DO NOT PUBLISH IR GABA – Labor Commission update

May 25, 2009

By classifying teachers as sub-contractors GABA is able to save a significant amount of money. This has not gone unnoticed by other language schools. A company with a similar lesson system has complained to us that their costs are at least 22% higher than GABA’s. Labor Commission Friday, May 22 was the seventh hearing of the General Union’s Labor Commission (LC) case against Gaba. It was an official mediation session. Both sides spent time talking individually with the Labor Commissioners but there was no offer of settlement. As a result, the Commission has strongly recommended that GABA go away and come back with a firm settlement proposal for the next mediation hearing to be held on June 30th. What does this mean? As often the case in Japan, the Labor Commission is trying to force a settlement. This also happened earlier in the proceedings. The offer at that time was a series of different types of employment contracts that set new industry lows in salaries. The Labor Commission was not surprised the offer was rejected, so the case continued. As the case draws to an end, the LC is once again attempting to close the case without making a ruling. Will GABA make moves towards an employment system for instructors or will the LC need to make a ruling? Stay tuned.