THE DYING CANARY:

Japan: the rising specter of unemployment (Hussain Khan, 10/31/03, Asia Times)

Higher labor costs, yen appreciation resulting in the outsourcing of production facilities and growing computerization all point to a long-term structural increase in Japan's jobless. Due to heavy losses in labor-intensive sectors, companies are planning further outsourcing of their production facilities to countries where labor costs are much lower.

It is difficult to describe how profound these changes are in Japanese society. [...]

The banks are not alone in their restructuring plans. Sanyo is emblematic of the new and unsettling Japan. In the electrical goods manufacturing sector, as a part of its effort to provide secure employment, Sanyo continued to produce white goods at its domestic plants. But with the white goods business unlikely to stop bleeding red ink in the immediate future, Sanyo has decided to downsize its operations in Hyogo Prefecture and another in Shiga prefecture. The Hyogo plant is to cease production of vacuum cleaners, massage chairs and all other products by year-end and focus on research and development. The Shiga plant is scheduled to stop making microwave ovens, washing machines and double-tub washing machines by the end of this fiscal year.

As a result, sales from domestic production are expected to account for about 20 percent of the firm's overall home appliance sales, down sharply from the current 60 percent. Sanyo intends to reduce employees at the two plants from the current 1,250 to around 900 by April 2004 through relocations to other divisions and transfers to subcontractors. The company plans to maintain its product lineup by outsourcing production at the two plants to outside firms and transferring it to overseas factories. [...]

The effect of computerization on employment cannot be neglected. On the second day of the Nikkei Global Management Forum, Scott McNealy, chairman and chief executive officer of US computer firm Sun Microsystems Inc, said information technology will bring about drastic changes in the corporate world. Since the spread of IT will render obsolete conventional ways of working, personnel ability and corporate activities, companies will have to adapt to the changes, for example, by reorganizing their employment structure, he said.

The Japanese economic miracle--built on the absurd notion that a developed nation could long endure as a mere assembly plant--has pretty much run its course. Now its core weaknesses--declining population, stifling of creative thinking and individuality, racism, centralized economic planning, lack of corporate transparency, etc.--come to the fore.

Posted by Orrin Judd at October 31, 2003 8:57 AM