The Secret Lives of Toyota Term Employees, Episode 5

Do you live with the fear that your job may be gone tomorrow? Toyota group company workers do, according to an article titled Growing Reliance on Temps Holds Back Japan’s Rebound in the Wall Street Journal on January 7, 2008. The central point of the article is this:

One reason Japan’s rebound hasn’t gotten traction: companies’ growing reliance on temporary workers, who earn less — and spend less — than full-time employees. The shift in hiring can be seen at companies like Hino Motors Ltd. The truck-making unit of Toyota Motor Corp. is paying record dividends this year. But it also has been filling thousands of factory jobs with temporary workers, who start at $10 an hour and get few benefits.

Even if you don’t believe in fairness, you don’t subscribe to the Toyota philosophies of kaizen and respect for people, you are not a term employee or temporary worker, and you don’t live in fear that your job may be gone tomorrow, you should be concerned when Japanese people don’t spend money. As the world’s second largest economy, the spending of people in Japan affects the global economy disproportionate to their shrinking population of around 130 million souls.

The increased reliance on term and temporary labor may be a good way to drive up profits for corporations in Japan in the short term, but is it a good thing in the long term? Is it sustainable, Mr. Watanabe?

Here we have the voice of management (Hino Motors) and labor (non-permanent worker Ikeda):

Toyota’s all-union labor federation has begun inviting temps and part-time workers to join, saying the increase in the number of nonpermanent workers is threatening unity in the work place.

But for companies like Hino Motors, temps remain an important resource. Between 1998 and 2002, Hino reduced full-time workers to 8,600 from 9,500. When sales picked up and it needed more workers, Hino turned to temp agencies. As of March 31, Hino had 4,770 temps and part-time workers, up from 684 in 1998.

The company doesn’t disclose pay scales. According to an ad by a staffing agency, a temp job at Hino pays about $10 an hour. This translates to pretax pay of about $21,000 a year. The average pay for all of its full-time people, including executives, was about $55,000 in the year ended March 31.

“The level of our production fluctuates sharply each year,” a Hino spokesman says. “Bringing in temporary people whenever we have a shortage is simply what we have to do in manufacturing.”

When Mr. Ikeda failed three years ago to get a job as a teacher, he found that signing up at a temp agency swiftly landed him temp work at Hino. But when he missed work for three days because of food poisoning, the staffing company called up to say he would be asked to quit if he doesn’t come back soon. Though he survived that, he quit later, and now is looking for another temp job. “I don’t mind the factory work at all,” he says. “But as long as I’m a temp, I have to live with the fear that the job may be gone tomorrow.”

The $21,000 figure in the WSJ is fairly on the mark, according to a sampling of Toyota term employee blogs. The blogger who writes on Toyota Term Employee Spiral 2nd (トヨタ期間工スパイラル 2nd) not only survived his first term, he signed up for second round (thus the “spiral”). His blogging which started in May 2007 and is continuing as of today January 7, 2008 is much lighter in tone and considerably less painful to read than Maruo’s experience in “Tahara prison.”
He periodically reveals the details of how many hours he worked and how much he made. Here are the details of his salary slip for the month of June 2007. If you keep in mind that at that time the Japanese Yen was trading at 121 Yen to one American Dollar or it will give you an idea:

Compensation

Base pay (18 days) = 199,500 yen
Overtime pay (8 hours 35 minutes) = 22,120 yen
Midnight shift compensation (33hour 45 minutes) = 12,680 yen
Time slot compensation (81 hours 35 minutes) = 25,550 yen
Total compensation = 259,850 yen

Deductions

Employment insurance = 1,559 yen
Health insurance = 5,070 yen
Pension fund = 19,035 yen
Income tax = 5,860 yen
Meals = 15,936 yen
Total deductions = 36,522

Net pay = 212,390 yen

For a single person in good health this may be a reasonable starting wage in Japan, before the “living in fear that my job may be gone tomorrow” deduction. Some may say that term employees prefer the short term work, and this may be true in many cases. The blogger who posted the information above reflected on his own fluctuating take-home pay and wrote in conclusion: “Being a regular employee is best.”

4 Comments

  1. David Moles

    January 8, 2008 - 7:03 am

    My instinct is that if the level of production’s fluctuating sharply each year, they must be doing something wrong. But if demand’s really fluctuating, I guess there’s no way around it — better than keeping inventory, right?

  2. J Thatcher

    January 8, 2008 - 2:10 pm

    Is treating human beings poorly really better than keeping inventory?
    I think ultimately it comes down to where you put your emphasis on in the lean process – is it the respect of humanity, or is it the short term profit?

  3. David Moles

    January 9, 2008 - 3:26 am

    I meant that fluctuating production was better than inventory, not employee mistreatment. It does seem like a bad sign if — for instance — the response to RSI is “this employee’s pain threshold is too low” rather than “this wrench needs to be redesigned”.

  4. lee

    April 12, 2008 - 5:29 am

    I think the owners and Upper managment need to start looking around if thay are the only people making money (outside living expenses)thay will be the only ones to buy their products.soon there won’t be anything to produce because nobody can afford to buy it.