Japan offers a lifetime job, if hired right out of school

Hundreds of young Japanese are getting pink slips before they even start work.

Japanese companies, contending with plummeting sales and shriveling profits, are withdrawing job offers to university and high school seniors.

Anywhere else, the news might be shrugged off as the predictable consequence of an economic collapse. In Japan, it's sending shivers across the country, raising fears that another "Lost Generation" of young Japanese will be locked out of good jobs forever. "Whether they get a job when they graduate decides their whole life," says Yuki Honda, a professor at the University of Tokyo's Graduate School of Education.

That's because Japanese companies typically hire only fresh graduates they can indoctrinate in their corporate cultures, figuring anyone with experience elsewhere might bring bad habits. Students who don't have jobs waiting at graduation risk getting stuck with a lifetime of low-paying, dead-end employment.

Now that Japan's economy has sunk back into recession — output fell at a terrifying 12.7% annual pace in fourth-quarter 2008 — Honda and other analysts fear a repeat of the "employment Ice Age" of the 1990s, which froze a generation of graduates out of full-time employment.

"It's a disastrous situation," Honda says. "There will be another Ice Age."

Hiroki Iwabuchi has felt the chill. During his final weeks at Tohoku University of Art & Design in Yamagata, he regularly skipped an architectural design class to do something he loved: produce a documentary film about his senior year.

Playing hooky set off a chain reaction that ended Iwabuchi's career before it began. He ended his final semester three days short of the required attendance, was barred from graduating and forced to re-enroll for another term. That cost him a job that was waiting for him at a publishing company.

Now 26, he's been locked out of full-time work ever since, laboring in a succession of go-nowhere jobs: working for a moving company, trying Internet sales, handling frozen pork for a meatpacker, sticking lids on printer cartridges for Canon, never earning much more than $24,000 a year. "The system is not fair," Iwabuchi says. But "I blame myself" for squandering an opportunity for full-time employment.

Japan's economy has produced more than 17 million Hiroki Iwabuchis — "non-regular" workers toiling in part-time, contract or temporary-agency jobs. Easy to fire, these chronic part-timers are absorbing the shock of Japan's downturn: The government estimates that 158,000 have lost their jobs since October.

When they first attracted attention in the late 1980s, irregular workers were viewed as social rebels, opting out of the dreary, 60-hour workweeks endured by corporate Japanese "salarymen" to enjoy flexible hours and undemanding jobs. The Japanese, who habitually absorb and transform foreign terms, started calling these outsiders "freeters" — combining the English word "free" with a German word for worker, arbeiter.

But what looked at first like a liberating social change proved to be the beginning of a wrenching economic transformation.

Changes prove rough

During the sluggish '90s, Japanese companies, seeking ways to cut costs and regain their competitive edge, started turning to part-timers, contract employees and workers dispatched from temporary agencies. Non-regular employees now make up more than 34% of the Japanese workforce, an all-time high and up from less than 17% in 1985, according to the Ministry of Internal Affairs and Communications.

The U.S.-style shift to a more flexible labor market appealed to penny-pinching managers. A web of regulations, laws and court decisions makes it tough to lay off full-time workers in Japan. Irregular workers can be hired and dismissed as needed.

But Japanese social policies didn't keep up with the economic changes. The country's safety net was built around the increasingly quaint notion that a man would stay with one company his entire career, supporting a stay-at-home wife and a couple of kids. The company would provide lifetime employment, benefits, bonuses and constant training.

The system wasn't built for a rapidly expanding irregular workforce. Yuki Honda says policymakers viewed part-timers and temps as slackers who chose an easy-going lifestyle instead of seeing them for what they were: thirtysomething breadwinners struggling to make ends meet.

"The government didn't analyze it so well. They thought, 'The younger generation just doesn't want to be responsible,' " Honda says. "The government was looking at the situation optimistically. They thought when the economy recovered, the problem would take care of itself."

Japan's economy rebounded from 2002 to 2007. But overall wages continued to fall, and irregular workers remained stuck out in the cold, contributing to a worrying divide between rich and poor in a country that prides itself on being ichioku-sohchu-ryu— "a nation of middle-class people."

