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Abe to Implement ‘Equal Pay for Equal Work’
World Economy

Abe to Implement ‘Equal Pay for Equal Work’

When Fumiko Kasai returned to work a decade ago she found Japan’s job market was very different to the one she had left in the 1980s to raise her four children.

Kasai, who had enjoyed a well-paid full-time job with a car firm before giving up work when she married, is now a temporary worker at a butcher’s. Earning 200,000 yen ($1,835) a month, her hourly pay is around half that of a full-time worker doing the same job.

Prime Minister Shinzo Abe has put tackling Japan’s labor inequality at the center of his policy agenda as the number of temporary workers hits a record high, posing a challenge to his “Abenomics” stimulus package ahead of a summer election, Reuters reported.

With part-time and temporary workers now making up about 40% of the labor force, Abe vows to adopt an “equal pay for equal work” scheme, forcing firms to pay the same wage for workers doing the same job.

Abe is counting on the plan—a centerpiece of a mid-year raft of policy announcements—to boost flagging consumption and win votes ahead of a July upper house election.

The move follows his decision to delay a scheduled sales tax hike by two-and-a-half years, putting his plans for fiscal reform on the back burner amid stubborn weakness in the economy.

But the plan could backfire on Japanese firms by pushing up labor costs and squeezing profits, analysts say. It also faces resistance from the businesses who would have to implement it.

In the Reuters Corporate Survey earlier this year only 9% of Japanese firms described the plan as realistic.

 Gap Widening

Structural reform to boost consumption and revive growth is one of the “three arrows” of Abenomics—aimed at reviving the economy after two so-called lost decades of torpor and deflation—alongside fiscal stimulus and massive monetary easing.

Meanwhile, the gap has been growing between “regular” and “non-regular” workers. The former are full-time employees with permanent contracts and pay scales based on seniority; the latter are temps, part-timers and short-term contract workers with more precarious jobs.

Before Japan’s bubble burst in the early 1990s, 80% of workers were full-time employees with job security, and most felt middle class. Last year, the share of non-regular workers in the labor force hit a record 37.5%.

 On Par?

Overall employees’ annual pay stood at 4.15 million yen as of 2014, having peaked at 4.67 million yen in 1997, reflecting a steady decline in the number of well-paid full-time workers, government data shows.

Hourly wages for part-timers stand at 56.8% of those for full-time workers, excluding benefits.

In France, by comparison, the ratio is 89%, while in Germany it is 79% and in Britain and Italy about 70%, according to data from the Japan Institute for Labor Policy and Training, a semi-governmental institution.

The government aims to bring the wage differential between regular and non-regular workers to the same levels as in Europe.

 

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