WTO urges Japan to reform labour market

GENEVA – The World Trade Organization on Tuesday urged Japan to reform its labour market, saying that it needed to boost the number of full-time workers if it is to stimulate domestic demand.

The proportion of part-time or temporary workers, who are paid substantially less than regular employees, has grown from 20 percent in 1990 to 34 percent in 2008, the WTO noted.

"As these non-regular workers are paid substantially less than regular workers, their increase has resulted in downward pressure on wages and thus domestic consumption," the WTO said in a report published during a regular review of Japan's trade policies.

"In addition, the rising share of non-regular workers has negative implications for potential growth," it said, noting that temporary workers rarely receive training and are therefore less productive.

Japan has been unable to escape entrenched deflation and years of pump priming have not led to any lasting improvements in its weak economy.

As a result, successive governments have failed to cut its massive public debt, which now stands at over 200 percent of output.

An ageing population is added to the labour problems, the WTO said, calling on restrictions on foreign workers to be eased in order to alleviate the issue and increase productivity.

The country's crippling debt prompted a credit rating downgrade last month by Standard & Poor's.

The International Monetary Fund has called Japan's outstanding debt and fiscal deficit "not sustainable" and warned that Tokyo must tackle the debt problem if it wants to avoid future trouble.

Feb 16^th, 2011

Source: Yahoo! Singapore