Labor reforms? Japan limits on part-timers please no one.

Japan's center-left government approved a bill limiting the hiring of temporary workers Friday, in a bid to reverse years of labor deregulation that it says went too far in favoring big business at the expense of workers.

But the proposals have drawn fire from all sides. Businesses and some economists say firms need flexible labor to remain lean amid fierce global competition. Meanwhile, some workers and small unions argue that the reforms don’t go far enough.

The cool reception reflects growing disillusionment with the Democratic Party of Japan (DPJ), which took power last year with lofty ambitions but is now being dealt a reality check on some of its pet policies.

It's been forced to retreat on several issues – scaling back a populist pledge to slash highway tolls, for example, and cutting in half its proposed child-rearing subsidy, from 26,000 to 13,000 yen ($145), at least in the first year of implementation.

Meanwhile, the DPJ cabinet's approval ratings have plunged to 34 percent, from around 70 percent when it took power, according to the latest poll from the Japanese daily Asahi Shimbun.

The labor bill is just the latest example of the DPJ's struggle to balance competing priorities while playing complex coalition politics.

"People are getting more and more frustrated about increasing inequality, and the DPJ has to take care of this national frustration," says Koji Murata, a professor at Doshisha University in Kyoto, about the labor bill.

"But this type of regulation may decrease Japanese companies' competitiveness. That's a Catch-22 for the Japanese economy."

Promises, promises

The measure fulfills a campaign pledge made by the DPJ during last summer's election campaign.

The bill approved by the cabinet Friday will ban "dispatch" work, or short-term contract work arranged through a third company, in the manufacturing sector. That rolls back liberalization measures in 2004 under the more business-friendly Liberal Democratic Party (LDP) government.

The new measures would also ban one-or two-day dispatch work contracts.

The bill now goes to the Diet, or parliament, where it is expected to pass within weeks.

Such measures are a response to widespread indignation over the mass firing of dispatch laborers when the recession hit in 2008.

Dispatch workers, along with part-time, subcontract, and other nonpermanent labor, now make up about one-third of Japan's 56 million-strong workforce.

The labor reforms are supported by Rengo, Japan's largest trade union confederation and a pillar of DPJ support. Most of its nearly 7 million members are permanent, full-time workers at big-name firms like Toyota and Panasonic.

But former dispatch workers, activists, and smaller unions representing temp workers say the changes won't take effect for three to five years, and that firms will easily find ways to sidestep the new measures.

‘Just in time’ workforce

As recently as the 1980s, Japan was famous for its social bargain. Salarymen gave firms long hours and unquestioned loyalty, and in return, companies took care of them for life.

Firms began relying on temporary labor in the late 1990s, with the help of LDP-led deregulation, says Yasushi Iguchi, a labor expert at Kwansei Gakuin University. Prime Minister Junichiro Koizumi's policies accelerated that trend.

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