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 AOYAMA VIEW

Trump impact spreads - Japan struggles with workforce issues
The world is whirling of President Trump's decision to pull USA out of Paris climate deal and of its global political consequences. It was as expected, petty political theater played to his domestic supporters in line with his other moves before, but more ugly than necessary to the rest of us as it came accompanied with such long list of lies for motivations. Trump's America continue to cut itself off from the rest of the world and with such selfish, ignorant leader, it cannot be trusted any more as a number of other countries' leaders now finally dared to point out.

Critical commentators in USA have not spared strong words. "A stupid reckless decision – the nation's dumbest act since launching the Iraq war...a thorough repudiation of two civilizing forces on our planet: science and diplomacy", wrote one. Another lamented ironically: "President Trump has accomplished an extraordinary amount in short time. With shocking speed he has wreaked havoc: hobbling our core alliances, jettisoning American values and abdicating US leadership of the world for Russia and China. This last disastrous decision is the coup de grace for American post-war leadership for the foreseeable future. It was not taken from us by any adversary. America voluntarily gave it up – because we quit the field."

With fine writers like that it's useless for a non-native columnist to try to match them. It's just amazing how this simple man sees the rest of the world only as adversaries that must be bent to his will and serve US interests y sheer hard power, military or economic. With this he is destroying the endless stock of good will and soft power that America has traditionally enjoyed over us, in form of advanced technology, high level universities, big business, top sports and wide varieties of popular culture. He has clearly handed China a great geopolitical gift, yet happily, the other countries are not willing to buy Beijing's alternative reality either that easily, but can see through the sweet words and promises of big rewards. No better example of this than the still-born EU-China grand bargain on climate after Trump Dump that was supposed to lead to many other things between the two: it was there in a Brussel morning, but vanished by afternoon when Chinese negotiators showed their true targets in trade issues.

Japan, always mindful for anything with USA, was content to note US resignation from Paris "with disappointment", but rushed to assure with other participants that all will stay the course together. Coming after another similar disappointment from Trump with US resignation from TPP and despite Japan's critical reliance on US in security against North Korea and China, it looks like Abe government's tune is changing in foreign policy. Japan is now pushing for realization of "TPP 11" without US participation – something earlier rejected outright – as well as thinking positively of China-led Asia-only RCEP trade area venture. This week Abe even hinted Japan might join China's new Asian development bank and its One Belt One Road project even if both clearly are vehicles to expand China's powerful reach through Asia, Middle East and Africa all the way to Europe. In fact, Japanese and Chinese diplomats are already working to realize reciprocal visits to each other's country by Abe and Xi, long overdue since the two leaders both took power in 2011. We need to thank Mr. Trump for this change of mood.

With a "friend" like this even Trump's only supporter in Europe, British PM May is now in trouble. Unsavory tweets from the night time White House about two horrific terror incidents have put the accommodating British leader in shame just before the crucial Parliament election today. It was supposed to be a victory lap and reinforcement for her incoming Brexit talks, but now it looks like she will barely scrap a win to maintain her seat even if her Labor opponent is a hopeless socialist, pacifist dreamer straight out of the 60's. The top song on British hit list right now, called "Liar, liar", is an unabashed putdown of May's policies and reputation and reflects well what many voters think about her.

In Japan, Abe-san continues to push for his non-business legislation that he thinks is so important despite opposition stubborn resistance. Powerless against ruling parties' majority, DPJ and JCP who both command less than 10% seats in the Diet, have adopted guerilla tactics: this week they stopped the Upper House Committee debating the controversial conspiracy law with no-confidence vote against its chairman and said they might propose no-confidence vote even for Prime Minister, who keeps refusing any responsibility in the latest school scandal with his close friend, to temporarily halt all legislation. This will make it difficult for intended legislation to pass through in the ongoing session that is scheduled to end June 18 unless extension is agreed upon. One proposed piece that might drop off is heavier punishments for rape and other sex violence that the Buddhist party Komeito has initiated, something that would again harm its alliance with LDP. Amazingly, Japan's current sex laws are from more than 100 years ago!

