Temp workers

Yesterday it was reported that Japan is considering a revision of the regulations governing temp workers, including the following section that might be rather difficult for most people to really understand.

The revised law will also tighten regulations on the industry practice of sending workers exclusively to certain clients or setting up a company for that purpose.

The practice allows client companies to use workers as nonpermanent employees because they are dispatched from a temp staff agency, thus cutting labor expenses.

To explain what this means, let me briefly discuss the labor situation at the private university in Japan where I worked for one year, from 2006-2007. In general, workers were divided into three categories: regular employees, contract employees, and part timers.

Regular employees were for the most part those hired through Japan’s so-called “shushoku” system of formalized job hunting that allocates the majority of good corporate jobs to fresh university graduates. In this university, almost every regular employee was hired through the shushoku system, and every regular employee I knew under the age of perhaps 30 or 35 was also a graduate of the same university. Some of the elder employees, such as the middle aged manager of my office, had been mid-career hires, but only after a couple of decades of work elsewhere. Regular employees are, in typical Japanese office style, expected to work long and pointless hours of overtime, and while they are contractually allowed to request overtime pay and use vacation days freely, unwritten social expectations prevent most from doing so. Many of these regular employees will spend their entire career in the same job, being gradually promoted based on a combination of seniority and merit. Merit probably factors in more than in the past but still less than would be desirable, and far more of them will also leave for another job at some point than in decades past. I would estimate that regular employees constituted about 25% of the office staff.

Contract employees are hired on what is effectively a three year contract, but is actually a one year contract with two renewal options. The contract stipulates a modest raise in the second and third year, but after the third year it is over and it is impossible for the employee to continue working there, no matter how much they want to or how good they are at their job. Since contract employeed were approximately half of the staff (at least in my office) this leads to an enormous waste of know-how and causes great inefficiency, as staff turnover is kept artificially high, and forces a lot of wasteful training. I am told that the reason for this system is that the labor regulations would require those modest annual raises to continue year after year, and so the university has taken the route of hiring employees with an expiration date, and then replacing them with fresh employees at the base salary. Contract employees leave exactly when the official shift is over, and if they actually have to due overtime due to excess work, will always request overtime pay for it. They have no long-term prospects, and it is impossible to move from being a contract worker to being a regular worker, no matter how competent or essential the person is. It is in fact possible for a former contract worker to start again on a fresh three year contract-at base salary level-but only after an insulting 6 month cooling off period, during which one is presumably and collecting unemployment insurance (which in Japan covers 3 months of payments after a contract concludes).

Part timers, who are almost all married woman who have young children in school and would have been housewives a generation ago, do essentially the same work as contract employees, but at significantly less pay and without benefits. I have no idea if they are theoretically limited in their employment duration, but without even the contract employee’s meager raises, why would they want to?

Now here is where the above quote comes in. There was a woman working in a different office from mine whose three year contract had expired. She liked her job and her co-workers, and her boss very much wanted her to stay, but under the rigid and bizarre employment system they had, it seemed that there was no way for her to stay. But she was offered an alternative, which involves a bizarre legal three card monty trick.

The university is a private, non profit, educational corporation. But they also “outsource” certain functions to a “joint stock company” (K.K. in Japanese terms) of which all shares are in fact held by the university. Various services such as cleaning, stocking, and certain other things I am not specifically clear about are sub-contracted to this company which is separate on paper, but has an office within the university, and whose board members are in fact staff of the university.

This woman, whose contract was expiring, was told that she could keep her same job, same desk, same duties, continue to work with her friends-but she would in fact be technically hired on a fresh contract by this shady subsidiary corporation and then dispatched as a temp to the university. Of course, being hired as a temp through a “third party” she would be taking a pay cut. Intelligently interpreting this as an insulting and demeaning offer, she declined the “new” position.

This, in short, is one of the types of hiring practice that the proposed new regulations are hoping to address.