Uncertainty clouds new law seeking job security for non-regular workers

March 28, 2013


In five years' time, labor advocates will know if a new law that takes effect in April to improve the unstable, low-paying positions that 14.1 million workers toil under, or fully one-fourth of those now employed, is successful or leads to more layoffs.

A major revision to the Labor Contract Law is a five-year rule for workers employed under a fixed-term labor contract. That rule will require employers to then convert such contracts to no-term ones, as is the practice among regular company employees.

Labor advocates wonder if companies will lay off non-regular workers shortly before their five years of contracts are up or if they will actually renew the contract without attaching a fixed term.

The designation of non-regular worker covers a wide range of individuals, from those working part time to those dispatched by temp staff agencies.

Tokyo-based Chat Noir Co., which operates a chain of coffee shops, had been renewing the contracts of part-time workers without limit. That practice will change from April, however, and workers will be hired for four years at the most.

A company official denied the legal revision being the reason, saying, "Because we had three-year limits on our contracted workers, we will also set such a maximum limit for our part-time workers."

However, one worker who joined a labor union and has been seeking the elimination of the limit said the new move was designed to avoid having to give workers contracts with unlimited terms.

One company that has said it would convert to new contracts is McDonald's Holdings Co. (Japan), which employs about 60,000 part-time workers at its outlets.

"While part-time workers have one-year contracts, we will basically renew the contracts because there are no major changes in the work volume," a company official said. "That practice will not change in the future."

Another legal revision that takes effect April 1 is a ban on discriminatory practices in terms of pay and other benefits between workers with fixed-term contracts and those with unlimited contracts as long as there is no major difference in the work being done.

At the same time, there are other organizations that have begun efforts to avoid giving workers contracts with unlimited terms.

For example, at most universities, the general practice for fixed-term contracts is to set the terms at three or five years. That means that a single renewal will give the worker the right to seek a contract without a fixed term.

One national university in Tokyo will begin considering from April a policy of not hiring teachers on fixed-term contracts for more than five years. A university official said the fundamental reason was to not implement a system for providing employees with unlimited term contracts.

Some companies are thinking about converting their non-regular workers to those dispatched by temp staff agencies. The switch would mean that those agencies would have to decide whether to grant unlimited contracts; not the companies where those individuals actually work.

An official with an agency said its client companies have asked if they can avoid the new law if they use dispatched workers.

While labor ministry officials expected such changes, one said, "We want to bring as much stability as possible to volatile hiring practices. We will provide support through other measures so effects will be felt from the legal revision."

Meanwhile, the labor situation in South Korea shows that legal revisions involving fixed-term contracts do not always lead to greater job security for workers.

In February, women who had been dismissed from jobs as school cafeteria workers and science lab assistants held a protest in front of the Seoul board of education. About 10 women took turns sitting in front of the educational board building from Feb. 18 and started a hunger strike from Feb. 25.

According to a South Korean women's labor union, of the approximately 80,000 individuals with fixed-term labor contracts at public and private elementary, junior high and senior high schools around the nation, 5,000 or more were laid off at the end of February. Of that number, 90 percent were women. Most had only one-year contracts, and many lost their jobs after working for only a year or two.

A legal revision took effect in South Korea in 2007 in which anyone who worked for more than two years at the same workplace under a fixed-term contract would be considered to have an unlimited term.

The revision was incorporated after a sharp increase in the number of non-regular workers in the wake of the 1997 Asian financial crisis.

However, it has been difficult to evaluate if the change has boosted greater job security because there are no accurate statistics for the number of such workers who have been dismissed.

"Our view is that there has been no change in the ratio of those dismissed from around the time when the revision went into effect," the Federation of Korean Trade Unions has said. "There have been some positive results because there has been a decrease in the number of non-regular workers."

However, the Korea Employers Federation, which is made up of about 4,000 member companies, is calling for removal of the restriction because 75 percent of workers on fixed-term contracts at companies with at least 300 employees have been dismissed because of the two-year rule on converting to unlimited contracts.

The South Korean government tracked about 20,000 workers on fixed-term contracts between April 2010 and July 2011. About 30 percent left the jobs, including those who were laid off, while 10 percent became regular company employees and 30 percent were given unlimited contracts even though they did not become regular employees.

However, those on unlimited contracts were found to have their working conditions and other factors, such as wages, unchanged from before the conversion. They also tended to have a lower possibility of promotion and pay raises.

A new term that can be translated into "semi-regular worker" was created for those who fell between regular and non-regular workers.

"Semi-regular workers are fake regular workers, and they are prevalent in the public sector, banks and the distribution sector," said Lee Nam-sin, chief director of the Korean Contingent Workers' Center, adding there was a move toward indirect hiring through the use of subcontractors.

Kim Yoo-sun, head of the Korea Labor and Society Institute, said, "Because dismissing workers every two years became a burden, there were many cases of switching to unlimited contracts. If the rule was for five years like Japan, everyone except those who were really necessary would likely be laid off."

(This article was written by Takufumi Yoshida and Hideaki Ishiyama.)

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South Korean women who were dismissed from jobs at schools under fixed-term contracts stage a hunger strike demanding to be reinstated. (Hideaki Ishiyama)

South Korean women who were dismissed from jobs at schools under fixed-term contracts stage a hunger strike demanding to be reinstated. (Hideaki Ishiyama)

  • South Korean women who were dismissed from jobs at schools under fixed-term contracts stage a hunger strike demanding to be reinstated. (Hideaki Ishiyama)

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