Terrie's Take 714 -- Employees: Breaking Up is Hard to Do. E-biz news from Japan

Terrie's Take terrie at mailman.japaninc.com
Mon Jun 17 00:20:01 JST 2013

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, June 16, 2013, Issue No. 714


- What's New -- Employees: Breaking Up is Hard to Do
- News -- Kickstarter funded anime project exceeds goal by 1000%
- Upcoming Events
- Corrections/Feedback
- Travel Picks -- Furano, Hokkaido and Bokusui, Miyazaki
- News Credits

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The Nikkei stock index has seen some impressive gyrations over the last few
weeks, and Thursday's 6% sell-off was additional proof that investors are
not convinced that PM Abe is really committed to letting fly all 3 of his
revitalization arrows, particularly the structural reform one. Near the top
of the  reforms list, just under deregulation and lowering corporate tax,
is the need by employers for more "labor flexibility" -- code for the
ability to fire people they no longer need. Economists reckon that 10% of
employees (about 4.5m people) in Japanese companies are redundant, and if
they could companies would let that many go in order to increase

So when the proposal, put forward by the LDP's own Industrial
Competitiveness Council, was shelved last week, this provided investors
with one more sign that the Abe government doesn't have the stomach to
tackle reforms head on and therefore it's difficult to see how
Abenomicswill take root and grow. The worker flexibility proposal was
of course just
part of Abe's "growth Strategy" package, but it's one of the most visible
parts. Either way, the  package was deeply disappointing to investors --
particularly foreign funds, many of whom have been hoping that Abe would
get it right and open up the opportunity for a multi-year bull run for the

We suppose it is understandable that Abe doesn't want to make enemies of
the labor unions and older workers, who are most likely to bear the brunt
of mass lay-offs, especially just before an election. So there is still a
chance the proposal will be revisited after July, and that companies will
in fact get the chance to reconfigure themselves. Economists insist that to
improve worker pay, which is a key requirement for Japan to break out of
deflation, companies have to be given the chance to value their employees
according to contribution not just body heat -- and thus initiate wage

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The theory is that pay levels of sales staff and skilled employees will
rise as companies try to retain them, while those of administration and
manufacturing staff will fall. Unemployment will go up, but the costs of
unemployment will be more than offset by employer competition for skilled
workers. While we understand the logic, we also think the reasoning is a
bit simplistic in that it disregards the average Japanese worker's concerns
about job security and the unknown. Risk aversion a deeply ingrained
cultural conditioning that will be hard to undo -- at least as hard as
convincing the public that Abenomics will actually work.

Still, even when faced with cultural barriers, better conditions and pay
can be strong incentives for labor mobility, as we have already seen in
younger Japanese when they see their friends doing well in venture
companies. If this were not so, then the Internet companies such as
Rakutenwouldn't be doing so well in recruiting staff. Indeed,
Mikitani is on record as saying he is not concerned with labor flexibility
and instead wants other reforms prioritized, such as less market
regulation. But we reckon he'd change his tune if he was stuck with an
average worker age of 40+ and had 10% of employees making little or no
contribution to the bottom line.

In the end, we think that Abe will have no choice but to make bring in
legislation to improve labor flexibility, just as we think he has no choice
but to cut corporate taxes dramatically. The question is whether he will
make these changes while there is still momentum in the market, or if it
will be a case of too little too late. Currently it is difficult, although
not impossible, to fire excess or unnecessary workers, and companies have
to go through significant hoops and costs to let go of someone.

As a short primer, there are 3-4 layers of law that bind employers to their
staff: the Constitution, which guarantees the right to work; the Labor Law,
which defines basic rules in the employment relationship, such as the
treatment of women, overtime, etc; the Work Rules which all companies with
10 employees or more must have and which define the conditions of work at
each particular company; and lastly, the labor contract, which is not
legally necessary, but which most foreign and modernized firms have. Of
these different layers, the labor contract is the weakest document, and
generally its main purpose is to help outline the benefits the company is
offering the employee over what might be considered standard conditions.

Once a company writes a job offer to a candidate, the offer is
contractually binding and the company is legally required to hire the
person. They then get 14 days to undo that commitment, after which severing
the relationship will be overseen by the Labor Standards Inspection Office
or the courts. Most companies have a probation period for new employees,
however while this is a useful construct, it is also relatively meaningless
in a legal sense. Companies have to make as much effort to let go of a
probationary employee as they do a full time one.

