Japan turns to 'work-sharing' to avoid layoffs

[February 20, 2009]  HIRAKATA, Japan (AP) -- Yasuo Igarashi spends a lot of time these days on the jungle gym with his daughter, after his employer joined the growing ranks of Japanese companies adopting "work-sharing" to ride out the global slump.

Common in parts of Europe, work-sharing means slashing employees' pay and hours instead of firing people outright. Two or three people might share what previously was one person's job.

The idea is that employees are required to share the pain of coping with hard times while everyone gets to keep their jobs -- even if they're paid less.

Work-sharing is the latest buzzword in Japan Inc. Proponents say it's a good way to avoid American-style layoffs in a society that has long fostered lifetime employment. Toyota Motor Corp., Mazda Motor Corp., Toshiba Corp. and Fujitsu Inc., have all taken up some kind of work-sharing. Nissan Motor Co. and others are considering it.

Although critics say it's merely a fancy way to disguise wage cuts, the practice is winning powerful supporters here, including Fujio Mitarai, the head of the major business lobby Keidanren.

The government is now considering earmarking public money for companies that take up work-sharing to curb surging joblessness as the world's second-largest economy slides into what authorities are calling Japan's worst recession since World War II.

Companies big and small are expecting losses or drastically dwindling profits. Thousands of job cuts have been announced in recent weeks.

At ASKK Ltd., a precision machinery maker in Hirakata, central Japan, with 50 employees, that counts Panasonic Corp., Sharp Corp. and Toyota affiliates among its clients, no one has lost their job.

But Igarashi, a 30-year-old employee there, says his monthly pay has dropped by about 60,000 yen ($640) from the 270,000 yen ($2,900) he earned before work-sharing kicked in earlier this year.

Like many Japanese, Igarashi used to work six days a week and racked up a couple of hours overtime every day. Now he works only four days a week.

"It can't be helped," he said with a smile and a shrug as he toiled by his whirring machine. "I try to find things to do that don't cost money."

Igarashi has cut back on buying new clothes, and his wife looks for discount coupons for groceries. On the upside, he spends more time with his family, including going to the playground with his 3-year-old daughter.

A handful of Japanese companies experimented with work-sharing during a slowdown a decade ago, but this time more are adopting the practice than ever before as a way to survive the far more serious recession.

Work-sharing is catching on here for cultural, legal and practical reasons.

Many Japanese companies maintain the tradition of lifetime employment so work-sharing is a way to avoid firing regular workers. So far, most of the layoffs have involved contract workers, whose use became legal in recent years to skirt the regulations protecting full-time, salaried workers.

Labor laws tend to defend lifetime employment, usually requiring companies to provide hefty severance packages or risk facing lawsuits. If a company is in bankruptcy or losing money, it becomes easier legally to lay off workers.

At the same time, work-sharing allows companies to keep trained workers -- and bring them back up to full time quickly, once a recovery comes.

Work-sharing is routine in nations such as Germany and Switzerland, where the government provides unemployment benefits to make up for the income fall from lost hours, said Jenny Hunt, economics professor at McGill University in Montreal, Canada.

She said the practice is unlikely to be popular in the U.S., where companies prefer to "concentrate the misery in a few people," and simply reduce workers.

"The income loss is spread over more people, and fewer people suffer the depression associated with unemployment," Hunt said. "The economic advantage is that firms retain their workers who are experienced on the job."

Work-sharing is taking various forms in Japan, and some companies aren't even calling it that.

At Tourism Essentials Tokyo, a job-referral company, two flight attendants sent to an airline were asked to share one job, and one person's pay, to avoid one of them getting fired.

At Fujitsu's computer chip unit, the shifts at the 24-hour-running plants were increased from two shifts of 12 hours each to three 8-hour shifts so each worker had their hours and pay reduced by a third.

At auto plants across Japan, including Suzuki Motor Corp. and Mazda, assembly lines are grinding to a halt on some days, resulting in a type of work-sharing. Toyota Motor Corp. has announced it will carry out work-sharing at its U.S. plants but has not expanded that to Japan.

A recent survey by the Yomiuri newspaper found about half of its respondents, a nationwide sample of 1,077 people, support the idea of work-sharing, although they also expressed fears about lower pay.

Work-sharing is also finding acceptance in nearby South Korea.

A group of labor, management, civic groups and the government to tackle the financial crisis is preparing to soon announce measures that will include work-sharing as a key element, said Kim Soo-gon, a Ministry of Labor official.

The government plans subsidies for companies that maintain employment by sending workers on paid vacations and training programs, he said.

Work-sharing has created some problems, says Sadao Nagakura, an executive at ASKK, the precision equipment maker.

Accustomed to working long hours, some employees found that cutting back undermined their morale. Another obstacle was that wives of male employees complained that they didn't want their spouses at home, he said.

Side jobs are allowed, he said, and at least one worker has already starting working at a convenience store on Saturdays to supplement his income.

Nagakura, who has made a point of ending his work day at 3 p.m. lately, sees work-sharing as the best way to cope with a drop in orders that has erased about two-thirds of ASKK's profit over the last year.

"There's no work for them to do even if they show up," he said. "I tell them to go on walks with their wives, holding hands."

But Nagakura also sees the downturn as an economic opportunity to get ahead. He expects most rivals to go bankrupt in the next year or two before a recovery comes while his company rides out the recession in good shape.

"We are going to survive, and we are going to win," he said.

[Associated Press; By YURI KAGEYAMA]

Associated Press writer ShinWoo Kang in Seoul contributed to this report.

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