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Japan Struggles To Balance Growth And Job Stability

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http://www.nytimes.com/2009/09/15/business...ml?ref=business

TOKYO — Every day, the impeccably dressed “elevator girls†of Tokyo’s Odakyu department store greet customers, ushering them in and out of the cars. During breaks, they practice their greetings and meticulously reapply their makeup.

Critics see the women as the embodiment of this country’s productivity problem — squandering of one of the world’s best educated labor forces on banal jobs that do little to make the economy grow. But others, including the Democrats, Japan’s new ruling party, see them as beneficiaries of a more humane capitalism, a capitalism that values employment and stability over growth.

Japanese manufacturers taught the world to be competitive — reshaping the landscape in industries like cars and electronics, and introducing a vocabulary of quality and efficiency that became a mantra on business school campuses and shop floors.

But productivity growth in Japan’s service sector has slowed in recent years, weighing on the labor productivity of the entire economy, which ranks only 18th among the 30 countries in the Organization for Economic Cooperation and Development and just 70 percent of levels in the United States.

With the service industry making up 70 percent of Japan’s economy, and manufacturers battered by the global slowdown, economists say Japan’s ability to emerge from the worst recession since World War II will depend partly on its ability to make its service sector more productive.

“Structural reforms have absolutely no popularity in the current climate,†Yorio Ota, a strategist at the Mitsubishi UFJ Trust and Banking Corporation, said in a recent report. “But what is needed for a true recovery are reforms of the Japanese economy.â€

But Yukio Hatoyama, the leader of the ruling Democratic Party, bases his political philosophy on what he calls “fraternity,†meaning empathy with workers, rather than concern for corporate profits.

Hirohisa Fujii, a leading contender for finance minister when Mr. Hatoyama announces his cabinet this week, has criticized even some of the moderate changes made by the departing Liberal Democratic Party.

“Market economics is supposed to make a lot of people happy by letting skilled people fully utilize their skills,†Mr. Fujii, an elder statesman and former finance minister, wrote in a newspaper column last year. But recent pro-market changes in Japan “did not make everybody happy,†he said. “ That must be corrected, and we must build a politics led by the people.â€

Evidence of low productivity in the service sector is everywhere: office workers still pour over paper files; a veritable receiving line of security guards and receptionists greets visitors at building entrances; and Japanese retailers employ twice the average number of workers per outlet as their peers in other Organization for Economic Cooperation and Development countries. Odakyu does not consider its “elevator girls†a wasteful extravagance. The store says the 14 full-time workers it employs to operate fully automated elevators provide a benefit.

“These girls are the first employees our customers see,†said Tatsuo Iwasaki, manager for customer services. “We take training them very seriously.â€

Mr. Hatoyama is especially critical of changes championed by the former prime minister, the pro-American, free-market Junichiro Koizumi. Among other things, Mr. Koizumi took aim at Japan’s stagnant labor market, lifting a ban on the use of temporary laborers at factories.

He hoped to increase flexibility in hiring at Japanese companies, many of which are saddled with more employees-for-life than they need, protected by labor laws and social norms. The inability to fire these redundant workers even in lean times keeps productivity at ailing companies low, while hurting upstarts that could use experienced workers.

But critics blamed those changes for a widening income gap between lifetime workers and their poorer “temp†colleagues. The number of temporary workers, with low pay, few benefits and little job security, has surged in the last decade, reaching a third of the work force of 67 million. The plight of temporary workers let go en masse in the fallout from the global financial crisis has prompted a public outcry.

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Just how do you make "elevator girls" more productive? Do they have to offer services on the side? Perhaps giving a product talk during your lift ride?

70% of economy from service sector!!!! I think that sort of economy can only ever work in a low cost trajectory economy, in a high cost economy it's unsustainable in the long term.

Japan never rebalanced from it's last collapse in the early 90's. Saving face was more important, they may not have the ability to save face for much longer.

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http://www.nytimes.com/2009/09/15/business...ml?ref=business

More at the link.

Just how do you make "elevator girls" more productive? Do they have to offer services on the side? Perhaps giving a product talk during your lift ride?

70% of economy from service sector!!!! I think that sort of economy can only ever work in a low cost trajectory economy, in a high cost economy it's unsustainable in the long term.

Japan never rebalanced from it's last collapse in the early 90's. Saving face was more important, they may not have the ability to save face for much longer.

A lot of those elevator girls go like the clappers in the sack, so maybe they could offer sexual services on the side?

Just sayin'...

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