Already a Bloomberg.com user?
Sign in with the same account.
Kenpoku Fashion is a small textile company in Japan's Iwate prefecture, in the coastal city of Kuji, nearly 200 miles north of the epicenter of the country's Mar. 11 earthquake. The firm produces the company uniforms—matching jackets and pants emblazoned with corporate logos—that are ubiquitous in Japanese factories and offices. The uniforms are enjoying considerable international visibility right now, as Tokyo Electric Power executives and government officials wear them during often gloomy press conferences, to project an air of competence and esprit de corps.
While Kenpoku's Kuji plant escaped major damage, the disaster took a different sort of toll. Before Mar. 11, a quarter of its 32 employees were Chinese workers in Japan on temporary visas. According to Hitomi Kudo, a manager at the plant, a few days after the quake the Chinese workers started worrying about the risk of radiation poisoning from the crippled Fukushima Dai-Ichi nuclear plant. Some were convinced that large portions of Iwate and Miyagi prefecture were already under water, others that Mount Fuji was going to explode. Within a week, seven of the eight had gone back to China.
April is the start of the Japanese business year—that means a surge in hiring and demand for lots of new company uniforms. The plant fell behind on orders, and soon their clients' patience wore thin. "Eventually we gave up on those who left to China and hired new workers," says Kudo. The new hires were Japanese, however, and demanded far higher salaries. "It's a very severe impact on our profits," Kudo adds.
The Mar. 11 disaster and the nuclear crisis have badly wounded Japan and its economy—from the tragic loss of life to the destruction of plants and ports. For many businesses, the disaster has had another effect: It has scared off the foreign workers they rely on.
Japan's aging population and extremely restrictive immigration policy, combined with a highly educated younger generation uninterested in menial labor, have created a shortage of workers willing to do the dirty, dangerous, or monotonous work that immigrants do in much of the rest of the wealthy world. Food processing and textile plants, restaurants, farms, and home health-care agencies have had difficulty filling job openings.
To help address that, Japan has created a temporary workforce, mostly from China, under what it calls its foreign worker trainee program. These workers spend three years in Japan, ostensibly learning a skill that they can take home with them. Immigrants rights groups and human rights lawyers, however, charge that the program simply provides companies with cheap, pliant labor while blocking actual immigration. In lawsuits, trainee workers have reported being paid as little as half the minimum wage in their first year. The minimum wage is usually between $8 and $10 an hour.
The aftermath of the earthquake suggests another weakness of the program: Some industries have come to depend on workers who are actively discouraged from putting down roots of any kind. When catastrophe occurs, Japan's trainee workers have little reason to stick around. And while they make up only a small fraction of the overall workforce, they're vital to certain parts of its agricultural, service, and manufacturing sectors. The Japan International Training Cooperation Organization (Jitco), the agency that administers the program, estimates that 70 percent or 80 percent of its more than 150,000 temporary workers have left the country since Mar. 11 and haven't come back.
The Japan Agricultural Cooperative Assn. chapter in Ibaraki, a prefecture at the southern end of the coastal area hit by the tsunami, reports that it lost 387 of its 1,591 foreign trainee workers through the end of March. Half the 1,500 foreign workers at the Hidakaya noodle shop chain went home after the earthquake. Recruit, the biggest manpower agency, is having trouble finding candidates for low-wage openings.
The problem isn't limited to the tsunami zone. The chief executive officer of Yoshinoya, another ubiquitous fast-food chain (specialty: "beef bowls"), just announced that it lost a quarter of its foreign workers in central Tokyo in the week after the quake and had to shuffle workers from other shops to make up for the shortage. "We are struggling," says Fumio Kita, executive secretary of the Japan Textile Federation. "If things go on like this we won't be able to turn out product, which will have a devastating effect on the entire textile industry."
The companies that lost those workers are scrambling as the economy begins to show life again after the quake. Some, like Kenpoku, the uniform maker, are hiring more expensive Japanese labor; others are making do with fewer workers for now. Economists worry that the scarcity of labor could weigh down the recovery. "When the reconstruction starts and effective demand increases, the exodus of foreign workers will have an extremely serious effect," Junichi Goto, an economist at Keio University, wrote in an e-mail.
Goto, like other longtime critics of the trainee worker program, hopes this realization of the country's reliance on trainee workers will spur more reforms. After years of complaints and investigations into poor pay, maltreatment, even trainee deaths, Jitco last year overhauled the program to add minimum-wage and other labor-law protections for its workers. "We think the reforms have changed the situation," said Takashi Nakamura, a Jitco spokesman.
Japan is more than 98 percent ethnically Japanese, and immigration is an even more politically fraught topic here than in the U.S. or Europe. Yet Chikako Kashiwazaki, a sociologist and associate professor of economics at Keio University, believes that in recent years there has been a new acceptance among Japanese of the idea of immigration. Politicians from the two biggest parties, as well as Nippon Keidanren, a leading business organization, have made proposals to increase immigration. "People are actually thinking that perhaps it would be better to receive more people for settlement rather than on a temporary basis," says Kashiwazaki. People, in other words, who might hesitate to leave even if they feared Mount Fuji would explode.
The bottom line: The post-earthquake loss of up to 70 percent of Japan's temporary immigrant workers may prompt more immigrant-friendly policies.