Introduction for Precarious Asia

INTRODUCTION

RECENT POPULAR AND ACADEMIC accounts have exposed the difficulties that workers in Japan, South Korea, and Indonesia have had with jobs that are unstable and insecure and that do not provide them with sufficient social protections. In Japan, as precarious work has expanded, so have concerns over “death from overwork,” or karо̄shi:

These days . . . part-time workers [in Japan] are increasingly at risk of karо̄shi. In recent years, firms have been eschewing full-time workers in favor of more flexible arrangements with recruits who work for lower wages, with less job security, which leaves them vulnerable to abuses like unpaid overtime and has forced many to take extra jobs. Since 2015, Japan’s number of workers with two or more jobs has grown by roughly 30 percent. (Hunt 2018)

Overwork is also a concern in South Korea. South Koreans work more hours than people from any other country in the Organisation for Economic Cooperation and Development (OECD) except Mexico. Averaging 38.9 hours a week, they work about nine standard workweeks a year more than workers in the United Kingdom and Australia who have similar average incomes. In response to the negative consequences of such overwork, the South Korean government passed a law on July 1, 2018, that reduced the maximum workweek from 68 to 52 hours. For many, reduced hours also meant reduced wages, forcing some to take second or third jobs, often with irregular hours and huge pressure:

There have been 15 deaths among couriers so far [in 2020], including some who died after complaining of unbearable workloads that kept them on the clock from dawn until past midnight. The delivery workers say they’re dying of “gwarosa,” or death by overwork. . . . “The workload has become just too much,” Ms. Choi [Ji-na, one of the couriers] said. “Since the coronavirus came, going home early enough to have dinner with my children has become a distant dream.” (Choe 2020)

And in Indonesia, the largest digital economy in Southeast Asia, “gig workers” engage in new and precarious forms of work. This work is not always rewarding, with workers struggling to maintain families:

Home health services worker: “I have sold nearly all my belongings to meet my household’s needs. There is no work and we are struggling to pay rent.”

House cleaner: “I can only afford 1–2 meals per day now. We used to eat meat, but we cannot afford it anymore.” (Flourish Ventures 2020: 5, 6)

Such situations illustrate some of the important consequences of the dynamics of global capitalism in recent years for workers in the three countries we study in this book: Japan, South Korea, and Indonesia. As in economies across the globe, the economic, political, and social consequences of neoliberal policy in these countries have led to the entrenching of precarious work, or work that is uncertain, unstable, and insecure and in which employees bear the risks of work (as opposed to businesses or the government). These workers receive limited social benefits and statutory entitlements (Kalleberg and Hewison 2013). Precarious work encompasses nonregular work arrangements (e.g., temporary and part-time workers and independent contractors) as well as work in the informal economy, which generally does not have the same legal and social protections as regular work. Moreover, the social protections previously available to workers in standard (or “regular,” full-time, or “permanent”) employment have declined, creating more precarious work among regular employees too. These protections and benefits were provided both by employers, as part of the standard employment contract, and by governments, as part of the social welfare system. In all three countries, these changes are significantly gendered, with women being particularly vulnerable to the changes. In Japan and South Korea social protections have been changed and, in some cases, reduced. In Indonesia they were extended following the overthrow of the New Order regime in 1998 but have been limited and challenged by both the state and business interests.

The recent expansion of forms of precarious work is the core problematic of this book. We examine the political and economic dynamics that underlie the liberalization of employment and social protections in Asia. We present a nuanced account of how precarious work is an outcome of political contestations in which the state, multinational corporations, local business, trade unions, and civil society organizations (CSOs) struggle to shape employment systems in Japan, South Korea, and Indonesia. We conceptualize and provide evidence for how these countries compare with respect to the rise of precarious work and how they differ in their institutions and politics with regard to worker power. We also examine the consequences of these political-economic dynamics for economic inequalities and for workers holding precarious jobs.

Our central theoretical argument is that the extent and consequences of precarious work reflect the relative strengths or weaknesses of transnational and domestic capital and labor in particular sectors of the economy in Japan, South Korea, and Indonesia, acknowledging that these forces have ebbed and flowed over time. Similarly, the social protections available to those in different work arrangements vary according to the governments’ economic, social, and political policies, which emphasize the relative importance of markets, fiscal discipline, trade, investment and liberalization (e.g., financial deregulation, decentralization, privatization), and the role allocated to the state. A range of policies have resulted, including limited state protections and welfare, decentralized labor relations, the weakening of unions and collective bargaining, and fiscal discipline taking precedence over social policies.