The body that arbitrates most dismissal disputes is the Labor Standards
Office, and there is one in every district in the country. By custom, the
procedure for letting an employee go is to undertake a 3-month program of
counselling, warning, then termination, with written notes from meetings,
and clear two-way communication between the HR staff and the employee being
terminated. Providing this procedure is followed, and providing the
termination is for a "socially acceptable" reason (poor performance is the
least good reason and difficult business conditions is one of the
strongest) then the final issue will be the amount of salary paid out for

The general rule of thumb at present is one month of salary for each year
worked, although there are many cases where even newer employees have
claimed in court 3 months or more and have successfully been awarded a
substantial portion of their claim. As an employer one can never expect to
"win" a dismissal dispute, imagining that a court action will be solved by
paying the legally mandated amount of salary (one month). Instead,
"winning" means paying something in between what you want to pay and what
the dismissed employee is seeking.

Getting back to the labor flexibility issue, the biggest problem for Abe is
of course the fact that before salaries go up, a lot of voters will be put
out of work and who will be very unhappy with the LDP. According to the
Bureau of Statistics, in 2011 there were 31.8m regular employees and 17.3m
irregular ones. It will primarily be the regular employees who will be
targeted, since they are the ones that can't be fired easily at present.
4.5m of them means about 15% of the regular work force would lose their
jobs -- and that's probably not politically acceptable at the moment.

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+++ NEWS

- LCC's hurt JR West, fares being slashed
- 24-hour buses from December
- H.I.S. funds/runs new Thai charter airline
- Dating site employees had unusual jobs
- Kickstarter funded anime project exceeds goal by 1000%

=> LCC's hurt JR West, fares being slashed

JR West is taking action to counteract the inroads that the Low-cost
Carriers are making on its rail business, by slashing Shinkansen fares by
up to 35%. The LCCs offer faster, cheaper services, starting at around
JPY5,000 from Osaka and JPY7,000 from Tokyo to Fukuoka -- something that JR
struggles to compete with. From July 20th to September 30th, JR West and
Kyushu Railway will discount one-way Osaka-Fukuoka fares from JPY18,320 to
JPY12,500 and Osaka-Kagoshima fares from JPY21,600 to JPY14,000. ***Ed: Ahhh,
nothing like free competition to make prices a bit more accessible to the
ordinary person -- go LCCs!** (Source: TT commentary from e.nikkei.com, Jun
13, 2013)


=> 24-hour buses from December

One thing that has always struck us as strange in a 24-hour megalopolis
like Tokyo is how the trains totally shut down around 01:00am or so.
Although no doubt suburbanites deserve to get some sleep, and track
maintenance is necessary, one train an hour would surely not disrupt things
too much. Well now the metropolitan government has decided that at least it
will start running some late night buses. Initially the buses will run
between Shibuya and Roppongi -- not sure how useful that will be, but at
least if the pilot works, then they are considering expanding the service.
***Ed: What they really need is several late night buses out to suburban
termini, such as Kichijoi, Hachioji, Funabashi, Chiba, Yokohama, etc., with
stops along the way.** (Source: japantimes.co.jp, Jun 14, 2013)


=> H.I.S. funds/runs new Thai charter airline

Interesting to see Bobby Haque heading up the new airline that HIS has set
up with a Thai company. The new charter airline is called Asia Atlantic
Airlines, and will start flights between Bangkok and Narita next week.
Great timing, considering the government is in the process of loosening up
travel entry requirements for SE Asian nations. Asia Atlantic will start up
with two aircraft, and expects to expand to 20 over the next 5 years.
(Source: TT commentary from japantimes.co.jp, Jun 14, 2013)


=> Dating site employees had unusual jobs

The Yomiuri is carrying a piece about a dating agency called Wingnet which
had 170 part-time employees posing as dates for their customers. The
"dates" would work hopeful customers for cash by posing as celebrities and
agents. Flattered by the attention, customers, who could join for free,
would then pay JPY200 per message received and JPY300 for each one they
sent. There is no word on how much Wingnet scammed customers, but obviously
enough to keep 170 people employed. (Source: TT commentary from
the-japan-news.com, Jun 14, 2013)


=> Kickstarter funded anime project exceeds goal by 1000%

Perhaps ironic that while Cool Japan sits on JPY50bn, Japanese
animecompanies are needing to go to the USA and
Kickstarter to get funding to launch new projects. Still, if it works, then
all is well. The latest Japanese anime company to score big with Kickstarteris
Anime Anime Japan Ltd., which with its internationalization project for the
"Time of Eve" anime managed to handily surpass its original funding goal of
US$18,000. In fact, the company has so far raised US$138,544 (as of
Saturday) -- and they still have 7 days to go! ***Ed: We predict that with
the success of this project, there will be many more Japanese firms looking
to follow suit on Kickstarter. In fact, who needs "Cool Japan"?
(Source: TTcommentary from
asahi.com, Jun 11, 2013)


NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links -- we apologize for the inconvenience.


