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Japan – Staffing giants seek higher pay for temporary workers

27 February 2014

Two of the biggest Japanese staffing companies are seeking higher pay for their temporary workers, reports asia.nikkei.com. For the first time in eight years, Tempstaff, Japan’s second largest recruitment firm is seeking fee increases from all of its customers. The proposed rises would see hourly wages increase by between +3% and +5%. Pasona Tech, a subsidiary of Japan’s third largest recruitment firm Pasona Group is pushing for a +3% increase, its first wage rise in three years.

According to asia.nikkei.com, staffing companies typically pocket around 5% of this fee, so these increases would mostly translate into higher wages. Temporary workers in the greater Tokyo, Osaka, and Nagoya areas earned an average hourly wage of JPY 1,521 (USD 14.86) in January, according to Recruit Jobs. An increase of +3% would equate to an estimated JPY 7,000 (USD 68.40) more in monthly earnings.

Temporary workers typically spend a greater proportion of their income, according to economists. Toshihiro Nagahama of the Dai-ichi Life Research Institute predicts that a +1% wage increase for the entire temporary workforce would give a JPY 133.7 billion (USD 1.3 billion) boost to annual consumer spending.

Prime Minister Shinzo Abe's government has been encouraging the corporate sector to pay employees more, in order to curb deflation. So far, mostly big, buoyant corporations have shown an inclination toward raises, but only for permanent staff. However, Japan's approximately 19 million part-time and temporary workers make up nearly 40% of the employed population.

A wide pay gap divides the workers on permanent and temporary contracts. On average, permanent workers earned JPY 4.7 million (USD 45,732) in 2012, about 2.8 times as much as temporary workers, according to the National Tax Agency. However, the wide difference can be mostly explained by the fact that temporaries are generally working fewer hours in lower skilled, lower wage sectors compared to permanent workers rather than any particular wage bias against temporary workers.

While permanent employees have unions to negotiate pay raises for them, wages for temporaries working on contract depend on how much their staffing companies are able to charge client firms.

Demand for temporary labour is on the rise across a broad range of fields, most notably in IT, where employers are willing to accept fee increases as high as +10% to get skilled workers. Wages for IT temporary workers climbed by +4% on the year in January according to Recruit Jobs.

Part-time workers, who account for more than 60% of temporary workers, are also seeing wage increases. The average part-time hourly pay in the country's three big metropolitan areas rose by +0.4% during the year to JPY 948 (USD 9.26) in January, marking the seventh consecutive month of growth, according to Recruit Jobs.

Temporary worker wages fell in 2011, as store openings plummeted following the 11 March earthquake. Since then, their pay has rebounded, partly on hopes of an economic recovery.

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