We summarize the political and economic forces that led to precarious work using the concept of neoliberalism. Neoliberalism is a set of ideological commitments and practices that have shaped the responses of governments to changes in global capitalism, such as greater globalization and technological transformation. In Japan, South Korea, and Indonesia the process of neoliberal globalization has intensified downward pressures on working conditions, enhanced capital mobility, weakened organized labor and limited the protections for workers, and generated entrenched economic inequality. Neoliberalism has played out in different ways in the three countries, depending on their balance of class forces, unique histories, demographics (especially their gender and age configurations), and social norms and cultures.

Institutions are important. We see institutions as the “social facts” that are external to individuals and coerce their behavior through social control and sanctions (Durkheim 1982). Institutions are durable and reproduce themselves over time (Clemens and Cook 1999). Nevertheless, they can be changed through collective actions, such as power struggles between capital and labor. We focus mainly on labor or work institutions; they set the rules, which many people agreed to, and thus legitimated, for longer or shorter periods, as effective means of solving the economic and political problems of production and distribution. They represent the hierarchical orderings of individuals and clusters of interests, the configurations of norms, and the rights and obligations that characterize the different types of actors in the economy. They describe the ways in which labor is divided, tasks are allocated, and authority is distributed (see Kalleberg and Berg 1987: 2).

We bring together two theoretical approaches that are usually kept separate to explain how institutions in Japan, South Korea, and Indonesia affect the incidence and consequences of precarious work. Our analysis integrates a historical institutionalist approach that sees institutions, once established at a critical juncture, as shaping behaviors in the broader society. At the same time, using insights from a critical political economy approach, we emphasize that institutions have their own histories and emerge from particular social and political struggles, especially those between capital and labor. Our synthesis of these two approaches takes particular care to show how institutions reflect power dynamics influenced by industrialization, democratization, and globalization in Asia. The political economy approach places greater emphasis on how features of the global capitalist division of labor influence power dynamics within countries and impact domestic institutions. These country-level institutions, in turn, are not static. In particular circumstances they can acquire considerable independence and affect the nature and structure of work and inequality. In this sense, these two theoretical approaches are complementary: The political economy approach explains the transnational and domestic forces and contests that shape particular institutions within countries, and historical institutionalist theories explain how these institutions structure precarious work and its outcomes.

Our theoretical perspective challenges mainstream economic explanations that view economic development and neoliberal-influenced policy as being primarily the consequences of market forces and that generally disregard or downplay the roles of political and social factors. In this mainstream view, political actions are imperfections in labor markets and institutions do not have significant influences on labor market outcomes. Rather, these outcomes reflect changes in skills, technology, and productivity, among other things (see D. R. Howell and Kalleberg 2019). Economists who hold this view might explain the rise of nonregular work arrangements as reflecting the preferences of individuals, such as women wanting to work part-time or on a temporary basis to deal with the needs of their families. Mainstream economists might also consider situations in which growth in international competition leads to employers having less capacity to secure their profits using standard work arrangements (with fixed costs and, in some cases, employment security guarantees and benefits) and therefore turning to more flexible arrangements.

The kinds of questions we ask tend to be different from those posed by mainstream economists who study work and inequality. For example, they focus more on how individuals acquire particular skills and get sorted into positions and less on how inequalities associated with the structure of the positions themselves are problematized. People and jobs are of course interdependent, though we emphasize institutional factors and jobs, whereas most economists concentrate more on the supply side of the labor market and individuals’ characteristics.

Why Study Precarious Work in Asia?