Meanwhile, in the Constitution change issue, LDP has finally managed to unite its ranks for a party committee that includes all its heavyweights to hammer out a unified LDP proposal as to what exactly should be changed. As the party leader and PM finally announced, he wants to see at least that Defense Forces are clearly mentioned there to remove any doubt that somebody might later claim SDF is "unconstitutional". Also, it seems, other parties' requirement for free education will make its way into Constitution. If this would be all, it would sound very reasonable, but let's see. As said before, it seems there are as many opinions as members inside LDP and then some more when other parties join the debate. The Boss has given marching orders to his cohorts that LDP's unified proposal must be ready for debate by the next parliament session that starts in September.

One new law that was already dumped from this session is the anti-smoking law as the Health Ministry's proposal clashed with old party hacks who want to continue enjoy their smoking where ever they please – and continue to get some support money for it from Japan Tobacco, the old monopoly that is still 30% owned by government. It is said that nearly 70% of LDP parliamentarians belong to this group, mostly old men as they are. The final feud was about which kind of restaurants and bars should be excluded in the law: Ministry's draft said it should be only night time snack bars smaller than 30 sqm whereas pro-smoking MP's claimed establishments up to 150 sqm should be allowed smoke as long as they would exclude children coming in and post a "smoking allowed" sign outside.

As it is, Japan ranks lowest in the list of developed countries in terms of tobacco control. Most others have fully adopted WHO norms that forbid smoking in 8 categories of public spaces including hospitals, schools, restaurants and public transport, where as in Japan there is no law against smoking in any of them. Sure, smoking is forbidden in most such places except for designated smoking space or wagon, but that's by choice of the business owner, not by law. It's because the number of smokers has declined from close to 30% in 2003 to below 20% in 2015 and the non-smokers complain they suffer from secondary smoke from smokers. The anti-smoking group say that Japan should act after having joined WHO Convention on Tobacco Control back in 2004 and that it will be international shame if Tokyo 2020 will be the first host city who don't follow IOC policy for smoke-free Olympics. Yet, the Old Guard sticks to its views unmoved even by data that shows 15,000 citizens die every year for secondary smoke.

With such steadfast resistance to change in this kind of small issue, you can understand how difficult it is to push through new laws here in more important issues. This does not stop Prime Minister from making new pledges to voters, especially when criticized he has failed to fulfill the earlier ones. In the child day care issue, a crucial requirement to get married women back to work force, Abe has now promised he will create 220,000 new day care spots by 2020 – and 100,000 more by 2025. Originally he promised to eliminate all waiting lists by end this year, yet that target looks far off. Out of 1.8 million new jobs created under Abenomics, 1.5 million have gone to women and this has made for bigger than excepted demand, claimed the government spokesman. For the ongoing year, government is spending JPY 1.15 trillion (EUR 9.3 billion) on day care, so you cannot say the lack of places is due to lack of effort. Instead, it's mainly from misguided regulations: the bottleneck is not lack of establishments but from lack of staff in them and this, in turn, comes from nurses' low salaries which are government controlled in conjunction with public support for their employers. With other jobs on offer aplenty today, it is not attractive to become a child care nurse and earn much less.

And boy, is there jobs available! According latest job data, there's now 1.48 jobs for each applicant, more than at the top of the bubble economy in 1989. In Tokyo, there's 2.07 openings for every job seeker and even in the worst place Hokkaido, the figure is now 1.09. Of course, most of the available jobs are non-regular with lower salary, average 60% of similar regular job pay, yet the sheer number of available jobs today, 1.5 million non-regular and 2.7 million overall, tell a story of utmost employment tightness that is bound to figure heavily in how business and economy will turn out in near future. The number of working age population 15-64 is now down to 77 million from the peak 87 million 20 year ago – much faster decline than the overall population decline that started 10 years ago – and it won't get better any time soon with births last year falling below 1 million for the first time in history. Yet, remarkably, the number of working people has increased during Abenomics from 62,8 million to 64.6 million.

Part of the increase is women, who have returned to work after child birth and more are needed desperately. The key to get them back is that they have day care available for their children as well as meaningful jobs on offer that pay decent salary. Unable to control wages that private companies pay, the government has focused on the first mentioned issue, yet voices are growing that it should mingle more in salaries and career opportunities as well. One way is to considerably raise minimum legal wages that are very low internationally in Japan, not just small tinkering once in a while as until now. Government could also start taxing big companies for the big troves of unused cash that they have hoarded to force them invest it or pay higher salary.

