Stopping False Labor Subcontracts

Since late July, the term "false labor subcontracts" has frequently made the headlines. The term refers to labor practices in which manufacturers and other companies accept temporary, dispatched workers from manpower agencies but falsify their labor contracts, claiming that they are subcontracted workers, so as to evade various obligations involved in their employment. More than a few of Japan's leading companies are among firms recognized as violators by labor bureaus.

False labor subcontracts were found to be common among construction companies, and cases were first unearthed in the manufacturing sector in March 2004 when the Workers' Dispatch Law was revised and the ban on the dispatch of workers to manufacturers was lifted.

Under dispatch labor contracts, unlike under subcontract agreements, firms have direct employment and other obligations as employers, and are also responsible for the industrial safety and health of the workers concerned, all of which create extra labor costs.

Most of the workers hired under false contracts are aged 20 to mid-30s, receive little or no bonus payments and chances to be promoted to higher posts, and are paid less than half the wages of regular employees. What is more, once their contracts end, they become jobless immediately.

The labor administration continued giving administrative directives, without publishing their names, to firms committing such illegal practices, but the issue was brought to the surface by the press, which exerted increasing pressure on firms to rectify the situation.

Following a series of media reports, some large firms were moved to act promptly and publish what actions they took to stop false labor subcontracts, while labor unions announced their views with regret for their failure in halting these illegal practices.

Rengo (the Japanese Trade Union Confederation) expressed great regret and said that unions were not exempt from blame on the grounds that rampant false labor contracts and illegal dispatch of workers had been left uncorrected, and that they were not fulfilling their duty to watch for illegal practices and circumvention of laws by firms, and to appeal to the latter to rectify them. It also declared that unions would intensify their efforts to get rid of all false labor contracts or illegal worker dispatching at every workplace.

Denki Rengo (the Japanese Electrical, Electronic & Information Union), condemning the failure of firms to comply with laws against false labor subcontracts, called on affiliated unions to step up their efforts to ensure appropriate use of subcontracts and dispatching contracts through, for example, strict control of compliance with labor-related laws and monitoring activities at individual workplaces.

Quite obviously, the situation could become dangerous for Japan if illegal, false labor contracts remain rampant and the widening income disparity among young people is neglected.