Japanese PM Shinzo Abe faces labour market's challenge

Economic reforms aimed at reanimating Japan’s sagging economy will be top of premier Shinzo Abe’s to-do list after his weekend victory in upper house polls tightened his grip on power.

With control over both legislative chambers, Abe now has a strengthened hand to face down vested interests in his often factional Liberal Democratic Party at a time when the Japanese labour market is ripe for change.

But where one camp sees a need for greater job security in a country of nervous and spendthrift consumers, another says too much worker protection is the root of much of the malaise that has beset Japan for the last two decades.

“When I heard Mr Abe talking about ‘decent work’, I thought it was a joke,” said Makoto Kawazoe, an official of the General Union of Young Workers in Tokyo.

“What he’s trying to do is exactly the opposite of decent work, something that will increase insecurity among workers,” he said.

As Japan’s economy roared to life after World War II, its companies struck a bargain with their staff: you commit to working hard for us and we will give you a job until retirement.

Lifetime employment served Japan well; it produced wealth, powered growth and provided a large measure of order in a place that prizes stability and harmony.

A raft of protections grew up around the concept, guaranteeing the rights of workers.

But, say economists, since Japan’s economy stopped its upward march at the end of the 1980s, firms that are no longer world beaters have been left bloated with un-needed staff.

“In a greying society where demand for goods is weak, Japan needs to shift its industry from manufacturing to services,” said Yoshimasa Maruyama, chief economist at major trading house Itochu.

However, under current sclerotic labour rules, it is hard to shift workers, he said.

Abe says the key is helping firms make the transition.

“We will provide money for job training that would prompt greater labour mobility from mature sectors into growing sectors,” Abe told journalists earlier this month.

Advocates of a labour rules rejig say as well as benefiting companies, this will be a boon for workers.

They say that if a company knows it has some wiggle room once someone is in a job, they will be more likely to take on new employees on a permanent basis, reversing the trend of recent decades.

Temporary workers now account for around 35 per cent of the entire national workforce.

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