For Improving Treatment of Non-permanent Workers

The government of Japan submitted a draft of the guideline for equal pay for equal work to Conference for Implementing Labor Reform last week. To improve labor situation of non-permanent workers, the draft proposes employers paying bonus or annual increase of salary, which are not guaranteed to them. Shinzo Abe administration is going to submit the Diet related bills to achieve it.

Average salary level of non-permanent workers in Japan is as low as 60% of that of permanent ones. Even how those non-permanents are diligent and talented, their amount of bonus, ordinary paid two times every year, is lower than the permanents and the pace of salary rise is slower. In the research of Ministry of Health, Labor and Welfare, only four out of ten companies pay bonus to non-permanent workers. While monthly salary of permanent workers grows every year, non-permanent workers rarely receive that benefit.

The draft proposes that employers need to pay the same amount of bonus, if the contribution of non-permanent labor to the company was paralleled with the permanent workers’ achievement. It also recommends introducing salary increase system as well. It requires payment on the same level of basic salary in accordance to experience, skill, achievement or length of employment. The draft denies difference of salary based on expectation of future contribution to the company.

Abe expects companies to spend internal reserves for salary of non-permanent workers, which occupies certain amount of share in labor market, and lead to positive consumption to enhance Japanese economy. However, it is generally a great burden for employers to pay more salary to non-permanent workers. Retail shops, for example, are operating their business depending on cheap labor of non-permanent workers.

The actual legislative process will be focused on Non-permanent Labor Law, Labor Contracts Law and Workers Dispatching Law. One point important is whether new legislation demands employers responsibility of presenting reason of difference between the permanents and the non-permanents. While labor union requests that responsibility, business community opposes it.

Even how the government requires equality of salary, it is employers who finally decide the amount of payment in capitalism. The result will be different based on various reasons. If the payment is the same regardless quality of labor, motivation for working cannot be encouraged, possibly damaging the business. Abe must not attribute insufficiency of Abenomics to labor system.