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Friday, 31 August, 2001, 13:45 GMT 14:45 UK
Sun sets on jobs for life
Jobseekers check offers at a Tokyo job placement office
Japan's 5% unemployment rate could be just the start
By BBC News Online's Jeremy Scott-Joynt

Twenty years ago, the job market in Japan was relatively simple.

A large minority of Japanese joined a corporation straight out of college, expecting to see pay and benefits rise with seniority.

Even after retirement - commonly taken not long after one's 50th birthday - a loyal employee might expect to set up a company supplying components or services to his former master.

Jobs for life. That was the implied promise.

Cutting back

But 10 years of economic pain are now putting paid to that cosy system.

Japan's giant corporations are laying off staff right, left and centre.

Toshiba, Kyocera, Hitachi and others have announced plans to cut over 60,000 jobs in the past month alone.

A Japanese man prays before the Tokyo's Kabuto shrine, seen as the guardian of commerce, on the day after Tokyo's Nikkei index hits a 17-year low
Praying for a recovery

The unemployment statistics make grim reading: Whereas from the 1950s through to the end of the 1980s the jobless rate rarely climbed above about 3%, on 28 August it hit a record high of 5%.

Even that figure may only be scratching the surface. The long supply chain is always squeezed first in Japan, and job losses further down the line do not necessarily show up in the headline numbers.

More to come

And according to Seijiro Takeshita, senior strategist at Mizuho International in London, the jobless count itself flatters the picture.

"You won't be counted as jobless unless you are actively looking for a job," he told BBC News Online.

"You can see that a lot of people don't have the energy or the ability to seek work."

Commuters in Shinjuku, one of Tokyo's main business districts
Some of these salarymen may no longer be heading for the office

Apart from the simple fact that jobs are thin on the ground, shame plays a part. Anecdotes abound of men in their forties and fifties leaving the house in the morning suited for work, then heading for the park or the job placement centre.

Sometimes their families do not even know that they have lost their job.

And more and more are finding life on the dole impossible to face. Suicide rates among middle-aged men are at all-time highs.

To make matters worse, industrial production is sliding and prices falling. There is no incentive for Japanese consumers to spend, and thus little to encourage companies to invest.

Structural shifts

In any case, most of them are in no position to do so.

In all the 'restructuring' going on at the moment, is there evidence that companies have finally realised the need to change? I don't think so

Seijiro Takeshita
Senior strategist, Mizuho International
Bad debts built up on risky property and share speculation in the high-spending 1980s - estimates go as high as 200,000bn yen (115bn; $169bn) - are crippling corporate Japan.

So there is little prospect that new jobs will appear in a hurry - not least, says Mr Takeshita, because Japanese companies have yet to face up to the role their own structures have played in exacerbating the situation.

"Even if the government tries to do anything, the structures are far too rigid to cope," he said.

Pay by seniority is still the rule, and intellectual capital (training, ability to do the job, and general know-how) are intimately linked to individual companies.

Unlike in many countries, job skills are not seen as transferable.

"In all the 'restructuring' going on at the moment, is there evidence that companies have finally realised this?

This hollowing-out is happening at a rapid pace... We will strive to ensure a stronger safety net, but it's possible that if domestic companies slim down too fast, it may be insufficient

Masajuro Shiokawa
Japanese finance minister

"I don't think so. This is not organic change. This is a bandage remedy, not true reform. It may be reducing the size of companies, but it's not changing the organisations."

It could take as much as another five years for the need for root-and-branch change to sink in, Mr Takeshita said.


And the government's actions do seem to make little difference.

The ruling coalition, led by charismatic Liberal Democratic Party (LDP) prime minister Junichiro Koizumi, has activated a six-month plan developed in 1999 to deal with long-term unemployment, offering a 300,000 yen financial incentive to firms that take on older workers.

Plans for a supplementary budget - a string of which has pushed Japan's national debt to record levels - could exceed the 30,000bn yen limit set by Mr Koizumi. But when published in September it will almost certainly include wide-ranging support measures for the jobless.

The government is even building seven new homeless shelters on top of the current five, which in total will house up to 2,700 people from families who lose their homes for up to six months.

A businessman walks past rough sleepers outside Shinbashi railway station in Tokyo
Homelessness, once a rarity, is rising fast

But leaders are worried, not least because increasing numbers of the job cuts are at home, rather than abroad.

Of the 14,700 posts Hitachi intends to abolish, 10,000 are in Japan. Toshiba is getting rid of 17,000 jobs at home and only 2,000 elsewhere.

"I understand this trend is inevitable due to globalisation, increasing global competition and the spreading of technological advancement around the world," said Finance Minister, Masajuro Shiokawa, on 30 August.

"But this hollowing-out is happening at a rapid pace... We will strive to ensure a stronger safety net, but it's possible that if domestic companies slim down too fast, it may be insufficient."

Keisuke Tsumoto, Schroders Investment Management
"IT companies are drastically changing their restructuring plans"
See also:

31 Aug 01 | Business
Hitachi cuts 14,700 jobs
31 Aug 01 | Business
Japanese prices spiral downwards
27 Aug 01 | Business
Toshiba cuts 18,800 jobs
27 Aug 01 | Business
Japan 'aid' for unemployed?
26 Aug 01 | Business
Hitachi 'joins job cutting spree'
25 Aug 01 | Business
Toshiba 'to axe 20,000 jobs'
20 Aug 01 | Business
Fujitsu to cut 16,400 jobs
27 Jul 01 | Business
Fujitsu and NEC profits slide
27 Jul 01 | Scotland
NEC confirms job cuts
26 Jul 01 | Business
Job cuts top 50,000
11 Jul 01 | Business
Japan's economy falters
20 Feb 01 | Business
Tech slump spreads to Japan
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