Asia—a region that encompasses an area of 17 million square miles and is home to 4.5 billion people, or nearly three-fifths of the world’s total population—is an important site of capitalist development. Today, Asia is the world’s factory. UN statistics for 2018 tell us that Asian economies then accounted for 37.2% of global gross domestic product (GDP) and more than 52% of manufacturing’s value-added (United Nations, Statistics Division 2019). Apart from the period of economic crisis in the 1990s, Asia has witnessed remarkable economic growth since World War II. Changes in Asia are directly connected to changes in patterns of investment, production, trade, and forms of consumption in the United States, Western Europe, and the rest of the world, mediated by globe-girdling value chains and the arrangements of work within them. Among so many other lessons, the global COVID-19 pandemic demonstrates how much global value chains depend on production in Asia. Because so much industrial production is located in Asia, changes in work practices there inevitably affect decisions everywhere regarding production, welfare, and incomes. In other words, changes in configurations of work and production in Asia are intimately linked to global changes, including the expansion of precarious work in the United States and other developed countries. This shift of production and the associated costs make for competitive pressures at every node in global production chains and networks.

Why Japan, South Korea, and Indonesia?

Comparative studies—in this book, of Japan, South Korea, and Indonesia—permit the examination of particular issues and institutions in different sociocultural and political economic settings using an essentially similar array of research methods, international and national level data, and an extensive analysis of the existing literature. Our aim is to understand the similarities and differences for the insights they can provide into precarious work in different national contexts and to suggest some generalizable conclusions from the three cases (Hantrais 1995). Japan, South Korea, and Indonesia provide a useful lens by which to assess the roles of global and domestic factors in shaping precarious work and its outcomes since about 1945. The three countries represent a range of Asian economies: Japan and South Korea are now developed and quite mature economies, whereas Indonesia is a large economy measured in terms of GDP, but it remains classified as a middle-income country. All three countries are political democracies and capitalist economies, which allows a comparative assessment of their economies (markets, corporations, trade) and democratic politics (parties, parliaments, civil society).

Japan was the third largest economy in the world in 2019 with a GDP of $5.15 trillion, according to the International Monetary Fund (IMF). South Korea ranked twelfth ($1.63 trillion), and Indonesia ranked sixteenth ($1.11 trillion). Combined, the three economies account for more than 9% of global GDP and about 13% of global industrial production. Japan, South Korea, and Indonesia differ in their level or stage of economic development, historical trajectories of industrial transformation, and configurations of labor politics. In politics, Japan’s democratic development came out of war and an American-administered political transition that led to the transformation of the country into one of the most stable political systems in the region. In South Korea and Indonesia, civilian uprisings led to the decline of military-dominated authoritarianism. Each country has responded to the dynamics of global capitalism in particular ways, with variations in how they have responded to transnational pressures and their effect on domestic political economies.

Post–World War II economic transformations began with Japan, enveloped the “East Asian Tigers,” including South Korea, and then extended to economies with more recent development experiences, including Indonesia. All three countries have undergone periods of high-speed growth, with Japan the first to industrialize in an era when strong national states had considerable capacity to make and implement decisions regarding domestic institutions and foreign policy. Japan’s dirigiste industrial policies enabled some companies to dominate their industries and develop into global corporations and brands. South Korea was the next to industrialize, and, though it also adopted dirigiste policies and had considerable state capacity, it was somewhat more constrained by global forces, responding to industrial relocation and the search for cheap labor manufacturing in a new international division of labor (Fröbel et al. 1978). Indonesia, the last to industrialize, was the least able to develop state capacity; a larger proportion of its companies were linked to global firms and foreign investment, and it was more reliant on demands from global supply chains, including those initiated by Japanese and Korean corporations. In all three countries, social protections have not been well developed; they rely on employer-centered programs, exacerbating marginalized workers’ precarity and contributing to inequality. Although the strength of the state has changed over time and is different in the three countries, the state has had a pivotal role in shaping economic transformation in each country and thus has contributed to the variegated precarity of its workers.

Each of the three study countries is an electoral democracy, yet they differ in their regulatory regimes, location in global production, class structure, and historical trajectory. This inevitably means that the dynamics of precarious work also differ in each country. In Japan and South Korea the rise in precarious labor is reflected in a growing distinction between employees in “standard” employment relationships and those with “nonstandard” work arrangements (see Sangheon Lee and Eyraud 2008). In Japan and Korea it is “nonregular” employment that has expanded, with women’s employment especially affected. In Indonesia precarious work is often understood as employment without a contract; it is extensive in the informal sector and in agriculture. In each of these jurisdictions and despite their differing definitions of precarious work, the work captured by these terms is uncertain, unstable, and insecure and the employees bear the risks of work and receive limited benefits.

