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Economy

Japan's small factories and eateries struggle to save jobs from virus

With outlook clouded, 260,000 part-timers were let go in March

With restaurants empty, many operators are letting go of part-time workers. (Photo by Takaki Kashiwabara)

TOKYO -- Small manufacturers as well as mom and pop restaurants in Japan are struggling with a hazy future as the coronavirus outbreak wrecks the economy.

The dire situation is prompting calls for additional government aid to help smaller enterprises weather the crisis and safeguard part-time jobs.

For many manufacturers in Tokyo's Ota Ward, a hub of tiny factories, the outlook is gloomy.

A specialized metal parts maker has managed to secure work for now but expects orders in value terms to miss its target by 30% in June. After that, they "could even tumble 50% to 70%," the employer of about 40 said. Even if the factory receives subsidies to keep paying workers, the daily cap of a little over 8,000 yen "won't be enough to pay a full-time worker," the 63-year-old president said.

A mold maker with a staff of four reports that April sales plunged 60% on the year. "How things will be in June and beyond is totally unclear," the 78-year-old owner said, adding: "Finished products are not selling, which means we're not getting work."

Sales so far have slid about 20% at parts processor Seki Iron. "We're worried about the next six months," President Eiichi Seki said.

A wiring assembly specialist located in Tokyo's Ota Ward, a hub of tiny factories. (Photo by Fumito Akiyama)

Such concerns are echoed in Higashi-Osaka, home to the biggest concentration of tiny factories in western Japan.

Nakano Manufacturing says that demand remains solid for its mainstay parts for chipmaking devices, but that auto parts sales have tumbled 60% on the year since mid-April. "The future can't be seen," representative Daisuke Nishijima said.

Japan's ratio of effective job openings to seekers slipped to 1.39 in March -- the lowest in three and a half years. New manufacturing job offers tumbled 22.8% on the year, steeper than the broader average decline of 12.1%.

Part-time workers are hit particularly hard. Japan recorded the loss of 260,000 part-time jobs in March, the biggest slide in comparable data going back to 2014. Payrolls at self- or family-owned businesses shrank by 400,000, indicating that those without strong job security or solid business bases are taking a significant hit.

A restaurateur who runs three izakaya pubs in Tokyo sent home all part-timers and temporarily closed two locations. Regular customers are keeping the remaining eatery afloat, but the restaurateur does not know "how long we can last."

"We can get by with loans for two months, but we won't be able to keep going beyond that," a restaurant owner in Osaka Prefecture said.

Phones are ringing off the hook at Posse, a nonprofit providing help on labor issues. The organization has handled about 1,000 cases since February.

Demand for support is overwhelming localities. Applicants for a small-business loan referral service from Tokyo's Shinjuku Ward have to wait about two months. Ota Ward saw long lines form from early morning for its special loan program before it switched to mail-in applications.

Some owners feel left out of financial assistance.

Loans are generally offered to outbreak-hit businesses showing year-on-year declines in sales. "We're not even eligible to apply, because we had a bad year last year, too," the owner of a small factory in Ota said.

"Loans with long repayment terms are usually not available to older people," said a 60-something woman who runs an izakaya in Shinjuku.

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