Shame and a growing crisis for Japan

MALCOLM GRAY June 8 1987

Shame and a growing crisis for Japan

MALCOLM GRAY June 8 1987

Shame and a growing crisis for Japan


Tokyo is a boomtown. Well-dressed patrons crowd the city's department stores and restaurants seven days a week—and the moneymaking prospects in such expanding fields as real estate and finance

lured 123,000 Japanese to the city last year alone. Still, that population shift dramatically underscores the contrast between the thriving serviceoriented capital and depressed industrialized regions in a country that remains heavily dependent on exporting its manufactured goods. But rising labor costs and the soaring yen have blunted the competitive edge of such earlier industrial mainstays as steel plants and electronics firms. And now factories in South Korea, Brazil and other countries can produce those goods more cheaply than their Japanese competitors. As a result, some economists predict that the country’s declining share of those markets will result in Japan’s unemployment rate doubling to six per cent by 1989.

Still, Japanese manufacturers in industries that range from electronics to automaking are attempting to offset the yen’s rise in value—by almost 50 per cent against the U.S. dollar since 1985—by opening new plants in such countries as Taiwan and Thailand. And according to Japanese government forecasts, that overseas transfer of Japan’s industrial core could result in as many as 800,000 Japanese workers losing their jobs during the next 13 years.

Japan’s current unemployment rate is low by western standards—Canada’s is three times as high. But the scourge of joblessness has already strained traditional employment practices under which an employee joined a company for life. Almost one-quarter of the 58-millionmember labor force has a lifetime guarantee of work. But increasingly frequent breaches of those unwritten contracts, as layoffs spread, have disrupted the lives of thousands of workers.

In an attempt to ease the growing unemployment crisis, the labor ministry conducts annual job retraining courses for workers in economically depressed regions. But some critics and students who have enrolled in those government-sponsored classes say that they place too much emphasis on developing the manual skills needed

in carpentry and construction jobs. Instead they say that government retraining centres should teach courses in computer programming and other high-tech skills that will be in demand in the future. Indeed, only 80 of the 168 students who took last year’s courses offered in the northern steelmaking centre of Muroran have succeeded in finding new jobs.

But assistance beyond job retraining is strictly limited. Japan’s unemployment insurance program provides up to 80 per cent of a worker’s final wage for 300 days—or a maximum of 360 days in depressed regions. But after that, unemployed Japanese have no right to further social assistance as only the handicapped or destitute parents raising children are eligible for welfare. In addition, many of the unemployed themselves say that they feel

deeply ashamed not to have a job.

Indeed, Atsuhiko Tateuchi, a Tokyo consultant who places fired white-collar workers in new positions, recalled that one of his clients concealed his dismissal from his two children and his neighbors for four months last year. But according to Tateuchi, the children became suspicious when they noticed that their father was returning home from the office at 6:30 p.m. instead of at midnight, as he normally did. Tateuchi’s solution for his client’s loss of face until he eventually found a new job as a sales director last August: receiving counselling each day at the employment agency, “from 9 a.m to 5 p.m., as if nothing had changed.” Because of those widespread social pressures, large Japanese operations, such as Osaka-based Matsushita Electric Industrial Co. Ltd., strive to avoid outright firings through the time-honored practice of transferring redundant employees to thriving branches and subsidiary companies. Managers in steelmaking, shipbuilding and other mature or declining industries have similar goals, and to that end Japan’s

five major steel companies are currently retraining unneeded steelworkers in new jobs as diverse as growing mushrooms and programming computers. But steel executives have had to resort to harsher methods as they streamline their industry, and spokesmen for the five firms say that they still must cut 44,000 permanent employees from their combined force of

150.000 workers by 1991.

Nippon Steel Corp. of Tokyo alone plans to close down five of 12 blast furnaces across the country and reduce its workforce to 27,000 members from

46.000 by that date. Retrenchment by the world’s largest steelmaker is expected to have a particularly devastating effect on Kamaishi, a Pacific coast city of about 60,000 inhabitants, 450 km north of Tokyo. That is because Nippon is the largest employer in a city that is the birthplace of modern Japanese steelmaking. There, in 1857 Japanese nationalist Takato Oshima produced the gunmetal for cannons that were intended to protect the country against western armed forces equipped with modern weapons. Only four years earlier the Japanese emperor had to bow to U.S. demands and open his country to trade after Commodore Matthew Perry warned him that refusal would result in his U.S. fleet bombarding Tokyo.

Top Nippon executives journeyed from Tokyo last October in order to participate in celebrations marking the establishment of the country’s first private steel mill in Kamaishi in 1886. But only three days after Nippon chairman Yutaka Takeda lauded four

generations of the town’s steelworkers for their service to the industry, company spokesmen announced that they would shut down the Kamaishi plant’s blast furnace next year and reduce its 2,300member workforce to 800 employees. Nippon officials said that they expected to attain that cutback in part through older workers retiring.

But they stressed that the company could not guarantee transfers to other company jobs for 1,100 younger workers.

That announcement sparked feelings of anger and betrayal

throughout a community noted for its loyal and productive workforce. And some of that resentment was directed against the town’s mayor last April, when he lost a bid for re-election after 12 years in office. Many of the voters recalled that he had initially described the pending furnace closure as “a matter of no great importance.” In fact, city officials calculate that shutting down the furnace will also cause the loss of another 260 jobs at a nearby iron-ore mine and eliminate work for

2,000 subcontractors and 4,500 employees in restaurants, stores and other local service operations. Declared municipal spokesman Keiichi Maekawa: “Closure would return Kamaishi to what it was 100 years ago—just a village.”

Meanwhile, 1,280 km to the southwest, residents on the small island of Innoshima have already experienced the effects of a similar retrenchment policy. That is because the giant firm Hitachi Zosen Corp. has slashed its payroll at its shipbuilding yard on the island: only 850 employees remain from a 3,300-member workforce two years ago. For Mamoru Murakami, 53, that massive reduction has resulted in a dramatic job change after 30 years of service. Murakami is still on the company payroll, but instead of working as a marine architect he is now raising thousands of flounders for market as the president of a four-member fishfarming operation. Said Murakami: “My wife complains that I spend all my time studying fish. But the ship industry is in such a state, while fisheries has some kind of future. So I took the job even though it wasn’t what I wanted.”

By contrast, another marine architect with 22 years’ service at the shipyard chose his outright release over a transfer to a new Hitachi subsidiary,

formed to teach ship-designing skills to students in underdeveloped countries. Declared 42-year-old Yukiharu Miyaji: “Hitachi set up those small companies merely to keep people employed. After three or four years they will probably go bankrupt, and if I am out of a job at that age it will be that much harder to be hired.” Miyaji refers to his joblessness as “a vacation from work” and uses his unwanted leisure time to take his dog for walks and coach a local baseball team. But he too is considering returning to the workforce in a drastically different role: as a real estate agent. And as newly rich Japan struggles to produce competitively priced goods for the world’s markets, increasing numbers of Japanese workers will likely make similarly wrenching job transitions.