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Strong work ethic is no path to better standard of living

by Philip Brasor

Last week I spoke to a non-Japanese economics researcher employed by a Japanese university. He said he was working on a study that compared Spain’s current fiscal crisis to Japan’s economic situation as a means of determining if the former would suffer the same long-term problems as the latter. I mentioned that the two countries’ situations seemed dissimilar because of Japan’s high savings rate, and he countered that the biggest difference was really the “work ethic.”

It’s a loaded term. The news media has been filled with stories of ballooning unemployment in Spain. In comparison, Japan has much lower official jobless numbers and a growth rate that impresses people like Nobel Prize-winner Paul Krugman, who said last spring in an interview with the Financial Times, “When people ask: Might we become Japan? I say: I wish we could become Japan.”

These optimists are referring to per-capita income and consumption, which they believe is relatively healthy for an economy that pessimists believe has been on life support for two decades. The big problem is deflation, which puts downward pressure on income. That’s why the consumption-tax increase bothers so many economists, since it will stifle consumption even more.

Still, there’s that “work ethic” idea. Everybody knows the Japanese are hard-working people, and even if productivity lags behind other developed countries this presumed national trait will always guarantee that the labor force can rally to overcome any challenge. But you have to wonder: Has there ever been a light at the end of the tunnel, a point at which Japanese workers can expect good results for their efforts — not for the benefit of the companies they work for, but for themselves? Will they always have to put up with long hours and inferior living conditions?

A few months ago this column discussed the decline of company labor unions and the effect it has had on the amount of overtime workers are logging. It’s a topic the Tokyo Shimbun continues to pursue, and recently it surveyed the top 100 companies listed on the Tokyo Stock Exchange in terms of 2011 sales. The newspaper wanted to find out how much overtime the employees of these companies, considered the cream of the crop, work now.

The labor ministry cites 80 hours overtime a month as the point at which a worker’s health and well-being become compromised. Anything above that and the chance of karōshi (death from overwork) becomes more probable. Tokyo Shimbun found that of the 100 companies surveyed, 70 have agreements stipulating maximum overtime of more than 80 hours a month. The average is 92 hours. The most is for the printing company Dai-Nihon Insatsu, where employees can be asked to work up to 200 hours overtime a month. In second place is Kansai Power Company, with 193 hours. The ministry, alarmed by this trend, revised the Labor Standards Law in April 2010 and implemented a new pay system for overtime work in a bid to check the rise in hours, but it didn’t work. Thirteen of the companies surveyed have increased the number of allowable overtime hours since then. Only Hino Motors has reduced them.

A representative of the Japan Business Federation (Keidanren) assured Tokyo Shimbun that just because a company can ask an employee to work more overtime than the ministry recommends, that doesn’t mean it will. Most employees work much less. Companies insist on higher maximum numbers because of flexibility. The economy is always changing, and management needs to be able to shift gears quickly. That means not having to hire new workers when demand goes up. You ask the people you already have to work more. By the same token, the company doesn’t have to lay off workers when demand is low. Increased maximum overtime gives it a safety valve.

Disregarding the notion that employees seem to have little choice in the matter, it sounds like a reasonable explanation in light of the conditions these companies fret about so loudly, namely the high yen and increased foreign competition. Economic health is measured by profits: If companies don’t make money, they can’t take care of their employees. Companies ask them to work harder so that they can make enough money to keep them on the payroll and ensure their livelihoods.

This is what growth is all about: activating private companies and increasing consumption by improving the standard of living. But is the standard of living solely gauged by economic parameters? Doesn’t it also entail peace of mind, a sense of comfort through acquisition of sufficient time and space for personal needs? Most people will agree that economic stability is a prerequisite to a comfortable life, but as long as the government believes that what’s best for the private sector is what’s best for the country, then stability will always be on those companies’ terms. If the government wants to beat deflation, all it has to do is compel employers to pay higher wages, but the government doesn’t have the will to do that, or the intention.

A new political party, Japan Greens, was established on July 28. In line with the worldwide Green movement, one of its priorities is to reduce labor hours and provide a humane balance between work and life. This idea has already taken root in Europe, but not Japan, where employees toil more hours than workers do in any other developed country.

Last week, Asahi Shimbun had a report on the Kingdom of Bhutan, which supplements the Gross National Product index that measures growth with a Gross National Happiness index that measures spiritual well-being. As growth has risen the GNH has dropped. In 2010 Bhutanese took out three times as many car loans and twice as many mortgages as they did in 2007. Bhutan still has a long way to go before its consumption rates compare with Japan’s. Twenty-three percent of Bhutanese live in poverty. Japanese people are much better off. They’re just more tired.