Part-time workers earn only 40% as much per hour as their full-time counterparts in Japan — a gap that cannot be explained by differences in productivity, says a 2006 report by the Organisation for Economic Co-operation and Development (OECD). Just 7.7% get regular promotions (compared with nearly 34.4% of regular workers), and they're half as likely to get a raise. Less than half of irregular workers are eligible for pensions or health insurance. Many do not qualify for unemployment benefits, nor do they receive much training.

The OECD notes that most people working non-regular jobs want full-time employment, but only 23% of those who left part-time jobs in the recovery year 2005 obtained regular work.

Labor activist Naoko Shimizu sees aging freeters as victims of an East-West collision between a Japanese corporate mindset that doesn't give second chances and a ruthless U.S.-style labor market in which no jobs are guaranteed forever. "We've tried the American way," she says. "But the value judgments are very Japanese. We need a new safety net."

On the campus of Tokyo's Meiji University, junior Ryosuke Ishida, 21, laughs nervously when asked about his upcoming meetings with corporate recruiters. Dressed in a dark blue suit, white shirt and blue tie with diagonal stripes, he knows the interviews may be his only chance to secure a good job. "I do worry about it," he says. "We have incorporated the American system. It isn't working yet. The government should do something; then I wouldn't have to worry."

Fear becomes anger

Many Japanese aren't just worried; they're angry. In January, hundreds of homeless Japanese — many of whom had just lost temporary jobs and housing in company dorms — descended on Tokyo's Hibiya Park, setting up a tent city to bring grievances to the heart of the city's government district. Officials went into damage-control mode to help them find temporary housing.

Other non-regular workers are staging protests against the companies that discarded them when the economy soured. "We are fighting," says Yoshinori Miura, 27. He is one of 1,400 non-regular workers who lost their jobs in December when automaker Isuzu abruptly canceled their six-month work contracts four months early.

Some irregulars are starting to join unions, even after they lose their jobs. They cannot join the "company unions" that organize workers at specific firms. But they can join other labor organizations, representing crafts or regions or collections of individuals. Naoko Shimizu and other activists even formed a freeters' union (membership: 150) that represents irregular workers in disputes with employers.

The dismissed Isuzu workers joined the All-Japan Metal and Information Machinery Workers Union after they were laid off in December. On a chilly, overcast day recently, union members held a demonstration outside Isuzu headquarters here, chanting their demands for full pay for all six months of the contract.

"We all agreed that (what Isuzu did) was wrong," Miura says after the protest. Over a lunch of soba noodles in a restaurant inside the Isuzu building — "the enemy's home," he jokes — he explains how he's spent the past two years working a series of three-month contracts for Isuzu, earning about $100 a day, living in a company dormitory and playing Xbox in his off hours.

Miura loved working at Isuzu and had been preparing for an exam to join the company's regular workforce when the ax fell. (He says temporary workers 30 years and older were discouraged from taking the exam — something he considers "unfair ... the older workers have more experience.")

"All we want is a stable life, and they cannot even provide that," he says. "I am fighting for myself, of course. But I am also fighting for others, so (Isuzu) will not do this again."

The OECD has advised Japan to adjust policies to reflect the new economic reality:

•Reduce protections for full-time workers, giving companies more hiring and firing flexibility and less reason to seek part-timers and temps.

•Expand social services protections to non-regular workers.

•Increase training programs for jobless and part-time workers.

Hold on to the jobs

Tokyo University's Yuki Honda has urged the government to offer businesses generous tax breaks for turning part-time jobs into full-time opportunities. She's heard nothing back, though the Labor Ministry has introduced a modest program offering small and midsize companies about $10,000 through March 2012 for every non-regular worker they hire full time.

Economist Fumio Ohtake at Osaka University figures that demographics can help solve the problem. Japan's population is aging and in decline, so companies, knowing they'll face a labor shortage when the economy starts growing again, can't afford to let another generation of young workers get away as they did in the '90s.

At least Iwabuchi — the art school student whose college truancy cost him a publishing job — found a way back into the full-time job market. He made a documentary about his experiences as a temporary worker at Canon. The film —A Permanent Part-timer in Distress— is being screened next month at an art house cinema in Tokyo's hip Shibuya district and has attracted so much advance publicity that a TV station offered him a full-time job as assistant director.