• Home
• About/Contact
• Economic Reports
• Research
• Advertising

• Business
• Economics
• Reports
• Finance
• Marketing
• Politics
• Real Estate
• Services
• Retail
• Tech

Subscribe

Japan’s labor force: Lower bonuses, more part time workers

The Ministry of Health, Labor and Welfare’s most recent report on the state of Japan’s labor force is not encouraging. According to the report, 6.2% of Japan’s workers are satisfied with their current pace of pay increase, compared to 15.7% in 1990. We also see that since 2001, the proportion of Japan’s workforce categorized as part-time workers has increased from 38% to 44%.

Those reporting seeing an increase in salary fell from 23.7% in 1978 to 6.2% in 2005, while those who found their jobs to be meaningful fell from 30.5% to 16.6% over the same time.

For those workers who are lucky enough to be on salaried status, this summer’s average bonus will be down on the average for the first time in six years, though the decline is only 0.08% to 909,519 yen. In the food industry, however, bonuses are projected to fall 5.38% to 781,057 yen. This might give something of a clue as to how food companies are managing to avoid passing on the full costs of increased production directly to consumers in the form of higher prices.

Bonuses appear to be split right along the manufacturing line. Those working at manufacturing firms will see an average 0.2% rise in their bonus, to 932,782 yen. On the other hand, those working at non-manufacturing firms will see an average 1.51% fall, to 840,098 yen.

The ministry also said that merit-based wage systems are contributing to an erosion in worker satisfaction, as they are often being used by firms as a cost-cutting measure. The ministry would like to see more transparent evaluation systems as well as the limiting of merit-based pay systems to those sectors in which it helps to increase worker satisfaction.

The government is also planning to push small and medium sized firms into adopting corporate pension plans. Currently, some 32,826 firms make use of the government’s qualified pension plan. Most of them are small and medium sized enterprises. The plan is set to be abolished in 2012.

Meanwhile, more trouble has been found at the ironically-named staffing company Goodwill Group. According to the Yomiuri, the firm booked 1 billion yen in hush money as an expense when making a 3 billion yen retirement payoff to the president of Crystal, a company it acquired in 2006.

Japan’s June bankruptcies soar 11.7% - liabilities up 56.2%

Although the number of bankruptcies in Japan had decreased by 1.5% May, that good news has been fully tempered by a string of negative data on June and first-half 2008 bankruptcy numbers. First, according to Tokyo Shoko Research, 1,324 firms went bust in Japan in June, which was an 11.7% rise against June 2007. The total liability left behind from these bankruptcies stood at 492 billion yen, which was a whopping 56.2% higher than a year ago.

Another firm, Teikoku Databank, put the number of bankruptcies in June at 1,065, for an 8.1% rise year-on-year. According to Teikoku, liabilities soared 40.3% to 472 billion yen. Both TSR and Teikoku include bankruptcies involving debts of 10 million yen or more, while Teikoku only counts those cases which are administered by a bankruptcy court. Teikoku had registered a fall of 1.9% in May.

For the first half of 2008, TSR announced that 7,544 firms had declared bankruptcy, which was a 6.9% increase on the previous year. Liabilities were up 19.8% to 3.20 trillion yen. On the other hand, Teikoku’s data saw a rise of 11.6% to 6,022 cases in the first half of 2008. The total liabilities of these cases was up 17.4% to 3.02 trillion yen.

Looking at TSR’s June data, we see the construction industry leading the way with 389 bankruptcies for about 105 billion yen. Following that was service industry (254), wholesalers (198), manufacturing (185), retail (151), real estate (52), IT (45), transportation (39), finance and insurance (8), and agriculture (3).

Although the real estate industry saw far fewer bankruptcies than the leading sectors, real estate led in terms of overall liabilities in June, with 142 billion yen left behind. In part, this is being blamed on tighter bank lending to real estate development firms (even as bank lending looks to be growing slightly), which has led to downward pressure on property values. More on this to follow.

Amidst rising prices, might foodcrime be the next trend?

After all the hoopla surrounding food safety and labeling in Japan over the past year, and the subsequent hand-wringing over higher prices, especially of dairy products and grains, it seems just about time for a new trend to come in: Foodcrime.

