Japanese workers compensated well for losing jobs
By Ann Saphir
Bloomberg News Service
TOKYO — Two years ago, Yoshi Matsushima was called in by his boss and asked to resign. He refused, and not even a 10 percent pay cut and a demotion could push him out the door.
"I was so angry, and I still am," 51-year old Matsushima says, recalling the day he was asked to leave Kokusai Kogyo Co., a bus and resort owner. "To ask me to quit after working there all my life! How could I get another job?"
Firing staff is rare in a country where a job for life is considered a right, hampering efforts by companies to cut costs and bolster profits. While workers in the United States may get little more than a month's pay with their pink slips, Matsushita Electric Industrial Co. offered 10-year veterans as much as $500,000 to retire early.
"Workers count on lifetime employment and the seniority- based promotion system in Japan, so they need something extra to agree to leave early," said Kumiko Takahashi, a spokeswoman at Daiei Inc., which paid 1,000 workers about double their retirement entitlements to leave early.
Daiei, which is trying to cut its $21 billion debt, shelled out more than $120 million in retirement payouts.
"Early retirement" is the preferred way for companies from Isuzu Motors Ltd. and Mitsubishi Motors Corp. to Fujitsu Ltd. and Snow Brand Milk Products Co. to get rid of thousands of workers to reduce costs.
Matsushita set up a career center to help laid-off workers find new jobs and provided three-month vacations for them to hone their skills.
It also offered up to 2 1/2 years' salary on top of normal retirement payments to encourage people aged 58 or younger who've worked for the company for 10 years to leave early. The maximum payout was about $500,000.
Fujitsu, which is eliminating 5,000 jobs after its first-quarter loss quadrupled, is offering up to 30 months' pay for workers who quit voluntarily. The company will take a $2.5 billion charge to cover the costs.
Compare that to the United States, where workers can be dismissed on the spot with little severance pay. Motorola Inc. plans to eliminate 30,000 workers, or about one-fifth of its work force this year. Cisco Systems Inc. has shed 8,500 workers, and Intel Corp. is cutting 5,000 jobs at a speed unheard of in Japan, where job cuts are spread over three or four years.
Sumitomo-Mitsui Banking Corp., the world's second-biggest bank, will eliminate 4,900 jobs by March 2004, and Mycal Corp., a retailer trying to reduce its $10 billion of debt, will shed 2,700 jobs by then.
"Japan has always been a more paternalistic country" when it comes to firings, while the United States "has always been considered the last bastion of capitalism," said Elliot Mandel, a labor attorney and partner with Epstein Becker & Green in Stamford, Conn.
For some, taking early retirement is an attractive option.
Mitsubishi Motors, which lost more money than any other Japanese company last year, offered employees up to four years' pay to retire early. The offer proved popular — 1,900 workers applied for the 1,200 packages available.
For many workers, "early retirement" is a euphemism for getting fired, and the only fishing they'll do is for a new job.
Akiro Yokota, a 49-year old plastics engineer, took an early retirement package two years ago that netted him about 2 1/2 years' pay. Two days later, he was back at work at a new job.
"It worked out well for me," said Yokota, who used the money to pay off part of his mortgage. "Paying the loan back saves me money."
The reluctance to shed workers has kept Japanese unemployment at relatively low levels.
While Japan's jobless rate climbed to a record high 5 percent in July up from 4.8 percent two years ago, South Korea's more than quadrupled to 8.6 percent in less than 18 months after the country slid into recession in the wake of the 1997-1998 Asian financial crisis. U.S. unemployment climbed to 4.5 percent in July from a 30-year low of 3.9 percent in September and October.
Any increase in the jobless ranks risks aggravating the three-year drop in prices that's gripped Japan's economy, which probably shrank last quarter.
As people are sacked, or fear they will be, they spend less. That damps consumer spending and forces companies to trim prices to attract customers.
"If companies do start cutting jobs, then we have the risk of a deflationary spiral, and then you have trouble," said Ron Bevacqua, an economist at Commerz Securities Co. "You lose your job, and that is going to impact demand."
Jobless queues are set to get longer. Toshiba Corp. last week said it will cut 17,000 jobs. Prime Minister Junichiro Koizumi's spending cuts and plans to force banks to get tough on borrowers that can't repay loans threaten to put up to 1.7 million people out of work, according to Peter Morgan, the chief economist at HSBC Securities Japan Ltd.
