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August
2007
Temp Staff Industry Seeks To
Sharpen Workers' Skills
Pasona Inc. and other temporary staffing agencies are working to build
systems for developing and assessing the job skills of their registered
employees, in a bid to give them an edge in the marketplace. Partly behind
the moves to support career development programs for temporary workers are
growing fears about labor shortages as well as the need to address the
growing wage gap between temporary and permanent workers. The Temporary
Work Services Association of Japan has recently created a committee of
experts from academia and the staffing industry, which is slated to launch
a fact-finding survey on temp agencies and their workers in September.
Based on the results of the survey, the panel will discuss such issues as
how to secure training opportunities for temporary workers and how to
develop an aptitude evaluation system. The committee is expected to create
a model system within this year and encourage temp agencies and their
corporate customers to introduce the program. The association believes
that under the new system, even registrants that continue to work as
temporary employees will be able to improve their careers by shifting to
more challenging jobs using their newly acquired skills. Pasona plans to
introduce its own job qualification system in November in which enrolled
staff will be classified based on five levels of experience in such job
categories as regular office worker and receptionist. While temporary
workers are rarely given skill and career evaluations, "Their
productivity differs according to their experience," Pasona President
Yasuyuki Nanbu said. Pasona's planned qualification system will be
designed to boost workers' qualifications to match their careers and
enhance their morale. The company will also consider partly basing wages
on employee qualification levels. Jtec Corp., which focuses on dispatching
engineers, will by next summer end the existing periodical pay raise
system for its registered workers and introduce a merit-based wage
structure. Under the new system, workers will be classified into four
grades based on their technological skills, among other criteria, and
rewarded according to the type of job associated with each grade. The
number of temporary workers rose 12% year on year to a record 2.55 million
in fiscal 2005. Of the total, over 70% were people in their 20s and 30s.
According to a report by the Ministry of Labor, 85% of temporary workers
earn less than 3 million yen a year. Currently, nonpermanent employees,
such as temporary and part-time workers, account for 30% of Japan's
working population. (The Nihon Keizai Shimbun, August 28, 2007)
Hiring Of Foreign IT
Professionals Enters New Phase In Japan
Recruiting of foreign IT professionals is growing in Japan, with JobStreet
Corp., the largest online employment agency in Southeast Asia, poised to
enter the market by recruiting foreign engineers on behalf of local
companies. JobStreet intends to establish a Japanese unit in October
jointly with a local firm that specializes in placing IT engineers, with
plans to start doing business in November. The Malaysian firm will be the
first job agency from Southeast Asia to expand into Japan. The local
entity will receive orders from companies and either provide candidates
for them to hire or dispatch workers as temporary staff. The firm will
also handle visa applications and other required documentation. JobStreet,
which is listed on the Bursa Malaysia stock exchange, and its group firms
currently do business in seven Asian countries, including India and the
Philippines. A total of 4.2 million engineers in India, Taiwan and
elsewhere have registered with the firm through its JobStreet.com Web
site. Statistics compiled by the Labor Ministry show that the ratio of job
offers to job seekers for data processing technicians stood at 3.41 in
June. Workers experienced in developing video cameras and other digital
appliances as well as those who can design robots and electronic circuits
are in particularly short supply. However, foreign technicians must meet
stringent conditions to work in Japan, including having at least 10 years
of experience. In March, the Japan Business Federation, also known as
Nippon Keidanren, requested that the government loosen the requirements.
