The Wall Street Journal Becomes Underconsumptionist

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

Hayashi, Yuka. 2008. "Growing Reliance on Temps Holds Back Japan's Rebound." Wall
Street Journal (7 January): p. A 1.
http://online.wsj.com/article/SB119939511325465729.html?mod=todays_us_pa&apl=y&r=125968

"One reason Japan's rebound hasn't gotten traction: companies' growing reliance on
temporary workers, who earn less -- and spend less -- than full-time employees. The
shift in hiring can be seen at companies like Hino Motors Ltd. The truck-making unit
of Toyota Motor Corp. is paying record dividends this year. But it also has been
filling thousands of factory jobs with temporary workers, who start at $10 an hour
and get few benefits."

"More than a third of the people in Japan's labor force are categorized as
"nonpermanent" workers: part-timers, temps on fixed-term contracts and people sent
to companies by temporary-staffing agencies. That compares with 23% in 1997 and 18%
in 1987."

"Use of temps gives companies flexibility and cost control, helping them succeed in
highly competitive global industries like manufacturing. Big Japanese companies have
reported earnings growth for five straight years."

"In the past decade, average wages in Japan have fallen every year except two
because of an increase in temps and stagnant wages for full-timers. Consumption by
working families declined on a year-on-year basis in six of the past eight quarters.
This even though the Japanese are also saving less: A Bank of Japan survey showed
that some 23% of households had no savings last year, compared with just 10% in
1996."

"The result is sluggish domestic demand and growth that is supported by exports to a
lopsided extent. In the July-September quarter, when Japan's economy grew at an
annualized rate of 1.5%, exports were rising at an annualized 11% rate and domestic
demand was shrinking slightly. Personal consumption is so weak in Japan that it
accounts for only a little over half of the economy, compared with 70% in the U.S."

"Until the late '90s, worker-friendly laws forbade temporary-labor contracts except
for a few specialized areas, such as computer programming. A change in 1999 allowed
temp agencies to dispatch workers to many more types of jobs. And in 2004,
manufacturers were allowed to use workers sent by temporary-help agencies."


--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
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