Japan: Gangsters muscle in on part-time practices

The popular image of Japanese gangsters - tattoos and missing fingers - is pretty hackneyed. But when it comes to business practice, yakuza gangs are positive trendsetters.

Figures released by the police this week show that Japan's mobsters, whose members patrol the country's ubiquitous red-light districts, have a far more flexible labour force than conventional businesses. For the first time since records began in 1958 - Japanese statisticians keep records of almost everything - the number of yakuza part-timers, at 43,200, has outstripped regular employees of 41,500.

Gangs have also become more efficient. In spite of a steady advance in revenue, which has mirrored the economy's return to modest health since 2002, they have cut their workforce. Last year it fell by 1,600. "These guys are the best entrepreneurs in the country, certainly the most responsive to change in business conditions," says a lawyer who deals with underworld issues.

Estimates of the size of crime-related activity remain notoriously sketchy, making it impossible for economists to calculate gains in total mobster factor productivity. But the trend is clear. In 1991, part-timers made up 33 per cent of total gang membership, a proportion that had risen to 51 per cent by last year. Conventional businesses have lagged behind that trend; a decade ago, part-timers made up 19 per cent of the workforce, rising to about 30 per cent today.

The sharp rise in part-timers, the product of 1990s restructuring, has helped conventional businesses control costs and return to record profits. But divisions in the labour market between regular and non-regular workers has provoked soul-searching about the creation of an underclass of "working poor". In the crime world, this has been less of an issue. Yoshinori Watanabe, former leader of the Yamaguchi syndicate, the biggest and most formidable Japanese gang, long ago instructed his members to get regular jobs to camouflage their activity.

Legitimate business, including warehouses, trucking and real estate, make up more than half of gang-related income, experts estimate, the rest being derived from more colourful lines of business, including protection rackets, prostitution and drugs. "There is so much yakuza money coursing through the investment world, it is almost impossible to distinguish it from clean money," said one financial expert. "They are much better at hiding what they do than they were during the bubble era."

Part-time gang members may also be opting out of the hierarchical world that full-time membership entails. Onerous duties include making cash payments to the oyabun, a young hoodlum's father-figure boss, and keeping long hours, for instance by preserving a henchman's precious parking space. Similarly, in regular business, many young Japanese prefer bouncing between part-time jobs to joining a rule-bound company. Like yakuza gangs, Japanese businesses tend to be hierarchical, with strict dress codes, mind-numbing duties and compulsory overtime.

The liberalisation of gangland labour practices is only one way Japan's yakuza have innovated. The Yama-guchi syndicate, for example, has led a wave of hostile takeovers unmatched in corporate boardrooms where such tactics are notoriously unsuccessful. The syndicate, based in the central city of Kobe, has moved steadily eastwards, taking over smaller gangs and consolidating its power in Tokyo. This week, two widely publicised shootings have been cited as evidence of the gang's tightening grip on the capital.

As a result of expansion, Yamaguchi members now account for 47 per cent of all mobsters, once again putting them ahead of the corporate curve. The Fair Trade Commission currently blocks mergers that result in a market share above 35 per cent. But, in the interests of international competitiveness, it is considering raising the threshold to 50 per cent. That rule change would make the Yamaguchi syndicate competition-compliant.

Finacial Times 10 February 2007