Tokyo  - This year's holidays are looking gloomy for Japan's temp workers as the nation's manufacturing sector reduces its output due to the global recession.

Japan's exporters have suffered slowing demand, especially in the United States and Europe, as businesses have revised their earnings forecasts for the full year through March 31.

Behind the corporate pessimism, more than 3.2 million workers who are outsourced via temporary staffing companies have become the first victims of cost cuts.

The nation's leading automaker, Toyota Motor Corp, was slapped with a 50-per-cent reduction in net and operating profits between April and September and ended up lowering its full-year earnings projections.

Other companies, including electronics firms, followed suit.

As businesses slashed their output to match reduced demand, the labour ministry saw more than 10,000 temp workers dismissed in October alone, and it expected the number to reach 30,000 by the end of March.

Takashi Kimura (not his real name) was one of the first unlucky ones to lose his job at a Nissan production plant.

He did not see it coming in August and September, when the plant was operating 24 hours a day and he was enjoying an increased wage of 370,000 yen (3,800 dollars) a month, including weekend pay.

But rumours slowly reached his ears from other subsidiaries that production was being reduced. In October, production was halved at his plant, and most of the temp workers like himself, who accounted for about 70 per cent of the factory workforce, were let go.

The 33-year-old worker received an order of dismissal two days before he was laid off.

Most of temp workers receive a contract for up to three years, but some only get a day job upon its availability or employment shorter than 30 days.

Japanese firms began hiring people on short-term contracts as a way to cut personnel cost in 1986, when the Japanese government enacted a law on outsourcing temporary workers. The law was gradually eased to increase the number of industries that can hire temp workers.

As of 2007, a total of 70,066 temporary staffing companies operated in the country. The number of people they dispatched to firms increased by 26 per cent to more than
3.2 million in 2006 from the previous year, according to the labour ministry.

Experts say that the law has made it easier for businesses to dismiss personnel because they only need to inform a layoff a month in advance, mainly by refusing to renew contracts, or in urgent situations they may terminate contracts only a few days in advance if the temp agencies pay a 30-day wage.

The system represents a hotbed of unstable employment, they say, criticising that it has caused widening income gap in Japan.

For most of Japan's temp workers, job loss can also mean a loss of housing. Kimura's temp agency provided a room for 35,000 yen a month during his employment.

But when his job disappeared, Kimura was both jobless and homeless. The agency also told him that another job opening was not available. He was on his own, it said.

Major Japanese automakers alone have so far announced their intention to cut at least another 7,000 temp workers by the end of December.

"Companies try to protect full-time employees," Kimura said. "Temporary workers like us are easy to cut."

Since the mass layoffs of temporary workers began, labour unions and other groups, including the Social Democratic Party of Japan, have set up hotline services.

Haken Union, the temporary workers' union, in Tokyo has been receiving calls from those who mainly worked in the manufacturing sector.

"Japanese corporations have used temporary workers to calibrate personnel costs," Shuichi Sekine, a union representative, said. "Over the years, the system has created a labour market that is easy to dispose of labourers.

After Japan's bubble economy burst in early 1990s, when outsourcing was limited to only a few industries, companies had to bear the pain of its profit losses. Layoffs were considered the last countermeasures, Sekine said.

But since the number of industries that can accept temporary workers has increased, firms are able to dodge the pain of sacking long-time employees by cutting the temps, Sekine said.

"It is really frustrating," said Kimura, who has little prospect =of landing another job until well into the new year. "People like us who are at the bottom of society have no power to improve in the labour market until someone like the US president-elect can think up a rescue plan." (dpa)