By exploiting contingent workers manufacturing companies and staffing agencies make profits

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By exploiting contingent workers manufacturing companies and staffing agencies make profits

Japanese Communist Party Secretariat Head Ichida Tadayoshi used his question period in a House of Councilors Budget Committee meeting on October 13 to shed light on contingent workers' harsh working conditions that have contributed to a widening social gap in Japan.

Ichida showed that large manufacturing companies widely use contingent workers who are not employed by the companies but dispatched by staffing agencies. In Japan, these contingent workers can be categorized into two types depending on applicable laws.

One category is "dispatched workers" governed by the Worker Dispatch Law. In this case, staffing agencies lease out their workers to companies based on contracts between the two firms. Within a specified period, receiving companies can use these dispatched workers under their supervision.

However, the companies are required to fulfill their responsibilities under the Industrial Safety and Health Law as well as to directly employ these contingent workers after a period of one year (three years from March, 2007).

The other category is contract workers. Manufacturing companies can contract out a part of their operations to subcontractors. In this case, subcontractors or staffing agencies must supervise the workers and are held responsible for their employment. Companies that contract out their operations cannot control these workers.

Why has such contingent work become so rampant?

For a manufacturing company, the hourly labor cost, including pension and health insurance premiums, to employ a worker is about 3,500 yen.

If the company uses a "dispatched worker", it pays about 2,500 yen, enabling them to save about 1,000 yen per hour.

Then, how about the staffing agency? It pays only 1,000 yen to their workers, making a profit of 1,500 yen.

According to a Health, Labor, and Welfare Ministry survey, companies use contingent workers mainly because this system enables them to make quick adjustments and cut labor costs.

It is in this situation that a number of manufacturing companies and staffing agencies adopt the illegal corporate practice called "disguised contract work" in which these companies disguise "dispatched work" as "contract work" so as to alleviate legal burdens on companies that use contingent workers.

Brief history of contingent work

In Japan, the practice of "dispatching workers" had long been banned under the Job Stabilization Law based on the fact that contingent work had brought about the miserable working conditions in prewar days.

In 1985, however, the Liberal Democratic Party government enacted the Worker Dispatch Law, followed by a series of steps further deregulating labor laws. In 2004, the government finally lifted a ban on dispatching workers to the manufacturing sector.
- Akahata, October 14, 2006