Japan's Lost Generation
Japan Inc. is back, but millions of young workers have been
left behind
By Ian Rowley and Kenji Hall, with Hiroko Tashiro in Tokyo
BusinessWeek
May 28, 2007
http://www.businessweek.com/magazine/content/07_22/b4036068.htm
By just about any measure, Japan is
back. The economy is growing at 2% a year, company profits are soaring, and land
prices are rising. Unemployment, meanwhile, is down to 4% as Japan Inc. has
started hiring again, with many college grads receiving multiple job offers.
Suddenly, the future looks bright for a new generation of Japanese.
Try telling that to Sadaaki Nehashi. The 31-year-old contract worker at delivery
company Yamato Transport makes just $1,100 a month sorting packages-about a
third of the average income for full-time employees in Japan. That’s a step up
from when he landed the job six years ago, though not enough for Nehashi to
afford a place of his own, so he lives at his parents' modest home in central
Tokyo. "I've had to lower my expectations a bit," says Nehashi, who graduated
from university with a degree in marine biology in 2000. "But if I had waited
around for a full-time job, I might have been
waiting forever."
If a rising tide lifts all boats, then why are millions of Japanese like Nehashi
treading water? There's an entire generation of people in their late 20s and
early 30s who came of age during Japan's so-called lost decade, a stretch of
economic stagnation that started to ease in 2003. Through that period, with
Japanese companies in retrenchment mode, young people faced what came to be
known as a "hiring ice age." Many settled for odd jobs or part-time work to make
ends meet but hoped eventually to find their way into regular employment with
the stars of corporate Japan. Instead, they're being
passed over in favor of new graduates-a serious problem in a country that still
values lifetime employment and frowns on midcareer job-hopping.
This group is called the "lost" or "suffering" generation. Some 3.3 million
Japanese aged 25 to 34 work as temps or contract employees-up from 1.5 million
10 years ago, according to the Ministry of Internal Affairs. These young people
have earned various less-than-desirable classifications in hierarchy-conscious
Japan. They might be keiyakushain,
or contract workers, typically lower-paid than full-time staff, with fewer
benefits and minimal job security. Or they're
hakenshain (people employed by temp agencies);
freeters (those who flit from one menial job to the next); or, at the bottom,
NEETS (an acronym coined in Britain that stands for not employed, in education,
or in training). The plight of such folks was the subject of a recent TV drama
called Haken no Hinkaku,
or Dignity of the Agency Worker,
the saga of a twentysomething temp who must put up with the snobbery of
full-time colleagues despite her long list of qualifications.
SKILLS SHORTAGE
With Japan's economy on the mend, you'd expect the ranks of
the underemployed to shrink fast. But the number of agency and contract workers
continues to swell. To spur employment during the lean years, Tokyo made it
easier for companies to add temporary employees. Now, even with fat times back,
big employers are reluctant to take those people on permanently.
In their defense, Japanese companies say people from the lost generation aren't
equipped to move into the middle rungs of the corporate world. "No matter how
much companies want to hire from among this pool, many in their early 30s just
don't have the needed skills," says Toshihiro Nagahama, senior economist at
Dai-Ichi Life Research Institute. Employers also fear that freeters who have
drifted from one job to another will be less loyal than ambitious grads hoping
to work their way up through the ranks.
These millions of young people face a life that's vastly different from that of
their parents. For Japan's postwar baby boomers, jobs provided certainty,
spurring them to partner and procreate. Faced with insecurity, many of Japan's
twenty- and thirtysomethings are doing neither. The number of marriages fell to
714,000 in 2005 from 1 million-plus in the 1970s. That could exacerbate a drop
in Japan's birthrate, already among the lowest in the developed world. "You
don't get maternity pay, and you have no job to return to-that makes it hard,"
says Masako Ikeda, a 30-year-old who works at
a video game company in Tokyo but is employed by a job agency.
The suffering generation also suffers from more mental illness. Workers in their
30s accounted for 61% of all cases of depression, stress, and work-related
mental disabilities last year, up from 42% in 2002, according to a study by the
Japan Productivity Center for Socio-Economic Development. "Because of the
anxiety stemming from job insecurity, it is quite natural that these people have
problems," says Susumu Oda, the psychiatrist in charge of the survey.
The fate of the likes of Nehashi and Ikeda worries Japan's economists. If
members of the lost generation don't land higher-paying, salaried jobs, they
won't have much pocket change to spend or funds to sock away for their old age.
Credit Suisse Group (CS ) estimates these people could saddle Japan's taxpayers
with $67 billion a year in retirement and health-care costs if their number
remains at current levels for the next three decades.
Tokyo is waking up to the problem. Last year it set targets
for paring the ranks of the underemployed, and it is offering companies $2,500
for each new hire of a freeter aged 25 to 34. And in September, the Health,
Labor & Welfare Ministry unveiled projects to help NEETS join the workforce. It
plans to double the number of NEET outreach centers, staffed by psychologists
and job counselors, to 50 this year and to increase training schools to 40 from
the current 25. "The government is finally realizing that it has a crisis on its
hands," says Yosaku Sato, director of the Bunka Gakushu Cooperative Network, a
nonprofit based on the outskirts of Tokyo that receives $200,000 a year in
public funds to run training and placement services targeted at young people.
Some companies are pitching in, too.
Toyota Motor Corp. (TM ), which has tripled the number of workers it employs on
short-term contracts to 10,000 since 2001, put 943 into permanent positions last
year and plans to convert 1,200 more by next March. Phone company Nippon
Telegraph & Telephone Corp. (NTT )and Fast Retailing Co., owner of the Uniqlo
clothing chain, have announced similar plans.
RANKLED RANKS
Meanwhile, some disgruntled Japanese contract workers are
pressing for change the old-fashioned way. Electronics giant Canon Inc. (CAJ )
is in the spotlight after Hideyuki Ohno, a 32-year-old temporary worker at the
company's Utsunomiya factory, near Tokyo, organized 17 other temps into a union.
His beef: After seven years on the job, he's still employed by an agency, not
Canon. Ohno, who earns $2,200 a month polishing glass lenses for steppers, the
complex machines used to make semiconductors, says he hasn't had a raise in five
years. "I heard my salary was nearly half of a regular
staffer of the same age, but I tried not to care about it too much," says the
father of two. Then Ohno read in a newspaper that Canon may have violated
employment law in not offering him a permanent position after his many years
with the company. That spurred him to file a complaint with the Labor Standards
Office.
Despite growing profits, Canon still relies heavily on outside help. In 2006, it
increased its ranks of contract employees by 19%, to 37,000; permanent staff
rose 4%, to 50,753. Canon declined to comment on Ohno's case but says it treats
temporary workers fairly and follows all labor laws.
Ohno says the dispute has opened a rift between
temps and full-timers at the plant where he works. After he launched his
lawsuit, tape was put on the floor to demarcate the line between permanent
employees and temps. "We used to all work together," says Ohno. "But now they
don't even say, 'Good morning.'"
