TT-779 -- Labor Law Changes to Create New Underclass? E-biz news from Japan.

An Insider's comments on Japan's high tech business world
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, November 02, 2014, Issue No. 779


- What's New -- Labor Law Changes to Create New Underclass?
- News -- Yakimo trucks a fire hazard?
- Web Content/Tech Job Vacancies -- Community Manager position
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Koishikawa Garden in Tokyo & Dai Onsen in Iwate
- News Credits

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As we think has become obvious, Japan is undergoing a massive labor
sea-change, and is creating two classes of workers -- the privileged
and the rest. The events spurring these changes are both oblique, such
as the transfer of wealth from the general public to the government
and those close to it (Abenomics) and the establishment of special
zones that will coincidentally negate traditional labor laws, as well
as more obvious ones, such as actual legislation to let employers fire
their staff at will.

Whether these changes are good or bad depends on where you are in the
food system. If you have investment assets and savings, a full-time
job with an exporting firm, or are employing others, then the economic
and legal ground shift is probably going to be good for you. If you're
a lower-paid but full-time Taro in a factory, then cost of living will
go up and you'll be fighting to stay on the good side of your
employer. At the bottom of the hierarchy, if you're an irregular
worker in a service industry -- then mostly it's going to be bad news:
low wages, uncertain tenure, and perpetually being an outsider.

We see a lot of online commentary about Abe's policies and how it's
not all bad. His supporters say that as the nation's leader at least
he is finally facing the hard choices and is accelerating the
necessary legislative and social change. As an example, they point out
the low unemployment rate and how the call to get married women back
into employment is finally being heeded. Certainly it is true that the
unemployment rate has fallen to a 6-year low recently (3.9%). However,
a closer look at the stats show that most of the new jobs are
irregular and that they pay far less than those for regular workers.
This is the main reason why, even as unemployment falls, the
inflation-adjusted take-home wages of Japanese workers is still going
down. According to a labor ministry survey last year, the average
full-time worker earned JPY314,700 monthly, while an irregular female
worker earned just JPY173,900. (Male irregulars earned around

[Continued below...]

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[...Article continues]

From the numbers and the flood of new legislation in the works, our
guess is that the government has decided it needs to have an
underclass in Japan, presumably to fight back against cheap-labor
competition elsewhere in Asia, and thus the stance has become
unofficial policy. Sure on the surface, there are a million
defendable, logical reasons as to why flexible labor is needed, but in
the end maybe it simply comes down to a shrinking pie and the need by
the elite to preserve their position. In the West we've had a "working
class" for generations. It's called market competition (for resources)
and is nothing new. But for the "we're all in it together" middle
class Japanese, the appearance of this income and rights gap is so
shocking that most people pretend it is not happening.

As an example of the changes afoot, this last week, the Diet started
debating a bill regarding the temp staffing sector, the biggest part
of the "irregular worker" sector -- a disadvantaged group that, by the
way, 57.5% of female workers are part of. The change being debated is
whether to remove the 3-year limit on temporary jobs when someone is
dispatched by a temp staffing company to an end employer. The new law
will create a new type of worker category, where they can be temp
staffed indefinitely, so long as they don't work the same exact job
for more than 3 years.

The time-limited rule was originally introduced to encourage end
employers to extend full-time jobs to promising temps. However, the
reality is that most temps have simply been fired or reassigned when
their 3 years was up, depriving them of any career advancement and
creating the exact opposite effect desired by the law. So in one way,
while the new law will officially introduce a permanent irregular
worker underclass, at least it does address the reality of the

Another set of legal changes that will redefine the work sector are to
be found in the various interpretations/rules of the new special zones
laws. In Osaka for example, they plan to introduce a new "Special
Challenge" zone, whereby workers will sign contracts that are
non-compliant with the Labor Law and which will allow the employer to
fire the employee at will. Theoretically this new type of contract
will only apply to higher paid workers, not low-income ones, but many
suspect it is the thin edge of the wedge to break down the current
inflexible employment rules. We tend to agree that it's the thin edge.
The Special Zones are probably both trial policy balloons and trojan
horses, created to test and condition public acceptance of the new
(and harsh) reality.