As for attractive career, OECD just proposed Japan should consider setting up legal quotas for women in corporate boards and other management positions in order to drive change into male dominated work culture that favors punishing overwork and social meetings after hours - "drinking with the boys" to put it straight – something mothers with children in day care obviously cannot follow. Pointing out that even other countries have found it challenging to create work culture to suit women without imposing quotas, the OECD representative said more women in leadership positions is the best way to make work more attractive to all women. Thinking back how the situation is in Finland, that sounds about right. Abe once tried to propose such "targets" but they failed miserably even in goverment's own offices as they were not backed up with any legal sanctions.

It's not only about women: companies, who find it hard to hire sufficient staff, are considering how to make the work conditions more human friendly to all. One example is courier company Sagawa Express, who just announced it will introduce a 4 day working week in Tokyo area as a test for a nationwide change. Punishing work speed running stairs up and down to deliver parcels from early morning to late evening and over weekends has made it difficult to hire new staff as much as needed for the courier companies' rapidly growing business. This was evidenced by No.1 Yamato Transport Co recently and now No.2 Sagawa tries out a new model which allows 3 days off with family and friends in return for 10 hour day instead of normal 8 hours on the 4 work days. The result is more free time, t lower monthly salary, an advantage for the company. If the model proves its purpose and brings more applicants to join Sagawa's 30,000 regular drivers, Yamato will try same to add to its 60,000 regulars. The clothing store Uniqlo and IT company Yahoo Japan have already changed to the four day work model.

Old, traditional heavy manufacturing industries are clearly in ever worse position for attracting new staff than the examples mentioned above. A depicting story how out they are for the young people today is a recent Bloomberg report of Nippon Steel and Sumitomo Metal's glitzy video advertisement on giant screen over the Shibuya crossing, young people's mecca. "Make your life in Sumikin!" the video for the 116 year old company, Japan's 4th most popular work place back in 1978, proclaimed using the well-known kanji abbreviation. "Who are they? I can't read it", responded a 17 year old at the place. Only two out of 10 young people interviewed by Bloomberg correctly identified the name for the world's 3rd largest steel producer! Such failure of brand identity reflect the changing trends in the society where jobs in regimented big companies are increasingly shunned in exchange for more casual small companies in IT biz, finance, tourism, food and other service industries. Global giant Nippon Steel & Sumitomo Metal is now 87th popular choice for graduating students. How tough!

Timo Varhama  
Tokyo, June 8, 2017   


Previous Columns

30 May 2017
"Taormina to Tokyo: Heavyweights and fashionable ladies"

"New Missiles, Diet Debates, Yet Big Business in Big Profits - Down on Ground Challenges Remain Basic and Simple"

9 May 2017
"Golden Week, Special Trains, Luxury Spending, Even North Worries Makes for Good Business"

20 April 2017
"North Korea, USA both worry Japan - Koike worry Abe and LDP even more"

5 April 2017
"Spring, Sakura and New Year Start in Japan - Commotion, Tensions Rise Around the World"

27 March 2017
"Questions Unanswered, Unasked – Lifestyle and Surveys Bring Light"

21 March 2017
"Finland in Focus: Friendship, Dictionary, Music, Food - Even Elevators?"

13 March 2017
"Uncertainty Increases Around Japan - At Home Rebuilding Uncompleted in 6 Years - Abe Popularity Takes a Hit."

3 March 2017
"Book Readers, Police Jokes, Nerdy Napoleon and Poison Scare"

24 February 2017
"Populism, Ignorance and Isolationism Leads to Mayhem and Mess"

16 February 2017
"Golf Diplomacy, Chocolate Festa and Hokkaido Deams-Come-True"

9 February 2017
"Tokyo overcoming winter, business changes, political battle and Trump threats "

2 February 2017
"Warm Feelings in Japan, Wild Winds from USA"

20 January 2017
"Ready for Rooster? It will be a wild ride!"



About the Columnist

The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.

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