A Note on Statistics

Contemporary comparative research increasingly relies on global, regional, and cross-national data sets that were created to allow quantitative analysis involving statistical manipulation to test hypotheses. In comparative politics this method has become the dominant mode of analysis (Schedler and Mudd 2010: 429). Although such an analysis can indicate broad outcomes across countries, often the texture of country-level difference is left untested. In this book we conduct a comparative analysis using primary data drawn from existing international and national databases. These data are not used to test hypotheses but to illustrate and highlight cross-national similarities and differences. In addition, we use statistical and qualitative data that allow a fine-grained analysis of precarious work in Japan, South Korea, and Indonesia.

We acknowledge that some of the quantitative data are problematic. International data sets such as those from the OECD, the International Labor Organization (ILO), and the World Bank are usually based on national data supplied by governments, and although the basic items are comparable, when national data are considered, differences in definition emerge. In general, we have found that Japan and South Korea have data that are most readily compared, although definitions sometimes diverge. Indonesia’s national data show considerable divergence from the other two countries. Yet this difference remains useful for the detailed analysis of Indonesia. In the following chapters, where appropriate, we flag the differences in definitions and data. In much of the literature on precarious work, including ILO discussions, and in national statistics, the most commonly used term is nonstandard work, a term that we use interchangeably with nonregular work. Standard work (which we use synonymously with regular work) can also be precarious if it is uncertain, unstable, and insecure. We discuss this further in Chapter 1.

Inequality and Poverty

As we show in the chapters that follow, precarious work has had important social and economic effects in Japan, South Korea, and Indonesia and is contributing to the increasingly high level of inequality that is condemning some segments of the population to chronic poverty and many more to livelihood and income vulnerability. On a related note, low wages, flexibilization, casualization, and informalization are shaping Asian labor forces and limiting lifestyle choices and opportunities. The resulting job insecurity restrains demands for higher pay and benefits and keeps costs down and “global competitiveness” up; flexibilization, casualization, and informalization have been used to discipline labor and curtail collective organization, minimize legal protections, and limit welfare.

For example, over the past three decades Japan has changed from a relatively equal society to a “gap society” (Tachibanaki 2006). Kitao and Yamada (2019) have shown that inequality in earnings, income, and wealth all increased since the 1990s, driven by a relentless offshoring of Japanese manufacturing and the resulting shift to employment in the service sector. The result has been a pauperization of peripheral groups—such as older one-person households, nonregular workers’ families, and single-mother households—because marginalized social groups have been employed in a variety of nonregular work arrangements and economic security has been reduced for increasing numbers in the labor force (Moriguchi 2017). Wider repercussions have also resulted, as many young people are marginalized as nonregular workers and delay or avoid marriage and family formation, exacerbating the already low fertility rate. This means that government social policies that tend to rely on a supportive family (which was formerly the de facto welfare system) are at odds with emerging social realities. With low wages and limited social support, the working poor are becoming entrenched.

South Korea has demonstrated a similar trend of growing inequality since the 1990s (Cheon 2016; K.-Y. Shin 2013). The sharp increases in both income inequality and the relative poverty rate were consequences of economic liberalization in the early 1990s and the impact of the 1997–1998 economic crisis, which saw increased unemployment and more rapid liberalization, including much debated changes to employment relations and welfare reform in the mid-2000s. These debates were double-edged: The conservative government led the economy into the turmoil of the crisis, and the National Congress for New Politics, the new ruling party that took power in 1998 as the economy crashed, did not fully recognize the problems of neoliberal globalization and followed the guidance given by the IMF. The new democratic government sought to simultaneously embed democratic politics and abolish the authoritarian developmental state’s legacy and revive the economy. However, in exceptionally difficult economic circumstances, it was forced to ask the IMF for a rescue fund, acceding to the IMF’s conditions without adequately considering the impact of the economic reforms that the IMF demanded.

