October 27, 2014

The government led by Prime Minister Abe Shinzo in the current Diet session submitted a bill to revise the Worker Dispatch Law. This is the second time for the government to submit the bill following the latest ordinary session of the Diet. In the previous session, the bill was dismissed due to strong opposition from labor unions and the general public. Let’s look at what would happen if the bill is enacted.

How the law revision will change the use of temporary agency workers

The government proposed bill aims to abandon the basic principle of limiting the use of dispatched workers and enable corporations to use those workers as long as they need.

In Japan, workers are classified into various employment types such as full-time workers, fixed-term contract workers, part-time workers, casual workers, and temporary workers. Full-time and contract workers work under direct employment contracts with their employers. On the other hand, temporary workers work under indirect employment relations as they are dispatched by staffing agencies to user companies.

The Worker Dispatch Law allows the use of temporary agency workers only to a certain extent outside the parameters of the basic principle of using workers under direct employment contract between employers and employees. That is to say, corporations are to use regular workers for regular jobs and temporary workers only for “temporary” jobs.

Under the current law, if companies accept agency staff in 26 job categories, which require specific professional skills and knowledge, there is no limit to the period of employment, but in other job categories, there is a limitation of three years.

The bill will remove the time limitation when agency workers are hired by their agencies with open-ended contracts. The government explained that if those workers become their agencies’ regular employees, they will be able to have job security. This government explanation, however, conflicts with what happened to temporary workers at the time of the global financial crisis in 2008.

In 2008 in the aftermath of the collapse of Lehman Brothers, a large number of temporary workers, including staffing service agency-employed workers, lost their jobs.

The bill will maintain the 3-year limit on the use of temporary workers under fixed-term contracts with their agencies. Under the bill, however, continuous use of the temporary staffing service after the 3-year limit will be allowed if user companies ask labor unions’ opinions, regardless of the pros and cons, about the extension of the service.

If the law is revised, temporary workers will be unable to move up from low-paid, unstable temporary employment and corporations will probably shift to a disposable use of temporary workers instead of hiring full-time workers.

Will revised law give temps chance to become full-time workers?

No. A revised Worker Dispatch Law will give almost no opportunity for temporary dispatched workers to become full-time workers of companies to which they are sent from staffing agencies.

The current law has two regulations which make it possible for temporary workers to work under a direct employment contract with user companies. One requires companies receiving temporary workers to make efforts to directly hire them at their request after they work more than the 3-year legal limit. The other one considers temporary workers to be workers under a direct employment contract with companies they have been dispatched if their work falls outside the 26 “expert” job categories.

A revised Worker Dispatch Law, however, will erase the requirement of recipient companies to abide by regulations with regard to agency workers under open-ended contracts with staffing agencies. A revised law will also allow companies to use agency labor as long as they want for whatever job categories.

Therefore, a revised law will close the door for workers dispatched from staffing agencies to get full-time positions at the companies they have worked for.

Will revised law lead to women’s empowerment?

To the contrary, women workers will suffer from poorer working conditions.

A revised law will urge staffing agencies to hire temporary workers, who the agency sends to other companies, on open-ended contracts but will lift the regulation on the required effort of user corporations regarding the offering of direct employment to temporary workers.

Except women in executive positions, 54.5% of female workers in Japan are part-timers, temporary workers, or do some kind of contingent work. Reportedly, 680,000 female workers work as workers dispatched from staffing agencies. The average wage for women remains around 60% of that of male workers.

Revision of the Worker Dispatch Law will deprive agency workers of their chance to be offered direct employment or become full-time employees of the company. Most of those workers will have to continue work as part of a low-cost labor force.

Important steps needed to promote women’s empowerment are to strictly limit the use of temps to urgent or temporary jobs and to oblige receiving companies to give temporary workers treatment equal to those companies’ full-time workers.

What responsibilities will user companies assume?

A revised law will exempt corporations from a responsible use of temporary workers. This is the most harmful aspect of the revision.

Under Paragraph 4, Article 40 of the present Worker Dispatch Law, if companies want to use temps beyond the 3-year limit, the companies should offer direct employment to the workers. A revised law will delete this paragraph from the law.

As the Labor Ministry’s labor policy council defines temporary workers as an important labor force needed to help adjust supply to demand in the labor market, a revised law will enable corporations to freely use such workers as an adjustment valve according to changes in the economic climate.

Adverse revisions in the Worker Dispatch Law will drastically lighten corporate responsibility including responsibility for worker protection measures and for equal treatment to be provided for both temporary workers and full-time workers.