Also in the news...
Secretary of State for International Trade, Anne-Marie Trevelyan, welcomes overseas investors and delegates to the Global Investment Summit in London.
Guidance for UK businesses on rules for selling services to Croatia.
The strategic partnership with the Breakthrough Energy Catalyst will mobilise £200 million of private sector funding over 10 years.
It’s recent news the Superbonus 110% has been recently extended to 2023, and this is great if you intend to renovate your home. Superbonus 110% isn’t the only available tax break on house renovations; find out how you can save on your taxes whilst renovating your Italian home.
If you have a VAT number in your EU country and you want to sell to individuals (with no VAT number) in Italy, you are required to have a VAT number in Italy. Back in the days, you were required to set up an entity in Italy or have a fiscal representative located here; this process is costly and develops multiple tax and accounting issues.
Slave-like Labour in Japan
Japan’s reliance on slave-like labour has recently been highlighted. While working conditions for those in the effected group are poor, whether they are “slave-like” depends on your perspective.
Staffing the 3K jobs
Since the 1980s, manufactures have found it difficult to recruit workers for low-paid work in “3K” jobs - those that are kitsui (demanding), kitanai (dirty) or kiken (dangerous). Simultaneously, China’s economic reforms created a labour surplus. To facilitate the movement of cheap Chinese labour to Japan, the Japanese government set up the Foreign Training and Technical Internship System (the “trainee system”). Matching this, the Chinese government encouraged the development of labour export companies to place large numbers of largely rural and unemployed Chinese workers abroad.
The trainee system permits Japanese companies to employ foreign workers for 3 years while providing training. On the surface, it is a successful policy for it has partially alleviated Japan’s 3K labour shortage which helped ease the recessionary pressure on SMEs. On the Chinese side it is a profitable business for the labour export companies, makes local governments look good by reducing unemployment and sees the remittance of relatively large sums of foreign currency into the poorer areas of China.
It is often argued that the group that receives the fewest benefits is the trainees themselves. A recent United Nations Special Rapporteur described aspects of the trainee system as akin to human trafficking. In particular, the report noted that trainees have to pay excessive commissions to get a job and once in Japan, may be forced to work long hours for low pay in frequently hazardous conditions. Their freedom of movement and association are severely constrained and the accommodation and food provided by their employer is often substandard. Chinese trainees in Japan usually put up with these conditions because of the risk of retaliation from the placement company if they file a complaint.
Conditions are however relative. In addition to room and board, trainees receive about JPY60,000/month in their first year and then double that for the following two years. As trainees are generally drawn from poor and relatively uneducated communities, their alternative is to remain at home where they would make around RMB2,000/month (JPY26,000). The wages in Japan are thus attractive, particularly when they consider the local spending power of money sent home to their family. On top of this there is also the opportunity to work in Japan and a chance of gaining some skills.
After the 2011 Mega-quake
There were 22,670 Chinese trainees employed in the four prefectures worst affected by the events of March 11. While all but a few have been accounted for, many fled home and less than half have returned to their area of work. Set against this, a Labour Ministry report released in mid-June cited that there are 2.02M people in Japan receiving government financial assistance: this figure is higher than any time since 1952. In the areas worst effected by the disasters, the jobless rate is now around 90%.
Given the number of jobless, it should be easy to replace the 12,000 or so absconded trainees with Japanese workers. This however is not the case for a Japanese worker receives more from unemployment payments than a Chinese trainee meaning there is no incentive to take an undesirable 3K job. For employers, the minimum wage they could pay a Japanese worker is around JPY165,000/month or about 1.3 to 2.7 times more than a foreign trainee; there is thus a positive disincentive to hire locally. This disincentive is not about maximizing profits, rather it is about remaining in business for without cheaper trainee labour, small Japanese companies are unable to compete with the price of imports from China and other low cost Asian producers.
An irony going forward
Thousands of small Japanese companies are locked into using relatively cheap trainee labour for to hire locally would see them go out of business. So unless the Japanese government comes up with some kind of subsidy system, Japanese workers will remain unemployed while the recruiters in China will continue to expand.