Temporary staff agency Human Resocia Co. is trying to meet the growing
demand for foreign engineers by partnering with schools and other entities
in China, India, the Philippines and Vietnam. It began recruiting
engineers in those countries last year. The firm has obtained jobs for
only 12 people in Japan so far, including machinery design engineers, but
aims to boost that to 100 by March 2009. Major job agency Tempstaff Co. is
also considering recruiting foreign engineers. "The domestic supply
(of engineers) is not sufficient to meet demand, so we want to broaden our
recruiting channels," a company official said. (The Nihon Keizai
Shimbun, August 09, 2007)
Strategic Step Toward
Adopting Intl Accounting Standards
The Accounting Standards Board of Japan (ASBJ) and the International
Accounting Standards Board (IASB) recently reached an agreement to
eliminate by 2011 all the differences between Japan's accounting standards
and the international rules set by the IASB. The ASBJ's decision to move
toward convergence with international standards reflects an accelerating
global trend and is a welcome policy shift. Over 100 countries have
already adopted the worldwide bookkeeping rules, known as the
International Financial Reporting Standards (IFRS), which aim to harmonize
financial reporting. Due to the globalization of corporate and investment
activities, accounting rules are assuming increasing importance for
efforts to support domestic companies operating overseas and attract
foreign businesses and investors to domestic markets. In 2005, the
European Union required European companies to use the international
standards, and is now demanding that foreign companies operating within
the euro zone to adopt accounting rules equivalent to the IFRS by 2008. In
the developed world, Japan and the U.S. are almost the only countries that
still stick to their own accounting regimes. But the U.S., which had been
unwilling to accept anything other than its own accounting standards, has
changed its policy and decided to allow domestic companies as well as
foreign firms to use the IFRS. The U.S. move has apparently been prompted
by intensifying global competition for investment. Japan would risk
international isolation if it continued to buck the trend, and the
economic logic of harmonization is simply too compelling to ignore. The
key area of difference between Japanese and international standards is
corporate consolidation. In the case of an equal merger, for instance,
Japanese rules allow the acquiring company to take over the assets of the
other company at book value. But U.S. and European standards require that
such assets be assessed at their market value. Japanese companies oppose
the adoption of the Western approach for "cultural" reasons, but
the market value method would be beneficial for investors because it
injects more transparency into the accounting process. Whether or not
Japanese companies have a strong case for opposing this and other changes
needed for the planned convergence of Japanese and international rules,
the country is not able to turn its back on this global trend. Through a
series of accounting reforms since the late 1990s, Japan has been bringing
its standards closer and closer to those used in Western industrialized
countries. But Western accounting rules have evolved further in the
meantime as the world economy has become increasingly globalized and
market-oriented, and Japan has lagged behind other major industrialized
countries in adjusting its accounting regime to the new economic
environment. There are still many hurdles that must be cleared to
accomplish the envisioned convergence. One big challenge is how to adjust
the corporate tax code so that the necessary changes in accounting rules
will not provoke strong opposition from the business community out of
concern about tax disadvantages. Such fundamental changes in the tax and
accounting regimes require joint efforts between the public and private
sectors underpinned by a clear and coherent strategy. (The Nihon Keizai
Shimbun, August 13, 2007)
Japan's Direct Foreign
Investment Hit Record $50.2bn In '06
Japan's net direct foreign investment climbed 10% on the year to a record
50.2 billion dollars in 2006, surpassing the 50 billion dollar mark for
the first time ever, according to data released Wednesday by the Japan
External Trade Organization. The previous record was 48 billion dollars in
1990, during the heyday of the economic bubble. JETRO's 2007 White Paper
on International Trade and Foreign Direct Investment attributes the large
investment amount to the growing number of Japanese companies making
forays into emerging economies, particularly in Asia. "Japan's listed
companies generate about 30% of their sales and operating profit from
abroad, of which about 30% is from Asia," the report says. Meanwhile,
overseas mergers and acquisitions by Japanese companies also helped lift
Japan's direct investment abroad. Such M&As soared 64% on the year to
19.9 billion dollars thanks to such major deals as Toshiba Corp.'s
acquisition of Westinghouse Electric Co. On the other hand, foreign direct
investment into Japan saw a net capital outflow -- the first in 17 years.
