Prime Minister Shinzo Abe has ordered key government panels to look into easing work-hour regulations under the Labor Standards Law so that some workers could be rewarded on the basis of their performance rather than the hours they spend in the office.
While proponents say such changes would enable workers to flexibly decide their work hours according to their individual circumstances, the proposal needs to be carefully examined so that it is not exploited by businesses to effectively force their employees to work long hours without extra pay.
The Abe administration reportedly believes that the work-hour deregulation would enable people to choose diverse ways of work and galvanize the labor market, and hopes to include the plan in its updated growth strategy for the Japanese economy to be released in June.
The Labor Standards Law currently sets the limit on an employee’s work hours to eight hours a day and 40 hours a week. Companies are required to pay extra if their employees work beyond such limits, with the exception of workers in management positions. The proposal aims to lift the rules under certain conditions.
While the specifics of what Abe has in mind are not yet known, the prime minister gave the order during a joint meeting of the government’s Council on Economic and Fiscal Policy and another panel on industrial competitiveness on April 22 in response to a proposal by Yasuchika Hasegawa, chairman of the Japan Association of Corporate Executives (Keizai Doyukai) and president of Takeda Pharmaceutical Co.
Hasegawa, who sits on the industrial competitiveness panel as a representative of the business sector, proposed two types of schemes under which the work-hour regulations would not be applied:
The first scheme envisions highly skilled workers with high income levels — possibly those with an annual salary of ¥10 million or more — who would be paid on the basis of their work performance irrespective of the hours spent in the office.
The second model would apply to general workers who would be given the discretion to decide on their daily work hours within a yearly range agreed on between the company’s management and labor union.
In both cases, employees would choose whether or not to opt for such schemes, which would be based on an accord between the labor union and management.
During his earlier stint as prime minister between 2006 and 2007, Abe tried to introduce a similar system known as white-collar exemption, under which certain office workers would be excluded from the work-hour regulations under the Labor Standards Law.
But he gave up the attempt in the face of strong opposition from labor unions and criticism that such a system would only exacerbate the notoriously long working hours for many of the nation’s company employees, possibly resulting in more overwork-induced health impairments.
The pro-business Abe administration is apparently trying to put the idea back on the table in light of the argument from the business community that the wage system in which employees are paid according to the hours they spend at work does not fit the job of many office workers because their performance does not necessarily go up or down in proportion to the length of work hours.
Proponents say the proposed system is in fact aimed at reducing the hours spent at work because the workers can leave early once they’ve finished their work and lack of overtime pay would encourage employees to do their job more efficiently within the regular hours.
Abe told the April 22 joint panel meeting that more diversity in the ways of work would help maximize the use of the nation’s manpower, thus contributing to sustainable growth of the economy. Proponents argue that with the decline in Japan’s working population, it is essential that more people who find it difficult to regularly work eight hours a day at workplaces — such as mothers raising small children and people who need to take care of ailing parents — join the labor force through a system that rewards them for the work done, not the hours spent at work.
Greater flexibility in employment would indeed be a positive move if it leads to expanding labor participation.
But the possible negative effects of the proposal need to be scrutinized in view of the prevailing practices in labor-management relations at Japanese firms, especially extremely long work hours and what is called saabisu zangyo (service overtime work) or overtime work for which management does not pay compensation.
The average annual working hours of full-time employees at Japanese companies stayed above 2,000 hours in 2013. About 4.74 million workers, or 8.8 percent of the total, worked 60 or more hours a week on average. Chronically long working hours for salaried workers remain undiminished.
Overwork-induced deaths and suicides of company employees remain such a serious issue that Abe’s ruling Liberal Democratic Party is preparing draft legislation obliging the government to take preventive measures.
Under the proposed system, it is supposed to be the voluntary decision of each worker whether or not to be rewarded on the basis of job performance, instead of the hours spent at work. But it is questionable whether individual workers would in fact be able to resist calls from employers who, as the labor ministry acknowledges, generally are in a much stronger position vis-a-vis their workers in Japan.
And it is most likely that the employers who evaluate the job performance of their workers also determine whether the workers have completed their job.
The proposed system needs a mechanism to ensure that employers don’t use their powers arbitrarily to set workloads and to compel employees to work — no matter how long — until the job is finished.
It must not be abused by employers as a means of cutting back on the cost of overtime work.