Are Japanese workers better paid than in any other country?

The Koizumi Cabinet and business circles are now saying that labor costs are higher in Japan than in any other country, an argument to justify their policy of holding down wages in the on-going Spring Struggle.

As proof of this argument, they often cite China where the labor cost there is said to be one-thirtieth that of Japan. Akahata of February 13 took issue with this argument.

Compare wages using purchasing power parity

The annual report of the Japan Federation of Employers Organizations (Nikkeiren) panel on labor policy states that Japan leads the world in wages. The graph in the report shows Japan's wages (100) is higher than Germany (90), the United States (79), Britain (79), France (66), and China (3).

A careful look at the graph's footnote reveals a trick cheating the public. Calculations of each country's wages are based on foreign exchange rates. Japan's hourly wage is calculated at a rate of 107 yen to the U.S. dollar, which makes Japan's wage level look higher than it actually is. In recent exchange rates, the Japanese yen stands at 133-135 to the dollar. If a 135 yen rate is applied, the United States stands at 99.5, almost equal to Japan.

The Health, Labor and Welfare Ministry publishes a labor statistics summary in two ways: one based on foreign exchange rates, and the other using purchasing power parity. A ministry councillor in charge of labor policy says: "The difference is whether you regard wages as cost to be expended or as provisions for your living. In terms of livelihood expenses, a comparison should be made as to how much the wage can actually buy."

The argument that Japan's labor costs are higher than any other country's comes from thinking that workers serve as a profit-making instrument, like machinery. From the worker's point of view, comparison of wages should be based on purchasing power parity.

The Japan Institute of Labor, which is affiliated with the Ministry of Health, Labor and Welfare, made an international comparison both ways. In terms of purchasing power parity, Britain is 87 and Japan stands at 100, but the United States (145), Germany (177), and France (132) are 20-40 percent higher than Japan .

Unpaid overtime work is prevalent and low-wage contingent workers are increasing

Government statistics alone are not sufficient in comparing Japan's labor cost with that of other countries. The Nikkeiren report is based on data taken from the Health, Labor and Welfare Ministry's monthly labor statistics which contains corporate data and disregards what workers are saying.

Wages and hours in the statistics are those which corporations paid. They do not take into account the fact that many Japanese workers are forced into unpaid overtime work as a result of corporate restructuring and work force reductions. If unpaid overtime work is taken into account, Japan's wage level comes even below what is expressed in purchasing power parity.

Annual paid holidays left unused is a form of work without pay. In other major countries, every worker is expected to use all paid annual holidays. In Japan no more than 50 percent, or 8.9 days, of annual paid holidays are actually used. This means that Japanese workers work at least 9 days without pay.

In the wave of corporate restructuring, large corporations are reducing personnel costs through temporarily transferring regular workers to affiliate companies, changing workers' company affiliation; reducing the number of full time workers; replacing full time workers with part-time or other contingent workers and increasing outsourcing of particular jobs; and introducing job performance ratings and discretionary work schedules. The Koizumi Cabinet is commending these moves as "deregulation" and "diversification of employment opportunities."

Thus, major corporations are now using a variety of methods to lower the labor cost and cover it up in diverse forms. But this will result in further declines in the purchasing power of workers. (end)