“Japanese semiconductor maker Renesas Electronics Corp. is considering cutting up to 14,000 jobs or 30 percent of its workforce as part of a major restructuring plan, news reports said Saturday.
The company is also considering selling a major factory to a Taiwanese firm, while closing or scaling down other plants, said the Nikkei and the Asahi Shimbun newspapers as well as Kyodo News.”
Business journalists and businessmen have long scoffed at the Japanese for holding on to their lifetime tenure work rules that offer cradle-to-grave protection for the Japanese workers, which is no problem as long as Japan is adding most of the value to the global economy. But since the competition with China that started with low-end manufacturing, and now is taking over high-end (high technology and sophistication) manufacturing has picked up, the high cost-high quality model of Japan no longer works. The Chinese can do that for cheaper.
And so Japan is finding itself in a basically 20 year long recession that is papered over by government borrowing and spending deducted from private households and companies (explaining their low interest rate despite a high public debt burden). The workplace protection which is associated with a great degree of responsibility for corporate leaders has been holding strong, but is now losing out. Japanese companies are now shifting to argue for leaner and more efficient companies, which is merely a business cloak word for demanding a cancellation of lifetime tenure, and more ‘flexible’ labor markets (again, another cloak word for workers being hired and fired at will), which will reduce labor costs so much as to make Japanese products more ‘competitive’.
From an individual standpoint these businessmen may make sense, but from a global viewpoint it becomes totally absurd. The road to Bangladesh, which indicates the quest for cheaper labor simply means that the crisis of overproduction, producing more goods and services than can be sold at profit, becomes heightened, and the financial shenanigans a la Goldman Sachs (Japan was struggling through similar travails in the 1990s) become our self-declared “saviors”.
Waiting for the dirt cheap countries to take on equal value to the labor in the industrialized countries is too long, too arduous and too devastating to contemplate. It is not a secure source of economic development, and will wreck a global financial and economic crisis in the scale of a Great Depression before we ever get there. It would be significantly more reasonable to agree on labor and government contracts that would stipulate a minimum standard of living tied to increases in labor productivity, the real measure of wealth in society.