To set up some background, first we need to keep in mind that wholesale wheat prices have nearly doubled in Japan in the past year. According to data released by the Bank of Japan yesterday, the rising price of wheat and wheat flour imports continue to contribute to Japan’s rising wholesale prices. Products such as noodles and spaghetti, which are made from wheat, have seen consumer price increases over 10% over the past months.

Japan is certainly not slowing down in its importation of wheat. According to figures released by the USDA this morning, the size of Japan’s wheat purchase from the US increased to 84,200 metric tons last month, ranking third behind Nigeria and Chile. This accounts for just over 13% of the wheat exported by the US in that time (on a side note, Japan purchased 33.6% of the corn that the US put up for export sale, though Japan did buy less corn than South Korea).

On the domestic front, a 30% price hike has been approved for wheat sales for the 2009 crop.

back to the story: this morning, the Mainichi reported that 2 tons of flour had been stolen from a wholesale company’s warehouse in Saitama. Although we’re not told if this was wheat flour, or whether it was imported or domestic in origin (which would be more likely), we do know that the flour was valued at 270,000 yen and that it was stolen with the firm’s own truck, which was returned to the warehouse, showing an increase of only 8 kilometers on its odometer.

This is hardly the first time food has been stolen in Japan, but we’re forced to wonder if the current environment of rising prices mixed with the guaranteed rise of prices for next year’s crop won’t lead to an increase in such incidents. If nothing else, more cases of mislabeled food should be expected.

Japanese government considering reforms to temporary employment laws

The Japanese government is currently discussing a bill that would prohibit temporary staff companies from dispatching day laborers, as well as require firms to tell workers about the commissions that are deducted from their wages. Of course, a cap on those commissions is not being considered (and I agree with this), but given what we saw happening at temp firms such as Goodwill, it’s obvious that more transparency is needed in this realm.

The Asahi has done a writeup on this proposed law in English at their website. However, what originally caught my eye was a post entitled simply “Temp workers” by Roy Berman over at the Mutantfrog Travelogue. Roy’s post gives a clear insight to the plight of Japan’s temporary, part-time and contract workers.

Since 1986, the trend has clearly been to relax labor laws in order to allow firms to hire more and more of their workforce as non-salaried workers. In 2004, the trend seemed to have peaked as the government allowed even positions in the manufacturing industry to be filled with temporary workers on contracts up to three years. Reversing this trend will not be easy, but trying to do so might gain some populist support for certain politicians in an forthcoming election cycle that promises to bring social issues to the forefront.

Retail Roundup: Seiyu announces more changes to come

Let’s start by looking at Seiyu, a firm that has been much discussed on this website over the past year or so. According to the Nikkei, Seiyu intends to renovate about 90 of its locations over the coming two years, at a cost of over 30 billion yen.

Seiyu lost about 20 billion yen in fiscal 2007 and has been in the red for six straight years. The Nikkei tells us that Seiyu intends to sell more Wal-Mart brand casual clothing at its shops, despite the fact that clothing sales at supermarkets continues to fall - they were down 8.6% in May alone. Seiyu also intends to link up further with Wal-Mart in terms of sourcing products from China. Although this might make economic sense, it also bucks the trend of consumer mistrust of goods produced in China.

Finally, we see that Seiyu intends to carry an “expanded lineup” of flat-panel TVs. Again, supermarkets are generally selling less of this kind of stuff, and it’s hard to imagine Seiyu outpricing, let alone out-marketing the Yodabashi, Bic Cameras and Kojima Denki shops in this area.

Finally, sales per square meter continue to decline at Japan’s supermarkets. Yet again, Seiyu intends to focus its renovation efforts on its larger locations, with 6,000 to 10,000 square meters of shop space.

200,000 of Japan’s fishing vessels to strike for public awareness of increased fuel costs on July 15

According to yesterday’s Asahi Shimbun, Japan’s National Federation of Fisheries Cooperatives is planning a one-day shutdown of fishing operations on July 15. The paper reports that 16 fishing groups with a total of 200,000 vessels will stay in port on that day in order to raise public awareness of the difficulties faced by the fisheries industry in the current economic climate. The group claims that the current price of 95,300 yen per kiloliter is 2.4 times greater than it was four years ago.