------ The Robert Grondine Memorial Scholarship Fund ------

In 2011, we lost a great friend and colleague, Bob Grondine. Bob made
considerable contributions in Japan to the legal and business community as
well as important civic and charitable efforts. Not only was Bob a
wonderful friend, family man and mentor, he was also a role model as a
leader in US-Japan relations.

Among a number of US-Japan causes, Bob was an important supporter and chair
of the Japan Advisory Committee of the United States-Japan Bridging
Foundation, an organization established to grow global leaders through a
program providing scholarships to American college students to study in
Japan. Students designated as Grondine Scholars will be selected for their
ability to emulate Bob's intellect and spirit as well as his dedication to
US-Japan relationship. The fund will keep his mentoring spirit alive and
memorialize his great legacy.

Donations of all amounts are welcome. To learn more, visit www.
bridgingfoundation.org or click on the link below. Thank you.



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------------------ ICA Event - June 20 --------------------
Speaker: Jean-Denis Marx , Lawyer for Baker & McKenzie

Title: "Practical Japanese Labor Law Guide for Employees"
Details: Complete event details at http://www.icajapan.jp/
Date: Thursday, June 20th, 2013
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members)

Open to all. No sign ups at the door!!!!!!!
RSVP: RSVP by 5pm on Friday, June 14th. Venue is The Foreign
Correspondents' Club of Japan.




In this section we run comments and corrections submitted by readers. We
encourage you to spot our mistakes and amplify our points, by email, to
editors at terrie.com.

=> No corrections or comments this week.



=> Japan Rail in Furano, Hokkaido

I arrived in the region of Furano on a local train after transferring at
Asahikawa Station. I had left Sapporo earlier in the morning and taken a
rapid train for the first leg of my journey but now, I was on a slow route
through the idyllic setting of the region made famous by rolling hills,
snow-capped mountains and flowers in the summer.

My first stop was Nakafurano station, a smaller town that had a cycle shop
that rented scooters. The shop was only a five minute walk from the station
and soon enough I was on my moped exploring the natural beauty of Furano.

At the end of the afternoon I returned to drop off my bike and headed back
to the train station. My ticket back to Sapporo left from Furano Station
only, so I took a local train ten minutes into the larger town to get ready
for the trip back home. I had been to the station earlier in the day with
my scooter and visited the information and tourism center and picked up
some very helpful English-language maps to ensure I wouldn’t get lost.

The station is relatively large, has a bicycle rental shop right beside it,
as well as a number of taxi stalls and a bus terminal. It should be noted
that the bus terminal offers a variety of short and long haul services and
even more importantly (for foreign English-speaking tourists), the
announcements for departing buses and the destinations they are serving is
also provided in English over the loudspeakers. So you have no reason to
miss your bus!


=> Bokusui Koen, Miyazaki

"Shiratori wa kanashikarazuya/Sora no awo, umi no ao nimo somazu/Tadayofu"
(Is not a white bird forlorn? It melts neither into the sky blue nor into
the sea blue. It flies and floats.) -Wakayama Bokusui, August 24, 1885 -
September 17, 1928 (translation by Kisaragi Chiyo)

The poet Wakayama Bokusui was born and raised in a beautiful mountain
village from which he journeyed far and wide in Japan and Korea writing
Tanka poems about the natural wonders he saw on his travels. It is said
that his heavy drinking, including (but not necessarily limited to) the
earthy sweet potato shochu common to Miyazaki, was responsible for his
early death. While there are museums honoring the poet here and there
around Japan, this is where he was born and grew up, and many of his local
fans no doubt believe his early memories live on in his poems. A number of
his devotees, therefore, make the trip out here to see his birth home.
Others visit to take in the view and breathe the fresh air.

Miyazaki is rich in such natural spots, and the further inland you go, the
better you will be rewarded. Bokusui Park (Koen) is one jewel of an
example. Bokusui’s house is inside the park, and you can catch a glimpse of
the rooms from the outside. If you follow the steps behind the house, you
will come to a small shrine and a stone slap with one of the writer’s
poems. There is also a museum in the park, if you want to learn more about
the poet. Across from the house is the rather expansive park with several
viewing platforms to take in the scenery. Kids will enjoy the many slides
and other contraptions built into the hills. One can take a picnic lunch
and enjoy the surroundings, or have a soba lunch at a restaurant right in
the park.




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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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