Prime Minister Shinzo Abe has made a drastic policy compromise amid a series of deepening revelations over a faulty government survey, and will now forgo expansion of the controversial discretionary labor system in the current Diet session.

The shift is apparently intended to minimize damage ahead of a critical leadership election in September.

After weeks of heated criticism by opposition lawmakers, Abe announced late Wednesday night that he has decided to “completely remove” expansion of the system from his proposed labor reform bill, currently at a draft stage, citing the public misgivings that have been stoked by the ongoing data scandal.

The discretionary labor system, whereby employees are paid according to a fixed number of hours instead of the actual hours they work, was a pillar of his much-hyped labor reform.

Abe’s early compromise on the system — coming before the actual bill is submitted to the Diet — appears to be a crisis management tactic meant to minimize backlash, said Norihiko Narita, a professor emeritus of political science at Surugadai University.

As Abe looks to drum up support for revising the Constitution and mulls a bid for a historic third term in September’s Liberal Democratic Party leadership election, the prime minister is likely to have decided that forcing through the work-reform platform based on questionable data is too much of a risk to take at the moment, the professor said.

“He probably considered it unwise to be stubborn on the labor issue and continue to sustain damage due to the data scandal,” Narita said.

Abe’s past attempts to press ahead with controversial policies — including enacting the state secrecy law and security legislation to expand the legal scope of overseas operations by the Self-Defense Forces — have often come at a cost to his otherwise solid support rate.

The Abe administration had asserted that  the discretionary work system could reduce employees’ work hours compared to the ordinary system, based on the survey.

But in the scandal, that survey — conducted by the labor ministry in 2013 — was found to have used two different methods to collect data, making it statistically unreliable. It has also been found to contain more than 300 erroneous figures. The embarrassing situation has left Abe scrambling to offer a rare apology and withdraw past remarks that were based on the survey.

That Abe took the high road so swiftly, Narita added, also underlines his awareness of the severity of the data scandal, given that it casts significant doubts on a long-held government claim. Amid growing concern over the erroneous data, a poll conducted last week by the influential Nikkei business daily showed 42 percent of its respondents were opposed to wider application of the discretionary labor system, outnumbering the 30 percent who approved. With the opposition pursuing a line of argument that the system, if abused, will increase unpaid overwork and exacerbate the problem of karōshi (death by overwork), the data fiasco is “in a way more serious than the Moritomo and Kake (cronyism) scandals because it actually had implications for people’s lives,” Narita said.

Although stripped of one of its key components, Abe’s work-style reform campaign will otherwise proceed as planned, the prime minister emphasized Thursday.

It will retain other major highlights, he said, including the so-called white-collar exemption system that will see “specialist” personnel with an annual income of more than ¥10.75 million — including financial dealers and analysts — receive pay based on their performance, rather than the hours they work. Among other reforms is a 720-hour annual cap on legally permissible overtime, and the “equal pay for equal work” principle that seeks to narrow income disparities between full-time and nonregular workers that include part-timers, contract workers and temporary staff dispatched from personnel agencies.

“This will be the first major labor reform in 70 years,” Abe told the Upper House Budget Committee on Thursday, voicing confidence it will foster a more diverse work style and curb a culture of long working hours.

“It will boost workers’ productivity and help them better strike a work-and-life balance,” he said.

But going forward Abe does risk losing some support from Japan’s business circle, which has been strongly pushing for the expansion of the discretionary labor system.

Its removal from the work reform legislation will likely throw cold water on hopes among employers that they can cut back on personnel expenses. Under the system, any work performed beyond prearranged hours would go unpaid.

“Talk of expanding the discretionary labor system is long overdue. Japan will continue to lag behind global standards if it can’t manage to pull off a change as simple as that,” Yoshimitsu Kobayashi, head of the Japan Association of Corporate Executives, told a news conference earlier this week. “It’s time we evaluated the quality, instead of quantity, of people’s work, otherwise efforts to improve productivity won’t pay off.”