In the article, Kuniyuki Miyahara, who runs the National Foundation of Fisheries Cooperatives, says that the spike in fuel prices has caused the nation’s fishing groups to exhaust all means of holding down costs by themselves. He would like for the government to start subsidizing fuel costs for fishing vessels.

Will this really raise public opinion? Last month we saw a one-day stoppage of 3,000 squid fishing vessels. Prices briefly shot up 30% and then returned to normal. The public simply ignored squid for a few days. Is a one-day stoppage of fishing vessels going to do anything to make the public call for subsidized fuel for fishing vessels?

If the action fails to help raise awareness, Mr Miyahara told the Asahi that spending a second day in port is not out of the question.

Japan to commence emergency butter imports from October

A post discussing Japan’s recent importation of whale meat from Iceland published back on June 4 ended with the line, “Seriously, we could use some butter.”

The Ministry of Agriculture has listened. Today’s Nikkei is reporting that Japan will import about 5000 tons of butter this autumn, from Europe and other yet unspecified markets. The plan is to get the butter into Japan sometime around October, when it is believed that shortages will be the most acute.

In case you’re worried over whether The Ministry of Agriculture will allow the butter to be imported under a free market, fear not: the Agriculture and Livestock Industries Corporation, an entity controlled by the ministry itself, will be handling the import shipments.

Ex-Nova President Sahashi arrested on embezzlement charges

Asahi is reporting that former Nova President Nozomu Sahashi has been arrested on charges of embezzlement, after having initially been brought in for voluntary questioning on Tuesday morning.

Since this arrest was so predictable, so obviously in the making for such a long time (and possibly only the tip of the iceberg), it can’t be good PR for the firm that decided to buy the rights to Nova’s name - and it doesn’t look like the negative PR is going to stop anytime soon. The decision to keep the firm’s muck-dragged name and not go through some sort of re-branding strategy baffles the mind.

As letsjapan.org is following these events in more detail, we recommend anyone following the case to head over there to read up.

HT to Shawn at letsjapan.org and JEN reader trev.

Japan’s steelmakers agree to 100% price hike for Australian iron ore

One day after China’s Baosteel Group agreed to pay up to 97% more for Australian iron ore, Nippon Steel and other Japanese steelmakers are set to accept a 100% jump in prices for the same iron ore. This follows a 65% hike in prices for Brazilian iron ore that was also recently agreed to. 60% of Japan’s iron ore for steel comes from Australia.

What can we expect to follow? It seems unlikely that Nippon Steel - Japan’s largest steelmaker - and its four main domestic rivals (JFE, Sumitomo Metal, Kobe Steel and Nisshin Steel) will be able to get away with not passing costs on to customers. This could put a pinch on automakers who have already felt the sting of increased steel prices over the past year. In the fourth quarter of 2007, the spot-market price for hot-rolled sheet steel was at $535 a ton. Since then, that price has shot up to $1,035.

Although this may hurt Japanese automakers domestically for the time being, as customers put off purchases of cars until prices come back down, it could be a boon for Japanese automakers in the US market, where they are in better position to sell smaller, more fuel-efficient, “steel friendly” autos.

Japan looking for 20 million foreign tourists annually by 2020

A very short piece in Friday’s Nikkei tells us that the Japanese government’s tourism promotion panel has set a goal of having 20 million foreign tourists visit Japan each year by 2020. In order to explore potential methods for meeting this goal, the panel will set up a working group by the end of July.

The panel’s previously stated goal of having 10 million tourists visit Japan each year by 2010 is still posted on their website. In 2007, 8.35 million tourists visit Japan. The jump to 20 million would be a 140% increase. There are also supposed to be 60,000 new landing slots opening up for international flights at Narita and Haneda airports over the coming few years. Might more new landing slots, and perhaps runways, be on the way?

The Nikkei’s piece ends with this short paragraph:

One idea likely to be considered is making traffic signs and displays at tourist sites available in several languages, as well as employing more multilingual tour guides.

Not exactly revolutionary. Hopefully the panel itself will have some ideas better than the low bar being set here.

Next Page »

Copyright © 2006-2008 Japan Economy News

Disclaimer