Capital inflow reached a record high as a result of brisk foreign
investment in Japan's financial, chemical and pharmaceutical sectors. But
capital outflow also ballooned to a record high because of such factors as
Vodafone Group Plc's sale of its Japanese subsidiary. (The Nihon Keizai
Shimbun, August 8, 2007)
Govt Panel Draws Up
Guidelines For FY08 Budget
The government's economic policy-making panel agreed Tuesday on guidelines
for the fiscal 2008 state budget, featuring spending cuts in key areas
such as public investment and social security costs, in an attempt to curb
core policy-related expenditures. The guidelines were adopted at a meeting
of the Council of Economic and Fiscal Policy, chaired by Prime Minister
Shinzo Abe, following recommendations made Monday by four private-sector
members of the panel. The panel agreed on a 3 percent cut in public works
projects from the previous year, and a reduction in social security costs
by 220 billion yen on a general-account basis. The guidelines also require
the government to trim personal expenses for public servants by 0.5
trillion yen or more at the national and local levels in the fiscal 2008
budget. Finance Minister Koji Omi said during the panel's meeting that it
is necessary to implement maximum spending cuts in compiling the fiscal
2008 budget, economic and fiscal policy minister Hiroko Ota told a news
conference. Omi said the government will set aside necessary budgetary
allocations for four key policy areas -- boosting economic growth, the
revitalization of the regional economies, education reform and prompting
environmentally-friendly policies such as reducing greenhouse gas
emissions, according to Ota. The panel is expected to determine the size
of the spending cap on core policy-related outlays in a meeting Thursday
and then the Cabinet will likely endorse it Friday, government officials
said. In July last year, the Finance Ministry put a 46.8 trillion yen
spending cap on policy-related expenditures in the general-account budget
for the current fiscal year that covers the 12-month period from April
2007 to March 2008. The size of the spending cap on general expenditures
is likely to exceed the previous year's level to top 47 trillion yen again
under the fiscal 2008 budget, government sources said. (Kyodo News
Service, August 07, 2007)
Govt Panel Agrees To Curb
Social Security Spending Growth By Y220bn
The government's Council on Economic and Fiscal Policy agreed Monday to
pare increases to social security spending by 220 billion yen in the
fiscal 2008 budget, in line with a proposal from its nongovernment
members. In the 2006 Basic Policies for Economic and Fiscal
Management and Structural Reform, the government set the goal of cutting
social security spending growth by 1.1 trillion yen over five years. The
CEFP also approved a 3% year-on-year cut to public works spending as well
as a more than 500 billion yen reduction to central and local government
payrolls at their meeting. The cabinet is slated to approve a
budgetary request framework based on the CEFP guidelines at a meeting
Friday. Canon Inc. Chairman Fujio Mitarai and other nongovernment
CEFP members emphasized the need for spending reforms in the fiscal 2008
budget but noted that expenditures should be distributed in a way that
will allow all regions and people to benefit from the economic growth. As
for the government's mismanagement of pension fund records, the
nongovernment members stated that efforts to address the issue should be
assigned a deadline so that growing mistrust within the society can be
alleviated. In addition, the nongovernment members called for
efforts to realize major reforms for taxes, including the consumption tax. （The
Nihon Keizai Shimbun, August 07, 2007）
Fate of reforms up in air
after LDP's election defeat
Voters reacted to months of scandals; opposition victory may force agenda
rethink the fate of fiscal rehabilitation and other economic policies is
uncertain after the ruling coalition helmed by the Liberal Democratic
Party suffered a stunning defeat in the July 29 upper house election.
Although the LDP-led government had initiated an agenda for fiscal reform,
the main opposition Democratic Party of Japan - whose platform includes
alleviating urban-rural disparity, protecting farms and improving programs
to assist child-rearing - won 60 seats in the vote out of 121 contested,
handing the opposition camp a majority in the upper chamber. Analysts note
that the setback may force Prime Minister Shinzo Abe's government to
abandon its emphasis on growth and heed opposition demands for a more
equitable distribution of funds. Some LDP lawmakers have gone so far as to
demand the resignation of Abe, who also heads the party itself. Abe
scoffed at the calls for his head but said he plans to reshuffle his
cabinet, probably later this month. Facing the firestorm head-on, the
government decided last week to propose retention of fiscal 2007's 3%
spending cut on public works projects for fiscal 2008 to hold such outlays
below 6.8 trillion yen ($57.1 billion). The government sets ceilings,
which reflect such cuts, before budget requests are made by each agency
and ministry in August. The decision quickly met criticism from the LDP's
own ranks. "I wonder if the party executives really reflect on our
defeats in the local constituencies," said one lawmaker at a Aug. 2
meeting of the faction led by Toshihiro Nikai, former minister of economy,
trade and industry. The public pension record-keeping fiasco and numerous
scandals of cabinet ministers were central issues in the election
campaigns, and many LDP members now believe that local residents'
dissatisfaction accounted for much of the ruling coalition's loss. Even as
rural areas lag behind their urban counterparts in the economic recovery,
the government failed to present effective measures to fill the gap.
Perhaps as a result, the LDP lost badly in local single-seat
constituencies. The government said that it will start a comprehensive
discussion on tax reform this fall. But Finance Ministry officials were
left speculating whether the election loss spelled the end of plans to
raise the consumption tax. The ministry had aimed to raise the tax rate in
conjunction with the increase in the state's share of basic
pension-program costs slated for 2009. The measure would require some 2.5
trillion yen in extra funds, which translates into a 1% rise in the
consumption tax from the current 5%. The rate would need to be bumped up
further to pay for other measures, including those aimed at addressing
Japan's low fertility rate and aging population. The ministry intended to
submit a reform bill to the Diet as early as 2008, but the DPJ, which
calls for maintaining the consumption tax at its current rate, scored a
decisive victory. For its part, the DPJ insists on using revenue from the
consumption tax to fund public pension expenses - a policy criticized as
unrealistic by the ruling parties during the campaigns. The prospect of
corporate tax reform has also been dealt a blow. The business community
was hoping that the government would move to lower the corporate tax rate
after deciding to increase the consumption tax. However, the political
winds appear to be blowing in the opposite direction. Meanwhile, Abe's
responsibility for the ruling coalition's defeat is under the microscope.
