Doubts over labor deregulation

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It will be the second such attempt by Prime Minister Shinzo Abe over the course of eight years if the government tables legislation prepared by the Health, Labor and Welfare Ministry to lift work-hour regulations on certain high-income corporate workers. The government says the plan — a part of Abe’s push for deregulation of labor rules as obstacles to improving the competitiveness of Japanese businesses — will give the employees flexible ways of work by paying them on the basis of their job performance rather than the hours they spend in office. But opponents of the move assert that such deregulation would only exacerbate the chronic problem of long working hours for many corporate workers.

The labor standard law sets the limit on employees’ work hours at eight hours a day and 40 hours a week, and requires employers to pay extra at increased rates when their employees work beyond the limit. Under the plan to revise the law, being drafted by the ministry for the current Diet session, workers who earn more than ¥10.75 million a year and engage in highly specialized categories of jobs can be excluded from the work-hour limits.

Abe was forced to withdraw a similar proposal during his first stint as prime minister from 2006 to 2007 — after facing the same opposition from labor circles based on the argument that it would effectively force more people to work long hours without overtime pay. In bringing the idea back to its agenda, the Abe administration says it has narrowed down the scope of workers to be covered by the system. Aside from the income threshold, the “highly professional labor” system will be applied to workers in specialized job categories with clear job definitions, such as brokerage dealers and people in research and development. To introduce the system, a company would need to obtain the approval of four-fifth of the representatives from both labor and management, and the consent of each worker that would be covered by the system.

Individual workers would exchange documents with employers on the scope of the work they’re required to perform. While workers would no longer be covered by the work-hour regulations, the ministry’s draft requires employers to take steps to ensure the workers’ health by monitoring their work hours, such as by securing a certain interval between the hours at work, setting a monthly upper limit on work hours, or obliging the employees to take at least 104 days off each year.

The administration says the system would fit the needs of people who engage in creative work free of work-hour constraints. Some proponents say the system would enable workers to leave early once they have finished their work and encourage them to use their time more efficiently, improving their productivity and hopefully reducing the hours they spend at the office.

It is not clear why the same thing cannot be achieved by utilizing the existing “discretionary labor” system, under which employees are given discretion over how they work, including time management, and are paid extra if they work beyond agreed-on hours but are still offered additional pay for late-night and holiday work.

Skepticism toward the proposed system persists. Opponents of the system say the government should first take steps to end the widespread practice of “service overtime” in which companies effectively force employees to work long hours without extra pay. According to the ministry, the total amount of unpaid overtime wages that companies paid after being cautioned by labor standards offices nationwide in fiscal 2013 reached ¥12.3 billion for 115,000 workers. Unless businesses are made to comply with existing labor rules in the first place, concerns will remain that the new system could be abused to the disadvantage of workers.

The ministry says the proposed system will only apply to people with specialized skills who can negotiate with their employers on an equal footing. One wonders how that principle will be upheld in Japan’s corporate culture, where employers generally hold the upper hand in their relations with workers. There is the rampant problem of “nominal managers” — employees who are promoted to managerial positions, and thereby excluded from overtime pay — but are effectively given no discretion over their workload and end up spending long hours at work. Concerns exist that under the proposed system employees who are given a workload exceeding their capacity might need to work long hours to finish their assignments.

Another major concern is that the system, once introduced, could be expanded to cover a broader segment of the workforce. Behind the push for the proposed system is the view within business circles that the work-hour regulations are irrelevant for office workers, whose output, unlike blue-collar workers, does not increase in proportion to the hours they spend in office. There is indeed criticism that productivity of Japan’s office workers is low despite the large amount of hours they spend at the office.

The proposed system was called “white-collar exemption” when Abe first tabled it in 2007. At that time, Keidanren (Japan Business Federation) demanded that the system be applied to corporate employees who earn more than ¥4 million a year. As the government tried this time to narrow down the scope of workers to be covered by the system so as to make it easier for labor to swallow, business representatives to the discussions urged that the income threshold of the workers be lowered and that the job categories be widened. According to the ministry’s draft, the income criteria for the proposed system will be set by a ministry ordinance, not by the law itself — making it possible to change the criteria without further legislative steps.

Abe counts labor deregulation as part of his bid to penetrate what he calls “rock bottom” regulations, which he says hinder economic growth. On the face of it, the proposed system is likely to cover only a limited number of corporate employees. If so, its economic impact would be minimal. This leads one to wonder if the administration views the move as only the first step toward widening the scope of the proposed system.

  • MPrck

    Once you allow this to occur, you’ll never get back what you have now. To allow change to occur after by just administrative choice, then you’ll really lose your rights. To read what really happened at say Fukushima, then google Jim Stone Freelance, and read that report. America is lost now, and with 90,000,000.00 + Million Americans of working age without jobs, and no border protection with Mexico, it’s only getting worse. Protect your jobs, and your country.