National / Politics

Labor reform panel adopts final report calling for overtime caps

by Reiji Yoshida

Staff Writer

A government labor reform panel adopted a final report Tuesday calling for revised labor laws capping overtime at 100 hours a month and improving conditions for nonregular workers.

The government aims to submit related bills to the Diet by the end of the year.

The report serves as a key reference for labor reforms advocated by Prime Minister Shinzo Abe, who has called for a reduction in overtime and for the elimination of wide wage gaps between regular and nonregular workers, including part-timers and contract workers.

“This is a historic step to change the work-style” of Japanese workers, Abe said at the end of Tuesday’s panel session.

Abe also said that “action plans” in the report proposed by the panel will be just “pie in the sky” unless the government draws up bills and has them enacted by the Diet.

Abe has argued that such reforms would raise productivity by helping workers achieve a better work-life balance and improving the status of women in the workplace.

The reforms will help reinvigorate the struggling economy, which is suffering from a shrinking population, Abe has said.

Some observers, however, remain skeptical that the government can draw up powerful legal regulations and force reluctant firms to meet the goals touted by the panel, which is chaired by Abe himself.

For example, the panel called for the revision of the Labor Standards Law to stipulate for the first time that overtime should be capped at 720 hours a year, or 60 hours per month on average. The panel recommended that violation should be punished by law.

But during busy periods, the monthly cap could be extended to 100 hours, a level which experts say is long enough to seriously damage the health of a worker.

Under the current law, employers are not allowed to have employees work more than 45 hours of overtime a month and 360 hours a year. However, if the employer and a labor union sign a special agreement, the cap can be removed.

Elsewhere, the panel called for revisions to provide “equal pay for equal work,” meaning employees working the same jobs should be given the same wages whether they are regular or nonregular workers.

But the report, based on government guidelines adopted in December, also says that a company should be allowed to give higher wages to workers if there are “rational reasons” to treat them differently, such as differences in expected career paths.

The report also argued that employers should be obliged to explain reasons for different working conditions if requested by an employee.

The 22-member panel includes nine ministers and the heads of Keidanren (The Japan Business Federation), the country’s most powerful business lobby group, and Rengo (the Japanese Trade Union Confederation), the largest union group. The report is seen as reflecting a consensus reached by the two parties.

On March 13 Keidanren and Rengo agreed to introduce the 100-hour cap on overtime, and the report is based on that consensus.

The focus has now shifted to specific details of regulations to be drawn up by the government and how powerful the bills will be.

Gaps between the working conditions of regular and nonregular workers at Japanese companies are much wider than those in many developed countries, which has deeply frustrated young and female workers.

In recent years, the number of nonregular workers has drastically increased, and they now account for about 40 percent of the total workforce.

Meanwhile workers on part-time contracts earn an average of about 60 percent of the hourly wage of regular full-time workers. In Europe the figure is about 80 percent.