Asian Corps, Govs Scramble to Save Jobs

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Job-seekers read the guide for the first job fair after the Chinese Lunar New Year on Feb. 5, 2009, in Beijing

Corporate managers in Asia have always treated their staff with a touch of paternalism. Companies were not meant to be simply places of work, but big, happy families. In parts of north Asia, especially Japan and South Korea, employees spent more time with their coworkers, either at their desks slaving away until late at night or in regular evening drinking fests, than with their own husbands and wives. Layoffs were considered unseemly. In Japan, a social contract of "lifetime employment" guaranteed full-time employees they would have jobs until retirement. In China, communism brought the "iron rice bowl" and institutionalized cradle-to-grave employment with state-owned companies.

That spirit has stayed alive even amid the worst economic crisis in memory. As unemployment rises throughout the region, government officials and executives from Tokyo boardrooms to New Delhi ministries are scrambling to find ways to minimize mass layoffs. Part of the urgency, especially in countries like China, is to reduce the risk of social unrest as the number of jobless escalates. But part of the motivation is a very Asian perception of corporate responsibility. "For each (employee), I believe, the workplace exists not only for earning a living, but also for making friends, growing up and making a contribution to the society," Akio Toyoda said after being named the new president of Toyota Motor in late January. "I'm aware that stabilizing and maintaining employment is an extremely important task of a company." (See pictures of the global financial crisis here.)

Asia's approach to layoffs contrasts with attitudes in the U.S., where staff cuts are considered to be a standard corporate coping strategy during business downturns. In January, for example, U.S. employers eliminated 598,000 jobs — the most in any month in 34 years — but there was scant public debate over whether the layoffs were necessary or justified. Then again, laid-off U.S. and European workers are usually entitled to government support in the form of unemployment insurance and other programs. In Asia, governments have traditionally seen worker welfare as the purview of the company and family, not the taxpayer. Social security nets are far less developed.

The potentially devastating consequences of getting laid off in Asia puts pressure on companies and governments to minimize pink slips. In India, the central government took control of IT outsourcing firm Satyam Computer Services in January after the revelation of a $1.6 billion fraud, in part to maintain the company's 53,000-strong workforce. A government-appointed board of directors is looking to sell the company. "Our top priority is to protect the jobs of the software professionals," announced Y.S. Rajasekhara Reddy, chief minister of the state of Andhra Pradesh, where Satyam is based. In October, Indian airline Jet Airways reversed a decision to lay off 1,900 staff after some weeping victims melted Chairman Naresh Goyal's heart. "I could not sleep at night," he confessed at a press conference. "I was mentally disturbed when I saw tears in their eyes." (Although he said he changed his own mind, Goyal might also have been influenced by Civil Aviation Minister Praful Patel, who claimed he told Goyal that "the ministry would certainly not be very happy with the approach of Jet Airways.")

In Japan, too, numerous companies have publicly announced their intention to minimize layoffs, even as the economy's outlook gets uglier. Air-conditioner maker Daikin plans to reduce investment in new equipment and carmaker Mazda has implemented pay cuts to minimize layoffs. "We need to share the pain with all," Mazda CEO Takashi Yamanouchi recently told reporters.

In no country is the effort to save jobs more widespread than in China. The government recently estimated that 20 million migrant workers have lost their jobs as the global slowdown forces tens of thousands of factories to close. The response has been a government-led effort to prevent even more widespread losses. Last week, the central government's powerful State Council ordered companies throughout the country to notify local government-backed labor unions if they planned to cut either 10% of staff or more than 20 employees. The directive also urged companies to use any proceeds from China's $586 billion economic stimulus package to create as many jobs as possible.

The State Council's directive came after several months of vigorous initiatives to keep people employed. Last month, Wang Dong, head of Beijing's Assets Supervision and Administration Commission, announced that all state-owned enterprises in the Chinese capital are forbidden from laying off any of their 750,000 employees in 2009. In December and January, Premier Wen Jiabao visited local businesses in the city of Chongqing and in Jiangsu Province and pleaded with them not to "resort to redundancy easily, and to try to stabilize the employment situation by all means."

Wen's message appears to have gotten through to China's private sector. Thousands of independent businesses across the country have since made announcements promising zero layoffs and full payment of salaries. To help them keep those commitments, several cities — including Beijing, Tianjin and Shenzhen — have announced policies to encourage companies to keep their workers by reducing the amounts employers must contribute to social welfare programs such as pensions and medical insurance. Local governments are making up the difference with subsidies. The Minhang district in Shanghai alone has set aside a budget of $290 million to assist struggling businesses avoid layoffs. The local government will also cover the expenses for job-training programs. "We want companies to avoid redundancy as much as possible, and as a government department, what we can do is to help them with favorable policies," says Ni Xuebin, deputy director of the Minhang Labor Department.

But because of the scale and severity of the global recession, companies appear to be fighting a losing battle. As losses mount and order books shrink, mass layoffs are necessary for survival. In Japan, where carmakers and consumer electronics manufacturers are confronting unprecedented losses, many of the country's most famous firms have been forced to break tradition and announce major job cuts. Just this week, carmaker Nissan said it would reduce its global workforce by 20,000, or about 8%. A few days before Nissan's announcement, Panasonic announced 15,000 layoffs and NEC another 20,000.

Still, analysts expect extraordinary efforts to save jobs will continue. Asians "can't be as ruthless as in the West," says Pawan Budhwar, a professor of international human resource management at Aston University in Birmingham. "People are more sensitive in making these kinds of cuts. They will explore other options." As the global recession deepens, that's the best workers in Asia can hope for.

— With reporting by Lin Yang/Beijing, Yuki Oda/Tokyo and Madhur Singh/New Delhi