There will apparently also be a new special zone rule which will
remove the requirement of companies to hire on a temp worker as a
full-timer if they have been with the company for five years. The new
rule is contingent on the employing companies having at least 30% of
their workforce as foreigners, so either it is targeted at foreign
companies, or more likely the bureaucrats think that foreign firms are
far enough removed from mainstream Japanese ones that it is a safe
trial balloon. One wonders what other "experiments" will be tested on
foreign firms before they hit the mainstream. It's certainly
convenient that lack of labor force flexibility has been a long-time
complaint by many foreign chambers of commerce.

That there is a ground shift in labor policy and employer benefits
going on is undeniable, but what is interesting is why this is
happening. Is it because as we mentioned earlier the elite is
conducting a callous societal reorganization as the nation's asset
base starts to dwindle? Or is there a deeper more meaningful intent,
such as causing sufficient pressure on a large enough number of
workers, to cause these breadwinners to realize that they have to take
on more risk and more responsibility for their own livelihoods?

Indeed, this could be a chapter right out of the book "Who Moved My
Cheese?" If so, and if intentional social engineering, then we predict
these changes will accelerate the end of Japan's tradition of
government-driven paternal benevolence to workers, and instead squeeze
up a new round of competitive workers and companies who can compete

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+++ NEWS

- Yakimo trucks a fire hazard?
- QQE2 -- amping up Abenomics
- Bureaucracy hobbles rebuilding in Tohoku
- Record Japanese investment flows to SE Asia
- DoCoMo has another dismal year

=> Yakimo trucks a fire hazard?

Fun article by Tokyo-based Australian motoring writer, Peter Lyon, on
the potential explosion hazard of yakimo trucks which sell baked sweet
potato snacks cooked on open-air fired ovens on the back of small
trucks. Lyon makes the point that in rules-obsessed Japan, everyone
seems to have forgotten to regulate the use of open ovens operated
just centimeters away from vehicle gas tanks. His research shows that
the reason is somewhat pragmatic -- in that yes it's unsafe, but no
one wants to stop this traditional method of hawking food. ***Ed: At
least, as Lyon found, there doesn't seem to be a recorded instance
(ever) of a yakimo truck exploding while vending snacks.** (Source: TT
commentary from, Oct 31, 2014)

=> QQE2 -- amping up Abenomics

On Friday, the Bank of Japan surprised the markets by doubling down on
its quantitative easing, increasing the annual monetary base from the
current JPY60trn to an unprecedented JPY70trn-JPY80trn. This is almost
as much as the U.S. Fed was issuing with QE3, but with an economy of
twice the size. Analysts see the increase in money being created as an
admission by the BOJ that Abenomics is not working and that more gas
is needed. As well as creating more money supply, the BOJ also said
that it would start buying certain assets such as Exchange-traded
funds and real estate investment trusts. (Source: TT commentary from, Oct 31, 2014)

=> Bureaucracy hobbles rebuilding in Tohoku

Very good Reuters report on the plight of the tens of thousands of
Tohoku homeless who are stranded in inadequate temporary housing 3
years after the Tohoku earthquake because of inadequate commitment to
get them into permanent housing. As the article illustrates with
interviews, many elderly people are suffering depression and worse
after living in cramped temporary refugee huts for 40+ months. The
causes of delay in getting permanent housing built is put down to 3
factors: competition for building laborers from Tokyo (due to the
Olympics), rapidly rising prices of building materials due to the
falling yen, and the inability to secure suitable land because of
inadequate property records and lack of administration staff. ***Ed:
All circumventable problems, but vexing to desk-bound bureaucrats in
Tokyo. Interesting to see how Abe stung the DPJ for their supposedly
slow response to the disaster, while no one these days seems to be
taking him to task for running years over schedule and billions over
budget. Is there a political opposition party in Japan these days?**
(Source: TT commentary from, Oct 31, 2014)