DPJ President Ichiro Ozawa said, "Voters expressed their lack of
confidence in the Abe cabinet." At a July 31 meeting of the LDP's
General Council, Koichi Kato sharply called for Abe's resignation, saying,
"It is unreasonable for the person who caused the defeat to retain
his position." Agriculture, Forestry and Fisheries Minister Norihiko
Akagi did his part to take the blame by stepping down on Aug. 1 over an
alleged political fund blunder. Despite fierce opposition criticism, Akagi
did not clearly respond to the allegations or explain the expenses booked
by his supporting group, based in his family's home. And as Akagi's
scandal must have had some bearing on the LDP's election debacle, some
party officials called the agriculture minister's resignation "too
late." (The Nikkei Weekly, August 06, 2007)
Japan looking at global
accounting standards by 2011
The Accounting Standards Board of Japan has set 2011 as a target year to
eliminate the differences that exist between Japan's corporate accounting
rules and those that are widely applied around the world. The biggest
difference that is cited most often is how Japanese rules treat mergers
and acquisitions. In Japan, companies are allowed to use a book-value
method to assess assets instead of market value. International and U.S.
accounting rules both require the application of a market-value method due
to a lack of transparency in book value. The ASBJ will require that market
value be used to assess assets. Another difference between Japanese and
international accounting rules is how goodwill is treated during a
corporate acquisition. In Japan, if the value of an acquired business
declines, a company is required to book the loss as well as a certain
amount of expenses every year. Overseas, however, companies are only
required to write off the loss. The ASBJ will consider eliminating the
booking of expenses. (The Nikkei Weekly, August 6, 2007)
Govt Sees Exit From Deflation
With Real Growth Of 2.2% In FY08
The government expects the economy to grow 2.2% in real terms and 2.6% in
nominal terms in fiscal 2008 under its medium-term outlook, signaling that
it believes the nation will fully emerge from deflation this fiscal year,
The Nikkei learned Friday. In deflation, the nominal rate falls below real
economic growth. The government believes that this trend will be reversed
in fiscal 2008, with the consumer price index posting growth. The
government said in a January forecast that the economy will grow 2.8% in
nominal terms for fiscal 2008, but nongovernmental members of the Council
on Economic and Fiscal Policy downgraded the projection to 2.6%. This more
cautious scenario, which projects lower tax receipts, is expected to
become the basis for the nation's economic and fiscal policies. In the
January forecast, the government said a primary balance surplus will be
achieved in fiscal 2011, with the figure equaling 0.2% of nominal gross
domestic product, as compared with a deficit currently. But this view too
has been downgraded, with revenue and expenditures in the primary account
now seen offsetting each other in fiscal 2011. The downward revision
indicates that the goal of achieving a primary balance surplus may be
delayed if tax revenue does not grow as expected and spending cuts are not
implemented as planned. Under the revised scenario, the government
forecasts real economic growth of 2.3% in fiscal 2009 and 2.5% in fiscal
2010, upgrades of 0.1 percentage point each year. It also projects nominal
economic growth of 3.1% in fiscal 2009 and 3.4% in fiscal 2010, down 0.2
point and 0.3 point. (The Nihon Keizai Shimbun, August 04, 2007)
June
2007
Five-year visas under
consideration
Highly skilled foreigners would be given five-year visas rather than the
current three under a government deregulation plan. The three-year action
plan, which runs through fiscal 2009, is aimed at ensuring economic growth
through regulatory reform. Covering 15 sectors of the economy from
healthcare through education, the plan also calls for raising the age
limit for hiring civil servants to make it easier for midcareer
professionals who have lost their jobs to rejoin the work force. In the
health field, the online submission of treatment fee receipts would be
mandatory for all medical institutions. The plan also recommends
simplifying procedures for foreigners seeking residency permits by
creating a nationwide information network linking administrative agencies.
The government intends to submit the plan for cabinet approval on June 22.
(Nihon Keizai Shimbun, June 18, 2007)
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