As Japan PM Abe weighs labor reform, IBM emerges as test case

Tue Jul 9, 2013 5:16pm EDT
 
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By Nathan Layne

TOKYO (Reuters) - When 27-year IBM veteran Martin Jetter came to Tokyo last year, the new president of the technology giant's Japanese arm had a radical idea: hold workers accountable for performance.

Within months of Jetter's arrival, IBM Japan fired a group of workers deemed to be underperforming in the kind of restructuring common in many Western countries but rare in Japan, where the most sought-after jobs have carried a promise of lifetime employment.

International Business Machines is now being sued for wrongful termination in what is shaping up as a legal test case in one of the most divisive and politically charged issues facing Prime Minister Shinzo Abe - whether to make it easier for companies operating in Japan to fire workers.

After years of economic stagnation, the prime minister hopes to shift Japan away from an employment system that prioritizes stability to focus on growth. On a Sunday television show, Abe said he wanted more hiring based on specialization or location - jobs that would offer benefits closer to full-time positions but be easier to cut if deemed no longer necessary - as one of his planned labor market reforms.

Advocates say these reforms would spur hiring and create opportunity for women and younger workers more likely to be stuck in lower-paid contract jobs without legal protection.

"We need to move away from this notion of lifetime employment. That means all the Japanese individuals should be more independent," said Hiroshi Mikitani, chief executive of internet shopping firm Rakuten Inc and a member of an industrial competitiveness panel that advised Abe on economic reforms.

But critics say the proposals are ill-timed. They would risk putting large numbers of mostly middle-aged men near peak earnings out of work just as the administration is trying to lift Japan from two decades of deflation and stagnant growth. The fired IBM workers are also middle aged.

"What the Abe administration is trying to do with labor reform is extremely dangerous," said Kensaku Sugino, secretary general of JMIU, the union representing dismissed IBM workers. "What is happening at IBM Japan shows what is at stake."   Continued...

 
Japan's Prime Minister Shinzo Abe, who is also leader of the ruling Liberal Democratic Party, speaks to voters during a campaign for the July 21 Upper house election in Tokyo July 4, 2013. REUTERS/Toru Hanai