Japan's temps may get new deal, of sorts
By Scott North
The second coming of Haken Mura (dispatched workers' village), temporary
holiday accommodation for Japan's growing number of laid-off haken (dispatched)
workers, attracted less public attention than its 2009 incarnation.
"Big" stories, such as the alleged corruption involving ruling party leader
Ozawa Ichiro, or the US-Japan spat over where to put American Marine
helicopters in Okinawa, pushed the plight of unemployed, homeless workers from
the front pages. The news value of this year's compassionate protest, which
January 18, was to some extent also diminished by involvement of the Ministry
of Health, Labor and Welfare (MHLW).
A year ago, the ministry was embarrassed by the encampment just across the
street from its offices. Aided by non-profit organizations and labor activists,
500 displaced temporary workers took up residence, receiving food, emergency
shelter, and employment assistance during the New Year vacation. Ministry
officials this year arranged a move to a less prominent location at the Olympic
Center in Yoyogi Park.
Despite the diminished publicity, hundreds again took refuge and many more
consulted with lawyers who staffed a phone hotline and consulted face-to-face
with workers about abrupt lay-offs, contracts not honored, and salaries not
paid. Reports quoted workers who said that they preferred to talk with lawyers
because the MHLW bureaucrats were unable to answer their queries
Official Japan has been loath to reveal that its statistics show labor market
liberalization contributing to increased inequality and poverty. Publication of
MHLW-collected poverty data had previously been left to the Organization for
Economic Cooperation and Development. But, with the effects of labor
deregulation becoming too obvious to disown, the MHLW this week published
poverty statistics for the first time.
They verified earlier surveys indicating that one-sixth of Japanese live below
the poverty line; 59% of those in poverty are single parents, the majority of
them "working poor", employed in the second tier of Japan's labor force, which
is made up of dispatch temporary workers and others who comprise the category
of "non-regular employees".
Dispatch labor was first deregulated in 1985. Growth of the temporary staffing
industry was slow at first but picked up dramatically after layoffs and reduced
hiring of new graduates following the collapse of the Japan's economic bubble
and the start of the decline of so-called lifetime employment. Today, nearly
four in 10 Japanese workers are "non-regulars". Their salaries and benefits are
typically estimated at half of regular workers' total compensation and their
jobs are much less secure. Haken are leading the way to a lower wage
floor, more-unstable working conditions, and greater social divisions.
The problem became more visible after 2004, when another round of labor
deregulation allowed dispatch workers to be used in manufacturing, the backbone
of Japan's export-based economy. Previously, manufacturing had been carried out
by full-time, regular workers, whom companies and their affiliated
subcontractors took some care to train and retain. Pressured by more than a
decade of economic stagnation, and influenced by neoliberal examples set forth
in position papers issues by the American Chamber of Commerce in Japan, key
Japanese business leaders embraced "flexibility" and "diverse 21st century ways
of working", and moved away from Japan's putative tradition of long-term,
in-house human capital development.
The 2004 deregulation allowed manufacturers to cut costs by legally using
dispatch temporary workers. Moreover, when work dries up, such non-regulars,
who seldom have union representation, have the added advantage to employers of
being easily, if controversially, dismissed, pulled off the line like surplus
tools. Labor leaders and social activists argue that dispatch temporary workers
are not machines but human beings, who need regular incomes for stability.
This haken issue has aroused strong passions about the future direction
of Japanese labor practices and the shape of society in general. Firms claim
they need flexible employment to survive and prosper. Advocates for workers
argue that without respect and stability, the workforce cannot survive humanely
or afford to raise families. The treatment of haken workers is the
visible tip of a much larger iceberg of unstable, non-regular employment.
Who is responsible for haken?
Companies that use dispatch labor have contracts with staffing agencies that
supply temporary labor. On paper, the workers are employed by the agency, which
takes a cut of the fee paid by the firm as compensation for finding and
dispatching the worker. The agency is responsible for pay and benefits, as well
as for directing the work of the dispatched workers. In practice, once agency
temporary workers enter a workplace, particularly in factories, they often take
orders directly from the company and face pressure to work like regular
employees. This includes pressure to work unpaid overtime.
Such violations of the law have become clearly visible only recently. A spate
of lawsuits and protests, such as the haken village, industrial
accidents involving inadequately trained haken factory workers, and
homeless haken workers sleeping in Internet cafes and 24-hour fast-food
restaurants, have made the problems clear.
When firms that use haken labor face harsh economic conditions, they can
terminate their contracts with the suppliers of the labor under specified
conditions. The workers, many of whom are living hand-to-mouth in
company-supplied dormitories, have no recourse against this sudden termination,
which may come before the expiry of their personal contracts with the temp
agency. Upon termination, they are obliged to leave their company lodgings.
Individual contract workers face the same dilemma.
The government is worried about layoffs of such vulnerable workers and has made
efforts to find housing for those who have lost jobs. It has also expressed
concern that this style of work will continue to spread, increasing poverty and
making family formation more difficult. There is fear that irresponsible
treatment related to haken workers will become institutionalized.
Illegal variants of haken are increasing and the number of companies
being disciplined for violating the current law is growing.
At issue is a legal distinction about who bears responsibility for managing
workers. The practice of treating workers like non-regular, haken workers
when it comes to salary and dismissal, but treating them like regular workers
when it comes to duties and hours is illegal. Workers at subcontractors (ukeoi)
may remain employed by their firms even when contracts with larger firms are
terminated. However, when haken contracts are terminated, the haken
agencies seldom assume responsibility for workers. Indeed, haken agencies
sometimes fail to pay all wages due. The agencies may also skim additional fees
from workers' pay or neglect to pay social insurance payments that workers must
make in order to be eligible for unemployment benefits.