Inequality in Indonesia has also grown rapidly over the last two decades (World Bank 2016). This has coincided with declines in contributions to value-added goods from manufacturing and agriculture and increases in services. By 2014 inequality in Indonesia had reached its historically highest level: The Gini index increased from 0.30 in 2000 to 0.41 in 2014, higher than most of Indonesia’s East Asian neighbors, despite the fact that the World Bank (2016: 7) considered this rate an underestimate. The Oxford Committee for Famine Relief (OXFAM) observed, “Today, the four richest men in Indonesia have more wealth than the combined total of the poorest 100 million people” (Gibson 2017: 1). Poverty has declined, but this is based on an unrealistically low poverty line, and despite almost three decades of high economic growth rates, almost 40% of Indonesians remain poor or vulnerable to poverty (World Bank 2016: 8).

As already observed, precarious work is not unique to East and Southeast Asia. Work that is uncertain and insecure and in which the risks are shifted from governments and employers to workers now characterizes all economies, including advanced capitalist countries. And informal economies—and their precarious work—dominate much of the late developing world. Although the basic nature of precarious work does not vary a great deal, what does differ are the global dynamics that interact with the local conditions, such as regulatory environment, level of industrialization, and the relative power of capital and labor. Neoliberalism and global capitalism have had differential effects on labor markets and the structure of work in the three study countries because of their distinct social, economic, and political dynamics. We argue in this book that differences in levels and forms of precarious work result from differences in the relative power of capital and labor. Similarly, state regulation, reregulation, or the lack of regulation varies according to the capacity of the state and the nature of its political regime.

The growth in precarious work in Japan, Korea, and Indonesia illustrates these differing dynamics. Much of the increase in precarious work in Japan is due to firms’ adoption of cost-cutting policies beginning in the mid-1980s in response to heightened competition associated with globalization, the deregulation of labor markets, and the loosening of restrictions on firms’ use of nonregular workers as well as state provision of social insurance benefits only for regular workers. In South Korea a drastic increase in precarious workers was an immediate consequence of neoliberal economic reforms implemented by a new democratically elected government after the 1997–1998 economic crisis. These reforms included the enhancement of flexibility of the labor market, the privatization of public corporations, and the restructuring of the financial market after the financial crisis. For Indonesia precarious work is also a consequence of neoliberal reforms implemented by the new democratically elected government; deregulation (or, more accurately, reregulation) of labor and markets has been part of the processes of democratization and decentralization that have seen the state adopt liberalizing policies meant to expand employment while also promoting “labor flexibility.”

Overview of the Book

This book adds to the growing scholarship about how political, economic, and social institutions affect precarious work, labor market outcomes, and inequality in Asia. Extant research typically makes trade-offs between specificity and generality. Some studies of precarious work and its consequences have tended to focus on one country and thus have been unable to assess how differences in a variety of macrolevel structures and institutions affect these processes. Other studies compare a relatively large number of countries, often using typologies that tend to gloss over important differences between countries within a given type of employment or welfare regime. Our approach, by contrast, considers three countries in Asia that differ in their institutions and political processes in important ways. This strategy enables us to drill down on the features that might be distinctive to these countries. By combining in-depth discussions of the political and labor market contexts of these countries with quantitative empirical information on the extent of precarious work, we can better understand the variability in precarious work and its consequences in these countries.

Our perspective is multidisciplinary, drawing on insights from sociology, political science, economics, political economy, history, public policy, and Asian studies, among other fields. We also adopt a multilevel approach, linking macrostructural institutions and policies to mesostructural features of employment relations and microstructural outcomes for individuals and their families. The combination of these interdisciplinary and multilevel features enables us to better understand the interplay among the political, economic, and social forces that generate precarious work and its negative consequences. In sum, our book is distinctive in its comparative (looking at three democratic countries that differ in important ways), multilevel (examining societal processes and their impacts on individuals), and interdisciplinary (drawing especially on sociology, political science, and economics) approach to a significant outcome of the expansion of the global economy (precarious work and its consequences for inequality). We also seek to integrate the historical institutionalist and political economy approaches to understand the role of institutions in these countries that produced these outcomes. By comparing three cases, we also indicate the variegated nature of precarious work in Asia, showing that the formation and variation of precarious work in the region can be considered an outcome of the interplay of global economic transformations, national political transitions, and local labor politics.

The book is organized around a set of themes, such as the comparative study of precarious work, how precarious work results from the interplay between global capitalism and domestic policies, the incidence and trends of types of precarious work, the impacts of precarious work on inequality and poverty, and labor politics. In each chapter we provide a comparative analysis of the three countries. We believe that this organization—as opposed to presenting each country in a separate chapter—enables us to better highlight the similarities and differences between these countries.

