More Cracks In Japan's Social Contract

Strapped companies turn more and more to part-time workers

Sixtysomething Tamae Sugawara is a rare breed at Nippon Telegraph & Telephone Corp. For the past eight years, she has been an exception in the directory assistance department where most of her co-workers are full-time employees. But soon, part-time workers like her will be the rule. To slash costs, NTT has decided that by March of 1999, all of its 14,500 telephone operators will be part-timers. There will be no new hires, and those remaining will get transferred, perhaps to less desirable jobs. "Our salaries are cheap," says Sugawara. "Japan is starting to go the way of the U.S."

The trend signals a new age for Japanese labor: one without job security. With Japan's economy stuck in low gear, corporations are finding they must reduce their workforces in order to stay competitive. But to avoid the public criticism that would come from massive layoffs--a breaking of Japan's social contract--they are saving money by hiring more short-term contract employees. This wave of part-timers, most of them female, is supporting Japan's fragile recovery.

QUICK FIX. The rush is on. Last year, Japan set a record for the highest part-time employment in its modern history--nearly 20% of its workforce, or 10 million people working as typists, receptionists, and construction workers. And the government is bracing for a new record this year (chart). Almost half of all Japanese companies employ part-time workers, and increasing numbers of workers are close to the 35-hour-a-week cutoff for part-time work, according to Shoken Ito, senior economist at Japan's LTCB Research Institute.

The reason is simple: Part-time workers save companies on pension plans and vacations--not to mention salaries. Japan Airlines Co., for example, has been hiring more flight attendants on annual contracts who also double as ground staff. The contract workers earn roughly $2,000 a month in their first year with JAL, while full-fledged attendants at entry level make $3,679. JAL, one of the few companies willing to admit its increasing use of part-timers, could not estimate its potential savings.

Still, not everyone wants to be part of a quick fix for Japan's corporations. Younger workers who enjoy the flexibility of part-time work now are concerned about the long term. "The work only lasts as long as the contract, and that makes me feel a little uneasy," says Junko Tsuchiya, 39, whose job as a secretary is only guaranteed through December. Others worry about career growth. University of Massachusetts graduate Kazumi Saito, 27, is looking for a permanent job after having worked as a temporary sales assistant. "I want to work full time so that I can see a path for my future," says Saito. "Someday I'd like to be a saleswoman myself."

Yet part-time work is becoming more professional. The traditional image of part-time workers in Japan has been of housewives who helped out on a seasonal basis at a local store or along an assembly line to earn a little extra cash. But now, temporary employment agencies are booming, and their revenues swelled fivefold since 1985 to reach $8.3 billion in 1995. Leading temp agency Pasona Inc. has registered 140,000 temporary workers this year in positions from bank clerks to computer instructors, up from 120,000 last year.

The government has helped the trend by gradually easing restrictions on the types of positions that can be held by temporary staff. Until recently, temps were restricted to 16 types of jobs that fell generally into the categories of specialists or clerical workers. That list was broadened last December to include 10 more types of positions as diverse as office automation instructors, telemarketers, advertising designers, and sales engineers. Temp agencies believe more deregulation will follow. "We think restrictions will be eased to permit the hiring of temporary workers as marketing and sales personnel as early as next year," says Muneaki Ueda, Pasona's executive vice-president. "When that happens, our market should increase by three times."

There are still kinks in the system. Occasionally, part-time employees have received less money than they had agreed to because of vague contracts. While Japan's labor unions are concerned about the pay packages, they're not bothered by the growing phenomenon of part-time workers replacing full-timers, in part because the temp trend affects mostly women. And the workers themselves acknowledge that part-time work is better than no work at all. Especially if there's more and more of it to go around.