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LABOR LAW LOOPHOLES

Overwork sanctioned by both firms and unions, with dim prospects for state intervention: expert

by

Staff Writer

When the suicide of a female worker at ad giant Dentsu Inc. was recognized as karoshi, or death from overwork, many blamed a corporate culture that glorifies the “warrior” workers who sacrifice themselves for the good of the firm.

But the true problem behind the suicide at 24 of Matsuri Takahashi, who had clocked more than 100 hours of overtime in October 2015 before jumping from a corporate dorm on Christmas, is legal loopholes that allow employees to effectively work unlimited hours, according to an expert.

Takahashi’s mother, Yukimi, is demanding that the government abolish those loopholes and create a better overall working environment.

“No work is important enough to sacrifice one’s life for,” she told a news conference in October.

What follows is an overview of Japan’s work-hour regulations and the loopholes that exist today in the law:

What is the cap on working hours in Japan?

Under the Labor Standard Law, work hours are capped at eight hours a day or 40 hours a week. An employer that violates this law could face up to ¥300,000 in fines or up to six months in prison.

That said, there are exceptions.

If the company and labor unions, or representatives of more than half of a firm’s employees, sign an agreement based on Article 36 of the law, which allows overtime, and submit it to a local labor bureau, employees become able to work overtime, or more than 40 hours a week.

Called saburoku kyotei — which literally means “36 agreement,” with 36 referring to Article 36 — such accords are regarded as the major culprits behind the problem of protracted overtime.

What does an Article 36 agreement stipulate?

If the two sides ink a standard Article 36 deal, employees can do overtime within limits set by the labor ministry, such as 45 hours a month or 360 hours a year.

But if the agreement contains a special provision, the overtime available to workers becomes effectively unlimited for up to six months a year, with the cap being at the discretion of the employers and employees themselves.

For overtime hours between 10 p.m. and 5 a.m., employers are obliged to pay their workers 125 percent or more of regular base pay. For overtime exceeding 60 hours a month, large companies must pay 150 percent or more of the hourly wage.

According to the labor ministry, nearly 60 percent of large businesses and 11 percent of small and medium-size companies had Article 36 agreements containing special provisions in 2013.

Among the large companies, 14.6 percent had placed their monthly overtime cap above 80 hours — a threshold recognized as karoshi territory by the labor ministry.

Why are Article 36 agreements still allowed?

Simply put, employers want more work to be done, and employees want more money, so such agreements remain in place, according to Koji Morioka, a professor emeritus at Kansai University who is well-versed in labor issues.

For employers, the 125 percent in extra hourly wages is a relatively small price to pay, compared with 150 percent in the U.S., he said. Labor unions, meanwhile, are toothless, he added, as many among their memberships want the extra money that comes with overtime.

“Rather than seeking to place strict caps on working hours, unions have accepted long overtime. That’s the reality,” Morioka said.

In short, the government has essentially left the matter in the hands of management and unions for nearly 70 years since the law took effect in 1947.

Have working hours changed in recent decades?

Overall annual average working hours, including those of part-timers, have declined to 1,734 in 2015 from 1,910 in 1994, according to labor ministry data.

The decline, however, is due mainly to the increasing number of part-time workers. The ministry data also show the annual working hours of regular employees stood at 2,026 in 2015, compared to 2,036 in 1994.

Even though more people today acknowledge the importance of work-life balance, a 2014 Cabinet Office survey showed that many still regarded employees who worked longer hours in a favorable light.

The survey found that more than 50 percent of respondents had a positive image of workers who clocked more than 12 hours a day, compared to 38 percent for those who worked less than 10 hours.

How does Japan compare with other industrialized countries?

According to the Japan Institution for Labor Policy and Training, in 2014, Japan’s work hours exceeded those of many European countries. The data say annual average working hours in Japan stood at 1,729, compared with 1,371 in Germany, 1,473 in France and 1,677 in the U.K.

However, Americans worked a little longer, averaging 1,789 hours a year, it said.

But when it comes to the percentage of people who worked more than 49 hours a week, or nine hours of weekly overtime, Japan was the highest, at 21 percent, compared to 16.4 percent in the U.S. and 12.5 percent in the U.K., according to the data.

Is the government taking measures to reduce excessive overtime?

The government set up a task force, headed by Prime Minister Shinzo Abe, in September to discuss ways to slash work hours, including revision of Article 36 agreements, as part of its “work-style reforms.”

It is expected to draw up action plans by the end of March, but whether it will lay out truly meaningful measures remains to be seen.

Morioka of Kansai University predicted the government will probably place nonbinding overtime caps at around 80 to 100 hours a month for workplaces operating under Article 36 agreements with special provisions.

But the pro-business Abe administration isn’t likely to place a binding cap on overtime, as it would likely spark strong opposition from Japan Inc., namely Keidanren, the major business lobby.

In fact, Keidanren chief Sadayuki Sakakibara warned the government back in September, saying it should consider the distinct nature of each industry when discussing placing such limits. Otherwise, he said, it could have a huge impact on the nation’s economy.

“It is not wrong to revise (the Article 36 agreement), including placing a cap on overtime,” Sakakibara said at a news conference on Sept. 26. “But that should not result in a delay of business operations.”

Morioka of Kansai University takes a dim view of the prospect of significant reform, saying that serious change isn’t likely unless the labor side engages in a sweeping mass movement, collectively demanding that the government restrict excessive working hours.