Japan’s Economy Is Killing Far Too Many Japanese: William Pesek

Commentary by William Pesek

Feb. 2 (Bloomberg) -- Ask a group of expatriates in Tokyo which foreign word is used most in Japanese and many will guess “beer,” “ciao” or “OK.”

Not even close. The answer, according to Japan’s cultural affairs agency, is “stress.” Some 98.5 percent of Japanese responding to an August survey, had seen, heard or used the word commonly pronounced “sutoresu” in their native language.

It takes but a split second to realize the logic in this being Japan’s most identified loanword. This is, after all, the home of “karoshi,” or death from overwork. Japan also is a place that consistently logs more than 30,000 suicides a year, many of which are tied to economic worries.

The concept of dying from working too many hours wasn’t invented in Japan, yet its workaholic ways result in a shockingly high incidence for a developed nation. While reliable data are hard to collate, lawyers estimate there are at least 10,000 work- related deaths each year.

That number might skyrocket as the global credit crisis visits Asia’s biggest economy.

“Karoshi will likely pick up again,” says Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo.

Japan’s outlook is worsening by the day. Factory output fell a record 9.6 percent in December. Unemployment had its biggest jump in 41 years and household spending slid 4.6 percent, a 10th month of declines. NEC Corp., Japan’s largest personal-computer maker, is cutting more than 20,000 jobs. The risk of a deep, multiyear recession is growing.

It’s Different

Yet this contraction is different. Schulz says efforts to dismantle Japan’s lifetime employment system have left a third of the workforce with flexible contracts. That means corporations have a tool that they didn’t have a decade ago to adjust to the recession: firing workers.

Japanese firms have moved with unprecedented speed to do just that, starting with the growing ranks of temporary staffers. Fast- rising joblessness in an economy unaccustomed to it means greater stress for more than just those out of work.

“It is worrying to see firms cut temporary workers, ostensibly expecting existing full-time staff to cover the shortage,” says Naomi Fink, Japan strategist at Bank of Tokyo- Mitsubishi UFJ Ltd.

Stressed Workers

There’s a national karoshi hotline, a self-help book to guide the overworked and a law that compensates families of victims, who are almost always men. Japan had the highest rate of employees suffering work-related health problems in a recent study by Kelly Services.

The Troy, Michigan-based recruitment firm questioned 115,000 people in 33 countries. The survey found that as many as three in five Japanese claimed they had been ill or felt unhealthy because of workplace conditions. That was markedly higher than the global average of 19 percent.

A political vacuum in Tokyo isn’t inspiring great confidence that things will improve. Prime Minister Taro Aso’s approval ratings are below 20 percent, and Japan’s main opposition party’s economic ideas are underwhelming, at best. And Japanese know things are bad when even the vaunted Toyota Motor Corp. is forecasting its first loss in 71 years.

The automaker also has been the subject of some unflattering headlines. In November, for example, a court in central Japan ruled in favor of the wife of a 30-year-old Toyota employee alleged to have died from overwork. The government was ordered to pay compensation.

Fabled Salaryman

Karoshi cases are difficult to prove and often go unreported. Business organizations such as Keidanren are calling on companies to offer more flexible schedules to reduce overwork and increase the national birthrate. Corporate executives and the government need to do more to drag Japan’s fabled salaryman from his desk.

This issue isn’t likely to receive the attention it deserves. Aso’s Liberal Democratic Party is preoccupied with staying in power. More energy needs to go into reducing the burden on workers who clock some of the longest hours in the developed world. Much of the overtime worked goes unreported. Vacation days often go untaken.

The key, Fink says, is to increase the productivity of Japan’s workforce. That’s easier said than done. The Organization for Economic Cooperation and Development says labor productivity per hour worked in Japan is 30 percent the U.S. level.

Killer Year

“If employers lay off to cut costs without raising productivity, karoshi might become an issue,” Fink says.

One also can’t rule out even higher suicide rates, not only in Japan, but also in South Korea and Hong Kong. Psychiatrist Shu- sen Chang of the U.K.’s University of Bristol says the current turmoil in markets risks creating a new wave of suicides, particularly among working-age men.

A Japanese hotline for people considering suicide is stretched to the limit, with the economic crisis thought to be worsening the problem, its director, Yukio Saito, told the Daily Telegraph this month. Even before Japan’s recession deepened in December, Telephone Lifeline was handling 700,000 calls a year.

It’s clear that Japan needs to end its candle-burning corporate culture. It’s less clear how to achieve a better work- life balance as the economy is plunging.

For Japan’s economy, the year ahead could be a killer -- in more ways than one.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net