Thursday, 4 December 2008

Recession in Japan

As with the last recession, it's hard to tell there's actually one on. The restaurants and izakaya are still full and the shoppers are as indefatigable as ever. Nevertheless, politicians are talking about extending the social safety net.

One reason for this is the move away from full employees to contract and part-time workers over the past two decades. This flexible workforce acts as a useful safety valve for companies as they can easily be fired in downturns, but exposes those people "downsized" to life without medical insurance or unemployment benefit.

People have now started questioning the morality of this arrangement. In a recent Sunday morning TV political debate a number of participants criticised the "lack of social responsibility" shown by companies which have shed large numbers of temporary staff recently.

Perhaps we will see the establishment of a European-style safety net on both sides of the Pacific simultaneously.

1 comment:

Grumpy said...

The U.S. economy is imploding not for any fundamental demographic reasons (as Japan will be faced with 20 years from now), but triggered rather, by a more than a few bent people in the financial sector who conned the greedy and the stupid into believing a run down suburban home an hour's drive from anywhere was somehow worth more than many small towns.

This alone would not have enough to punch a hole in the greatest boom in history, but our hideously over compensated CEO's have marched to the rescue of the doomsayers by laying off as many workers as they could, as quickly as possible and long before any real loss of sales occurred.

Apple for example just had a record quarter which has been mostly ignored perhaps because Apple produces essential goods and services and not luxury goods like fancy phones, mp3 players and over engineered laptops which may be suffer from discretionary spending during a recession.

So when we see CEOs hitching their hiring and firing cycles to short term market sentiment we might like to compare them with a market gamblers who buy at the top and sell in a panic at the bottom.

Well done club CEO, it takes real talent to create a depression out of thin air !

This is why it is harder to lay people off in civilized countries, not only because there is seldom a decent safety net but because left to it's own inclination the free market is free to create booms and busts of ever increasing magnitude.