Japan Press Weekly

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2013 January 9 - 15 [ECONOMY]

Local gov’ts work to give more jobs to smaller businesses

An increasing number of local governments have introduced programs to give more public works contracts to locally-operated smaller business firms. One of the more successful cases can be seen in Niigata, where the prefectural government in 2007 adopted a program to award “regional maintenance works” to such companies.

A president of a construction company in Niigata’s Joetsu City said, “We received contracts to reinforce a riverbank in a recovery project from the heavy rains two years ago. Amid fewer jobs, smaller construction firms like us suffer from the severe business environment. That is why this local program helps us a lot.”

Running the business for 100 years, the company has been involved in public works projects such as building river revetments and recovery work from landslides. However, the number of public works contracts it was awarded has decreased to one-fourth of previous years.

Construction is the prime industry in Niigata as 10.6% of workers in the prefecture in 2010 worked in the industry, the largest ratio in the nation. A decrease in investment has made it difficult for local construction companies to continue their businesses.

The prefectural government selects local small- and medium-sized enterprises (SME) which were engaged in public works projects in the past, such as checking, patrolling, or removing snow at prefecture-owned facilities, and designates them as “regional contribution” firms. It awards them local public works contracts that range from 2.5 million yen to 70 million yen and do not require special skills. Every year it encourages new local SMEs to apply for the designation.

The number of contracts awarded to local businesses increased from 259 (amounting to 3.7 billion yen) in 2007 to 1,371 (26.9 billion yen ) in 2011.

Niigata’s Federation of Merchant and Industrialists Organizations and other local SME organizations had made many representations to the prefecture, calling on it to give more job opportunities to local businesses. In the prefectural assembly, the same requests were also made by Japanese Communist Party representative Takeshima Ryoko.

“We need to further push the prefecture to improve the program as well as to encourage local cities, towns, and villages to adopt similar programs,” said Takeshima.

According to the Small and Medium Enterprise Agency’s research findings in FY 2011, among 343 municipalities which have more than 100,000 residents, 272 or 80% have introduced programs to increase job opportunities for local SMEs.