Unemployment Fears Grip Kobe : Quake: With some big employers pulling out and many small businesses closed, workers fear for jobs.


Waiting in line on a school playground for octopus dumplings that volunteers were baking for earthquake refugees, Tomoko Fujisaka's mind was on her husband's next paycheck.

It will be for January, and Sumitomo Rubber Industries Ltd. has not yet informed her husband if it will include pay for the period after Jan. 17, when the earthquake shut down the firm's Kobe factory and ended his work for the month.

"We've been afraid of even asking," she said.

Her own part-time income ended on the day of the quake, when the grocery where she worked was damaged beyond repair.

"We had counted on the money I made to pay for our living expenses, including the rent," she said. "But we've already been told that our rent won't be lowered."

Even more worrisome was the fear that her husband's employer might decide to move production to other factories in Japan, she said.

Within a week, her fear became reality as the firm announced that it will move its production and its workers to two other plants in Japan and abandon any hope of rebuilding its facilities here.

Before mid-January, paychecks and job security were never much of a worry here for employees of big companies such as Sumitomo Rubber. But so unprecedented was the damage inflicted by the 6.8-magnitude quake that few employers--big or small--are offering firm assurances for the future.

The quake that killed 5,391 people also destroyed or irreparably damaged more than 107,000 buildings, including factories and homes.

The city's port--Japan's third-biggest in tonnage handled--was put out of commission. And whole segments of small industry, such as synthetic shoe-making and sake brewing, were virtually wiped out.

Big business, for its part, may leave the region, warned Tetsuro Kawakami, chairman of the Kansai (Osaka-Kobe-Kyoto area) Economic Federation, the region's major business organization. He condemned national and local governments for concentrating rescue measures on small businesses.

"It's fine to talk about building beautiful, safe cities for the future, but business firms have to decide what they are going to do in the meantime. If governmental aid isn't given to (big) companies that suffered damage, they will move out of Kansai to other areas," Kawakami declared in a news conference.

"To ask big businesses to rebuild by themselves is the same as asking businesses to leave Kansai," Kawakami warned. Specific measures to cope with unemployment will be needed, he added.

Three days after he spoke, Sumitomo Rubber announced that it will abandon production in Kobe. And two large shipbuilding firms revealed that they were moving some of their orders to other yards.

Toshio Miyoshi, chairman of Matsushita Electric Works Ltd. and a vice chairman of the Japan Federation of Employers, said he feared that nearly 100,000 people in the region could lose their jobs.

Such statements, warned Takashi Nakagawa of the Nada Ward Employment Stabilization Office, "could create a panic."

At least one big company seems determined to stay. Daiei, Japan's largest chain of department stores and supermarkets, which has its headquarters in Kobe, mobilized a recovery operation 90 minutes after the quake struck and opened 24 of its 49 Hyogo prefecture outlets before the first day ended. Now all but 16 stores are operating, and five of those will be reopened within two months. The remaining 11 are damaged beyond repair.


Daiei's owner, Isao Nakauchi, immediately resigned two major posts he held in Tokyo with top business federations and declared that he will pour all of his energies into rebuilding his firm.

Nakauchi said that $500 million worth of damage from the earthquake had transformed an expected profit into a prospective $260-million loss for the company's accounting year, ending this month. It will be the first loss Daiei has ever recorded.

The charismatic businessman, known abroad for his criticism of government regulations on business, underscored his commitment to Kobe by plastering Daiei shops with stickers that read, "Let's remain steadfast! We love Kobe. We are with you forever--Daiei Group."

In the region's sizable small-business community, untold thousands of shopkeepers were forced by the quake to stop operations, and many may find rebuilding too overwhelming a task, said Yasuhiro Toyoshima, a city official in charge of small enterprises.

Ninety-five percent of Kobe's enterprises employ 29 or fewer workers.

So far, the blow to employees has been cushioned by companies' extraordinary efforts to meet payrolls, by traditionally paternalistic business practices and by existing government support systems.

Motoyasu Taniyama, who owned a factory that made $8 million worth of shoes last year and that was burned to the ground after the quake, spent two weeks visiting evacuation centers to find all 70 of his employees and give them their January pay. He made no promise, however, for February.

Aiko Nagate, whose bakery and seven shops were destroyed, did not pay her 18 employees, but she did give them certificates declaring them to be employees of a business that had been forced to suspend operations. With the certificates, the employees can collect 45% of their pay from the government.

Setsuzo Koda, 77, the proprietor of a Kobe trading company that imports logs, said he will use his savings to try to stay in business for a year, but he is seeking the city's help to get a low-interest loan of $300,000 to refurbish his damaged office.

About 4,000 people like Koda have visited the city's small-business office, and 200 more are coming every day, said Toyoshima, the city official. Nearly 80% of the business people are seeking loans, he added.

It remains unclear what will happen to large numbers of part-time workers who enjoy none of the job security that full-status employees traditionally have had.

Haruo Ushiroda, 56, had been working part time at a firm with 500 workers when the quake struck. All of the workers have been told to wait until they are summoned back, he said. But as a part-timer, Ushiroda knows he has no assurance of being hired back.

"I don't know what to do if the company doesn't want me. If I were younger, I could go elsewhere and work, but I don't have a driver's license or anything" such as a special skill, he said.

Some jobs are being created--albeit temporarily--by the massive cleanup effort now under way.


In Osaka, companies are being signed up to remove an estimated 11 million tons of rubble from the disaster zone--a task that will take a year. These firms have raised their recruitment of day laborers to 5,000 from 2,000.

A boom expected to last five years and lift the nation's construction industry out of a recession is also expected to increase employment, although probably not by much in the Kobe environs. Construction firms will be bringing in specialists from other parts of the country, said Yasuo Saeki, general affairs manager of Kajima Construction Co.

But for the long term, most signs point toward a tightening of purse strings as residents continue to worry about both their jobs and the expense of buying new housing while still paying off loans on destroyed property.

Megumi Shimizu of The Times' Tokyo Bureau contributed to this report.

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