For more than three decades free market fundamentalists have criticised labor market regulations as an impediment to global competition and free markets.
They have worked to undermine the social contract that helped rescue the United States from the Great Depression, win World War II and create stable growth and the world's first blue-collar middle class.
Developed countries like France, Germany and Sweden with significantly stronger labor laws and generous social safety nets than the U.S. have been lectured on the need to develop more flexible and nibble labor forces. The result: a decline in full time permanent employment, the rise of a subclass of contingent workers who receive lower pay and fewer benefits than full-time permanent employees, and growing social inequality.
Now that the U. S, economic downturn has dragged the world economy into a recession, millions of unemployed workers are experiencing the dark side of deregulation and labor market flexibility-unemployment and homelessness.
Under Japan's traditional company centered social welfare system, firms were expected to look after employees until retirement and beyond, providing pensions and other benefits and keeping unemployment down by not laying off workers.
The neo-liberal model has undermined the traditional guarantee of life-time employment for so-called salarymen and tens of thousands of factory workers laboring in the country's small factories. They have been replaced by a contingent labor force, a subclass of Japanese workers, employed by staffing agencies or hired on short term contracts with lower wages and fewer benefits. These workers are not covered by legal protections against layoffs like regular full-time employees are.
Contingent workers now comprise over a third (34.5%) of the Japanese labor force. It is these workers, second class employees really, who are literally being thrown into the streets in response to the world's economic slowdown.
One hundred and twenty-five thousand (125,000) of the 131,000 Japanese workers who have been furloughed since October were nonregular, contingent workers according to the Japanese Labor Ministry.
According to the New York Times, these workers"...can expect little in the way of unemployment or welfare benefits." Japan simply does not have an adequate social safety net. Fully half of Japan's labor force is not even qualified for jobless benefits which were designed with lifetime employees, not contingent workers, in mind.
This is the dark side of deregulation-thousands of hard working people being literally throw into the streets as if they are used up machinery.
Next time you hear business leaders or economists promote labor market flexibility, ask them: how has flexibility helped Japan's new class of unemployed and homeless workers?