Monday, January 7, 2008

Japan relies on too many temp workers

--Companies across Japan have gone on a binge of hiring temps in the past few years. They earn about two-thirds of what full-timers do and can often be hired and fired with just a few days' notice. More than a third of the people in Japan's labor force are categorized as "nonpermanent" workers: part-timers, temps on fixed-term contracts and people sent to companies by temporary-staffing agencies. That compares with 23% in 1997 and 18% in 1987. --The trend has been good for Japan's economy in some ways. Use of temps gives companies flexibility and cost control, helping them succeed in highly competitive global industries like manufacturing. Big Japanese companies have reported earnings growth for five straight years. --Yet the heavy use of temps also has created an obstacle to the virtuous cycle typically seen in an expanding economy: When companies make better profits they eventually raise wages, which boosts consumer spending -- and leads to more corporate profits.

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