Laid-off haken workers thus fall into a gap where there is little or no
safety net. Some workers have tried to fight dismissal, arguing that the firms
in which they have been working have an obligation to keep them there. Some
have worked beyond the statutory time limits for temporary labor, and many have
been taking orders directly from the firm's bosses just like the regular
They have argued that in such a situation, a tacit contract between the worker
and the firm exists and that it should take precedence over the dispatch
agreement between the staffing agency and the firm. But officials in companies
that use haken labor have refused even to accept worker petitions or
meet with such dismissed haken workers. Firms say, "You don't work for
us so we are not responsible for you."
Proposed reforms to protect haken workers
To stem the rising tide of inequality, the new government of Prime Minister
Yukio Hatoyama is to introduce a legislative proposal to re-regulate the use of
dispatch workers as part of an overhaul of the Labor Standards Law when
parliament opens on January 26. The aim is to protect haken workers from
sudden forced dismissal, and to redress the perception that bureaucratic
inaction has transformed haken workers into the working poor.
The reform aims to strengthen worker protections and restore "regular"
employment as the norm by eliminating loopholes currently exploited by
employers, and providing swift and appropriate punishment of future violations.
Under the proposal, temporary staffing agencies that hire workers for a certain
period (currently unspecified) will have a duty to make effort to shift those
workers to "regular" employment status. When considering the wages of haken
workers, equivalence with the salaries of the regular workers in the firms to
which they are dispatched will be considered. The charges for dispatching
workers will be made clear to workers and agencies will be required to make
public the margin they take, that is the often sizable difference between the
dispatch charges paid by the firm to the agency and the wages the agency pays
Under the proposed revisions, only dispatch for regular employment would be
permitted. Dispatch for short terms of less than two months, dispatch of day
laborers, and dispatch in manufacturing are to be banned "in principle", as is
dispatch for replacement of regular workers. So-called touroku-gata haken,
the dispatch of workers who register with the agency and are called upon when
there is work, will also be banned; however, there will be exceptions in 26
selected occupations. Clearly, the aim of the proposed revision is to increase
regular employment and determine the locus of responsibility for worker
But the way forward is not clear. The 26 "specialized" occupations to be
exempted currently employ about half of Japan's 2.2 million dispatch workers,
and lawyers say the vague definitions of the exempt occupations will invite
abuse and undermine the effectiveness of the proposed law. Furthermore, some,
mostly young, workers appreciate the freedom and relatively lucrative nature of haken.
In consequence of the temporary nature of the work, it usually pays slightly
more than working for subcontractors, which have higher fixed costs than temp
agencies. Nor does haken entail the long hours or heavy demands of
Furthermore, the proposal does not obligate firms to negotiate collectively
with unions on issues related to dispatched workers, nor would firms that use
dispatched labor be obliged to share responsibility for unpaid wages or
benefits. Vague definitions and the as yet undetermined time period for
implementation of the reforms are other likely sticking points.
As for sanctions, if firms knowingly violate the new law, treating haken
labor as subcontract labor, the MHLW will regard the situation as an implicit
labor contract. Workers treated thus will have the option of asking to be hired
directly and firms will be obliged to hire them. However, it is important to
note that the Supreme Court recently ruled against a worker in just such a
case, establishing a precedent that poses a preemptive challenge to this
portion of the revision. The ultimate form of the proposal will be shaped by
debates in and out of the Diet, or parliament, over the coming months.
For their part, employers, too, find problems with the proposal. They argue
that if touroku haken is banned, it will produce a flood of layoffs,
increasing unemployment. They say that the proposal will be especially harsh
for smaller businesses, which do not have enough steady work to justify hiring
subcontractors and so depend on being able to bring in registered temporary
workers on short notice when they need additional hands.
As the working class goes, so goes Japan It is clear that the boom in temporary staffing agencies has been
instrumental in widening the working-class divide. A class of non-regular
workers, who often do the same work as regular workers but receive lower wages
and enjoy less stability, has been the outcome. Consequences include the
increase in dispossessed individuals, families living on the edge, damaged
pride, increasing anger, a sense of real betrayal, and the stirrings of class
conflict in a country that has long prided itself on keeping class differences
Rallies and study sessions are planned around the country in the coming months
so that workers can study the proposal and voice their opinions. Labor
advocates see the proposed haken reform as at best a piecemeal effort.
If enacted, it will be impossible to repeal, and its loopholes will become part
of the social fabric.
Workers who feel they are being used illegally will continue to have little
choice or recourse. Penalties for labor law violations are generally limited to
administrative guidance and warnings. These activists argue that fundamental
reform is needed. They say that only guaranteeing all workers equal legal
rights and status can neutralize employers' current incentives to abuse both
low-status workers and the law.
The revised law's name and goal are the same: "Protection of Dispatch Workers".
However, at issue are not just conditions for haken workers but Japan's
system of employment in general. Many workers today are forced to accept
unstable, non-regular employment even though they would prefer the long-term
stability of regular employment. There are more than 3.5 million unemployed,
many eager for any work at all. And there is a minority who favor non-regular
work because it fits their lifestyle goals. They do not want the burdens of
regular employment, but they may find their chosen occupation on prohibited haken
The debate over proposed haken and other labor reforms is of crucial
importance to Japan's future. The shape of the society is implicit in the
outcome. It is a story that should be able to challenge the Okinawa base
squabbles and the endless rounds of political corruption for front-page space.
Scott North is Professor of Sociology, Graduate School of Human Sciences,