Businesses finally starting to get back on their feet in areas affected by the Great East Japan Earthquake say they are unable to make use of national government subsidy programs designed to encourage employment of disaster victims.
Businesses finally starting to get back on their feet in areas affected by the Great East Japan Earthquake say they are unable to make use of national government subsidy programs designed to encourage employment of disaster victims.
The re-employment of former employees who were temporarily laid off as a result of the disaster is not covered by the plans, and businesses and municipal governments are calling for requirements to be relaxed.
Bihan Corporation, a supermarket operator in Yamada, Iwate Prefecture, is reconstructing its stores which suffered extensive tsunami damage in the March 11 quake. However, it ran into a wall when it tried to use the government wage subsidy program to rehire former employees laid off at the end of March.
The Employment Development Subsidy for Disaster Victims is a new program created after the March 11 disaster. It pays wage subsidies--500,000 yen ($6,330) to major corporations and 900,000 yen to small- and medium-sized enterprises--to companies that hire workers who lost their jobs as a result of the earthquake.
The Regional Employment Development Subsidy is an existing program that was enhanced to pay between 1.2 million and 27 million yen, depending on the number of people hired and the amount of capital investment made, to companies that employ job seekers from the stricken areas.
Neither program pays subsidies if former employees are rehired.
Bihan, which operated six supermarkets and gas stations in the town, had annual sales of two billion yen. The tsunami completely destroyed all of its facilities and it was forced to lay off its entire workforce of 100 at the end of March.
Many of the employees are also direct victims of the disaster.
Keizo Mase, 33, managing director for Bihan said, “My first thought was that the employees would need cash so we paid them severance. I promised them we would call when we reopened the stores."
Bihan hopes to reopen with one large supermarket in August to serve its customers and prevent them from going to rival stores outside of town.
It was when the company considered using the national government's employment subsidy program for hiring disaster victims that it learned it would not be able to receive assistance for rehiring former employees.
The government instituted this condition in order to prevent companies from receiving fraudulent benefits by repeatedly firing and rehiring workers.
"We've been told that it would have been better if we hadn't dismissed anybody. However, in March we didn't have the luxury of being able to consider such a thing," Mase said.
If the company takes on new hires, it can receive a wage subsidy from the government. Mase continued, "It's preposterous that we are ineligible to receive the subsidy if we rehire veteran employees who are the people we really want to bring back in the first place. It's a poorly-devised scheme."
There are also negatives for employees if they return to their former employers. Individuals who re-enter the workforce before their unemployment benefits, which last a maximum 330 days, expire are eligible to receive up to 50 percent of the remaining benefit. If they return to their former employers, however, this perk is not available.
As a result, more than 10 people Bihan offered to reemploy refused. The company is planning to cover this shortfall by hiring new staff.
Some municipalities are taking matters into their own hands
Prior to the quake, Koyama Heihachi Shoten, a processor of marine products located in Kesennuma Port, Miyagi Prefecture, processed salmon, Pacific saury and mackerel into sashimi and deep-fried fish products.
The tsunami swept away all four of the company's processing facilities. "We'll call you back in half a year." So said Tomio Koyama, 75, the company president, when he laid off all 86 of the firm's workers at the beginning of April.
Even after they were dismissed, many of the former employees stayed on and worked without pay to help clean up the destroyed facilities.
The company has plans to restart operations at a new facility sometime in August. In preparing to call back former employees, it discovered that it would not be able to use the subsidy program.
The company is planning to restart operations with 300 million in debt and damage from the tsunami reaching 2.5 billion yen. Koyama said, "This (subsidy) system is useless. I want (the government) to think about companies that are really facing trouble."
In response, the town of Hirono, Iwate Prefecture has decided to provide up to a maximum of 20 million yen in benefits to businesses, conditional upon their rehiring of employees they terminated after the earthquake.
It will be possible for the three companies taking advantage of the system to rehire a total of 100 former employees.
The prefecture's governor, Takuya Taso, is lobbying the Employment Security Working Team of the Democratic Party of Japan's Health, Labor and Welfare Department to ease conditions attached to the national subsidy scheme.
According to Health, Labor and Welfare Ministry survey, as of June 15, 580 people from the coastal regions of Iwate, Miyagi and Fukushima prefectures have found employment with new companies in the area after losing their jobs as a result of the earthquake. Nearby employment opportunities are extremely scarce, with just 0.7 percent of the area's 82,183 unemployed finding work in the region.
(This article was compiled from reports by Tomoaki Ito and Makoto Watanabe)