Japan Press Weekly

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2009 January 28 - February 3 [LABOR]

Time to stop the mass dismissals by using corporate internal reserves

Akahata editorial

A labor ministry survey has found that 125,000 temporary and other contingent workers will lose their jobs by the end of March. Another survey by a group of staffing agencies and contractors estimates that about 400,000 workers will be forced out of their jobs around the same time.

Last December alone, the unemployment rate jumped by 0.5 points, which the Ministry of Internal Affairs said is the sharpest ever rise, except for rises under exceptional circumstances.

Mass job cuts for contingent workers by major companies have had a widespread negative impact.

Employers’ ‘degeneration’

A government institute has also admitted that the sweeping job cuts are very unusual. Iwata Kazumasa of the Economic and Social Research Institute of the Cabinet Office, said, “Compared to the past, it probably is about four times faster. Things that normally take about one year have been coming out in just one quarter (three months) in one burst.”

Above all, most of those who have been abandoned are thrown out into the street in the cold and are being left in a severe situation in which only public livelihood assistance can save their lives.

In the House of Representatives Plenary Session Chair Shii Kazuo took up this question. Prime Minister Aso Taro stated, “The government will make the livelihood assistance program available to those who have lost jobs, including those who are in a state of homelessness.”

The government should end its policy of unreasonably refusing to extend welfare assistance to workers who currently do not have a place to live and provide them with welfare assistance in a flexible and prompt manner.

A Kyoto News survey shows that 16 major manufacturers, which are laying off more than 40,000 workers, have amassed a total of 33.6 trillion yen in internal reserves, about twice the amount of 6.5 years ago. Five of them have increased dividends to their shareholders. Five other companies are paying almost the same amounts of dividends. Six companies say they have not decided on the level of their dividends yet. At this point, none of them plans to reduce their dividends.

It is possible for these large corporations to cancel their dismissal plans if they use just 0.4 percent of their huge internal reserves.

In the past, even large corporations were exercising some moderation. The first thing they did to deal with business slumps was to reduce the value of dividends. The unspoken understanding was that employers would lay off workers only after incurring deficits for two straight years. “Degeneration” may be the right word for the present method of corporate management at large corporations that dismisses workers even while increasing dividends to shareholders.

Mitarai Fujio, chairman of the Japan Business Federation (Nippon Keidanren) and president of Canon Inc., said, “If a company makes light of its shareholders, its market value will be lowered.” Dividends are linked to bonuses for executives. Management cannot increase their own bonuses while cutting dividends to shareholders. If executive board members are actually more concerned with the share prices and their own bonuses than employees’ salaries, their action would be harmful even to the corporation.

Government must strictly supervise

Quick dismissals may help to create short-term profits on an individual corporate basis, but they will worsen the economy as a whole if all corporations do the same. A collapse of domestic demand at a time when overseas demand is shrinking will make it even more difficult for companies to overcome their slump in sales.

Even an influential businessman who was at the center of the financial circles is now critical of the present situation. He says, “Workers are neither tools nor product parts. Anyone in management at large corporations who thinks that the government should look after the workers, needs a good smacking.” (Maeda Katsunosuke, honorary president of Toray Industries Inc., March issue of BOSS magazine).

It is absolutely unjustifiable for large corporations to lay off contingent workers before the expiration date of their contracts or deny them contract renewals. The government must strictly instruct the corporate management to end their mass dismissals of workers.