“I don’t blame my boss,” said Kodaira. “I’m not the only one.”
But Kodaira is not among the 1.9 million people in Japan who were out of work in May, accounting for 2.9% of the workforce.
Instead, she is one of the 4.2 million people who are still paid a portion of their wages, in her case, about 75%, for the time they are not at work. While the number of those people improved slightly in May from April’s record 6 million, it is still almost three times higher than in January 2009, during the global financial crisis.
Takuya Hoshino, an economist at the Dai-Ichi Life Research Institute, has calculated that Japan would have an unemployment rate of 10.2% by May if those on vacation were taken into account.
“Even after the state of emergency was lifted, the number of people on leave is still very high. That is unexpected and very grim,” Hoshino said.
A serious threat
That’s because Japan’s practice of holding on to workers through economic turmoil could backfire, they say, because doing so could make companies and their employees less nimble. A fifth of the workforce has worked with the same company for more than 20 years in Japan, or double the comparable figure in the United States, according to government data.
“The biggest problem in Japan’s labor market is the stubborn insistence on seniority pay. If genuine merit-based pay were introduced, there would be much more job change and career advancement,” said Jesper Koll, senior advisor to the fund management company. Tree of Knowledge.
Legal obstacles also make it more difficult for companies in Japan to cut jobs compared to their western counterparts. The Labor Contract Law, for example, establishes that a dismissal would be invalid if “it is not considered appropriate in general social terms”.
In practice, human resource managers say workers are rarely fired, and companies prefer to negotiate a voluntary retirement package that often includes generous severance pay.
That kind of attitude has led many Japanese companies to ask workers to stay home with some salary, instead of cutting their jobs directly. By law, they must pay at least 60% of wages during compulsory company leave. Meanwhile, the government has promised to pay up to 90% of those costs through subsidies as part of the stimulus measures implemented to cushion the economic consequences of the outbreak.
“In the United States, the individual claims their unemployment benefits directly from the state. In Japan, the government pleads with companies not to fire and will help pay wages in return. It is a very different cultural approach,” Hoshino de Dai said. -Ichi Life.
What’s more, as in Western countries, a person in Japan has to actively look for a job to be considered unemployed, a practice that analysts have long criticized because it can hide the true unemployment rate. That discounts Japan’s large employable population, mostly women, who leave their jobs by marriage, childbirth, or elderly care and never return because the labor market is too rigid. That number is likely, economists say, to increase as the realities of the recession further deter job search.
Long-term fears
Meanwhile, the effectiveness of that financial aid will face a critical test in September when the stimulus measures expire. Some economists predict that the unemployment rate could exceed 4% by the end of the year, which would be the highest since August 2013.
Japan slipped back into recession in the first quarter, and economists say the nation may be in the midst of its worst recession since the end of World War II. According to a Nikkei survey of 16 economists, Japan’s GDP is expected to have declined by 21.7% annualized during the April-June quarter.
“In terms of overall liquidity in the labor market, there is still no clear path ahead,” Hoshino said.
Japan’s labor practices are so entrenched that new words have come up to describe idle employees, from calling them “madogiwazoku” (a phrase meaning “tribes on the windowsill”) during the 1970s, to the most recent phenomenon. recent “internally”. unemployment “- the concept of a worker going to work but not assigned anything to do.
However, some economists expect tight working conditions to reemerge relatively quickly, as the country’s aging population is reducing its workforce. There were 120 jobs for every 100 job seekers in May, according to the latest government statistics.
“The labor shortage is real and the war for talent will intensify as economies normalize,” said Koll of WisdomTree. “Japan’s nexus with Asia in general, and China in particular, means that the manufacturing sector here will pull out of the recession long before the United States recovers.”
Still, Nanami says she is worried. She is spending a large part of her salary buying long-haired mannequins to practice her cutting technique.
“It is not the same,” he said. “I need to be in the living room for the latest trends. Also, I miss talking to my clients.”
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