In Chapter 1 we present our conceptualization of precarious work and how this represents a departure (at least in Japan and South Korea) from the standard employment arrangements associated with their periods of Fordism. We outline various forms of precarious work, including nonregular work, informal economy work, and self-employment. We present the conceptual model that guides our analysis in the book and discuss how our framework seeks to integrate historical institutionalist and political economy explanations of institutions.

In Chapter 2 we offer an overview of the three countries included in this study: Japan, South Korea, and Indonesia. We briefly summarize the key features of these countries’ economic, social, and political institutions since the 1970s and illustrate how these reflect our theoretical arguments regarding these institutions outlined in Chapter 1. We also present information on these countries’ demographic and industrial characteristics.

The ways in which global and domestic factors have intersected to produce the growth of precarious work and inequality in the three study countries are discussed in Chapter 3. We first identify the exogenous factors associated with the global economy (such as neoliberalization and the dynamics of global capitalism, and the processes of hyperglobalization, production, and investment) and the endogenous factors associated with the political, economic, and social forces in each of the three countries. We discuss how the dynamics of global capital in East and Southeast Asia have interacted with the economic, political, and social institutions in Japan, South Korea, and Indonesia to create nonregular work arrangements and to generally shift risks of employment from the government and employers to individuals.

In Chapter 4 we document the growth in nonregular work arrangements in Japan and South Korea and the salience of the informal economy in Indonesia. We present data on work arrangements (and trends in them) in the three countries (nonregular versus regular work especially in Japan and South Korea; informal versus formal work in Indonesia). For Japan a key trend is the expansion of nonregular work, especially for males. In South Korea the large self-employed sector (the majority of which does not have employees) is especially important. We also compare Japan and South Korea with respect to the differing opportunities that men and women who work in nonregular jobs have of moving to regular jobs. For Indonesia we present data on the formal versus informal economy, showing how the latter has remained significant, and explain how nonregular work remains important even in the so-called formal economy.

We discuss the relationship between nonregular work arrangements and labor market outcomes, such as wages and broader inequalities and poverty, including those associated with both the availability of and access to social protections (e.g., health insurance, pension benefits, unemployment insurance, and training), in Chapter 5. We present data on the wage gaps between nonregular and regular workers in Japan and South Korea and how these differ by gender and discuss the especially disadvantaged position of self-employed people in South Korea. We also consider the wage gaps among employees, own-account workers, and other informal workers in Indonesia. We then present data on poverty in each country, showing whenever possible how the poverty rate differs by work arrangement. We explain wage gaps between nonregular and regular workers through a comparison of labor market institutions and social welfare protections. We emphasize the macrostructural factors that shape labor market institutions (especially unions and collective bargaining and minimum wage laws) and social protections (health insurance, retirement and pension benefits, unemployment insurance benefits, and labor laws such as those related to occupational safety and health) as well as the political factors that affected them.

In Chapter 6 we discuss labor politics in the three study countries. We emphasize the responses of labor, civil society, and governments to precarious work, inequality, and poverty. These include bottom-up social and political movements that have sought to mitigate the most serious negative consequences for workers and their families, and top-down efforts by governments (perhaps prodded by protest movements) to enact policies (such as more generous welfare policies) to protect workers from the consequences of precarious work.

In our concluding chapter we summarize our findings about precarious work in Japan, South Korea, and Indonesia and their implications for current and future issues. Our argument and the evidence we present to support it suggest the need for comprehensive social protections to help people cope with the risks presented by the increase in precarious work. The necessity for social protections is widely recognized, as indicated even in recent reports from the World Bank (e.g., 2016), whose views are largely shaped by neoliberal economic theories. However, although there is agreement on the outcomes that are needed, there is less consensus on how to achieve them, prompting important policy debates. This view of the World Bank focuses its policy prescriptions on providing individuals with greater opportunities to achieve in an unequal society rather than on directly addressing class-generated differences and inequalities. By contrast, we argue that there needs to be class-based redistribution of income and wealth to reduce the inequality between nonregular and regular workers. Such a change would require a broad redistribution of political power.