=> Record Japanese investment flows to SE Asia

Good update from the Economist, highlighting the tremendous surge of
investment that the Japanese are putting into Asia, doubling to
JPY2.3trn in 2013. This is mostly due to the Japanese government and
corporate pursuit of a China-plus-one strategy, where they are seeking
to decrease their exposure to China in the light of political issues
and rising costs and regulations there. As a result, China investment
fell by 40% in 2013. The article also infers that the Abe government's
desire to increase exports through a weakened yen is flawed by virtue
of the fact that, as Deutsche Bank estimated, outbound investment in
FY2012 "...reduced Japan's trade balance by as much as JPY16trn...
more than trade deficit that year of JPY7trn..." (Source: TT
commentary from, Nov 1, 2014)

=> DoCoMo has another dismal year

In the seven years since Softbank entered the mobile phone business,
it has risen to become a powerhouse in grabbing new subscribers. As a
result, the incumbent, NTT DoCoMo, has seen its overall market share
fall from 55% to 45%. The company has just announced that things are
unlikely to get better soon, as it offered guidance that it expects
its FY2014 operating profit to fall 23% from last year, to JPY630bn.
This is the lowest income forecast for the firm in the last 15 years.
The Nikkei reckons the fall is due to a botched pricing strategy on
smartphone accounts, where the company introduced compulsory flat rate
prices which cut power users' bills by half while scaring away
lightweight users who previously had cheaper plans. KDDI and Softbank
have been watching DoCoMo's pricing strategy from the sidelines and
have since adeptly modified out the worst of the leveling effects that
DoCoMo has suffered from. (Source: TT commentary from,
Nov 1, 2014)

NOTE: Broken links
Some online news sources remove their articles after just a few days
of posting them, thus breaking our links -- we apologize for the



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=> No feedback or corrections this week.



=> Koishikawa Botanical Garden, Tokyo
A sylvan paradise

The Koishikawa Botanical Garden is located right in the middle of
central Tokyo. It is run by the University of Tokyo and started out as
a medicinal herb garden in 1684 during the Tokugawa Shogunate. Thus,
it is the oldest in Japan. I have been living in Japan for about 12
years now and had never heard of this place! It is not on the beaten
path at all. I basically just discovered it by looking at an old Tokyo
street atlas then on Google Maps looking for someplace interesting to
take photos.

The garden is basically divided into two. The lower half is dominated
by ornamental ponds and bushes with open spaces that allow you to take
in the beauty. When I was there, there were many people drawing and
painting the scenery. The upper half is on a hill and is mostly
forested with many types of trees and lots of shade - very refreshing
during the summer.

=> Hot Spring Experience in Dai Onsen, Iwate-ken
Over 1200 years of history

Hanamaki in Iwate is well known for its hot springs (onsen). I don't
know exactly how many there are, but from living here for nearly 10
years I would guess over 50 easily. It is divided by areas, Hanamaki
hot springs, Ozawa hot springs, Namari hot springs, Kanaya hot springs
and a number of others. Many of those areas include several hotels;
also, the facilities vary widely from Western style to ryokans
(Japanese-style inn) and even private hot springs.

A little history: Dai onsen has been used for bathing for over 1200
years, as you can see from the sign when you enter the village. It has
seen many changes over the years and most hotels go through regular
upgrades to maintain their appeal, but with the intent to retain the
quaint and charming atmosphere. Despite its small size you will find a
wide variety of accommodation -- ranging from rooms for budget
travellers through to pampered service in your own en suite onsen
bath. One thing that I like is, while walking around the village, I
can often see and smell the hot water overflowing in the drain; the
smell is unmistakable, a good sign if you want to experience a real



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