory in Aichi Prefecture. But the trickle-down effect is not the reason. Tokyo, abuzz with public works projects, has become a huge draw for workers, leaving regional employers scrambling for hands.

Irregular workers

The government's council on international finance and the economy met March 16, with Columbia University professor Joseph Stiglitz as the special guest. Bank of Japan Gov. Haruhiko Kuroda asked the American economist: "Companies are enjoying robust earnings, the labor market is tight, but the pace of wage hikes is slow. Why?"

Stiglitz cited a lack of demand. Business executives are having a hard time selling products and have little confidence, he replied.

The conundrum is how to create a virtuous cycle of wage gains and higher consumer spending. The government devised a prescription to focus on irregular workers, who make up 40% of employees. Back in January, Abe out of the blue mentioned the goal of "equal pay for equal work" for employees -- regardless of their status as regular or irregular workers -- in his policy speech before parliament.

The Democratic Party is not a happy camper. "The language is almost the same. It is a catch-and-steal strategy," a senior party official said. Party President Katsuya Okada demands that "specific measures be proposed before the election."

But the Democrats are licking their old wounds. While in power, they failed to implement their labor policy. Partly because of the Democrats' affiliation with Rengo and labor unions, which mostly represent regular workers, the party gave priority to promoting regulatory reform for irregular workers. Pundits say the party's current emphasis on the plight of irregular workers is a calculated political move to turn the issue into an anti-Abenomics symbol.

Yet Abe's government has decided to postpone reviewing employment rules involving firing and changing jobs until after the upcoming election, as the ruling coalition faces headwinds.

Neither side of the aisle has a fundamental solution in sight.  

(Nikkei) 

 

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