National / Politics

Diet enacts key labor reform that opposition slams as ‘karōshi promotion’ bill

by Tomohiro Osaki

Staff Writer

The Diet enacted a bill Friday that Prime Minister Shinzo Abe says represents the biggest shake-up of the nation’s labor laws in decades, ushering in a legally binding overtime cap and exempting skilled white-collar employees from work-time regulations.

The government has also claimed the reform, which includes an “equal work, equal pay” measure, will increase wages for non-regular workers — such as part-timers and temporary workers — while enabling more flexible work styles.

Ostensibly an attempt to slash overwork, the comprehensive legal package has, however, drawn fierce criticism from opposition lawmakers that it will do the exact opposite, by exacerbating Japan’s deeply ingrained problem of karōshi (death from overwork).

“This is the first major reform in 70 years,” a proud Abe told reporters after a plenary session of the Upper House, referring to the 1947 enactment of the Labor Standards Act.

“It will rectify the culture of working long hours, eradicate the term ‘non-regular workers’ and create diversity in the way people work, so that their careers will become more compatible with their child-rearing and nursing-care duties,” he said.

The passage is a much-needed legislative win for Abe, who at the onset of this ongoing Diet session declared enacting the labor reform bill his top priority.

Failing to achieve that stated goal would have cast doubt on his leadership within his ruling Liberal Democratic Party, and marred his chances of winning re-election in the party’s critical leadership election. The vote, slated for September, is a race in which he needs to triumph in order to pursue his longtime ambition of revising the post-war Constitution.

It remains to be seen, however, how much of a boost the reform’s enactment will prove for Abe’s popularity as it recovers from two favoritism scandals. A Jiji Press opinion poll conducted earlier this month found that 38.7 percent of respondents disapproved of the reform, with those who approved — at 29.5 percent — outnumbered.

The bill was passed by a majority vote, receiving the backing of the LDP-Komeito coalition and conservative opposition Nippon Ishin no Kai.

Now the government’s primary legislative focus shifts to a controversial casino bill that in all likelihood will provide the biggest source of political wrangling this session, as the Diet heads to a close in late July.

The labor reform package, which comprehensively revises eight related laws, will for the first time ever put in place a legally binding cap on overtime at 360 hours annually, although it can be extended to 720 hours as an exception. Noncomplying employers will be penalized.

Among the most controversial reforms on the horizon is the adoption of what is known as a white-collar exemption system, which will spare those described as “specialist” personnel with an annual income of more than ¥10.75 million — such as financial dealers and analysts — from work-hour regulations.

The “high-level professional system,” as it is officially called, has long been pushed by the nation’s business community including the Keidanren, Japan’s largest business lobby group.

It will allow employees to be paid based on their performance rather than the hours they work, paving the way for more flexible working styles and boosting overall productivity, the government claims.

Noting that the system effectively dispenses with the concept of overtime pay, however, the opposition has argued it instead risks endorsing unpaid overwork. As a result they have dubbed the reform the “Karōshi Promotion Bill.”

“Under the pretext of boosting productivity, the reform is first and foremost designed to cater to the needs of employers. Its fundamental purpose, it appears, is to help them cut back on the cost of overtime pay,” lawmaker Makoto Hamaguchi, of the Democratic Party for the People, told the Upper House session.

Under the system, kin of karōshi victims will be hard-pressed to prove a correlation between overwork and the death of their loved ones because an “accurate” and “objective” grasp of the hours worked by employees will become “extremely difficult,” he added.

“What this means is that even if there is karōshi it may no longer be recognized as such, which could result in the number of karōshi cases decreasing only on paper,” Hamaguchi said.

Among other highlights of the bill is a so-called equal work, equal pay measure meant to curb what is seen as discriminatory treatment by firms against nonregular employees, including part-timers and temporary staff, who have long been at a disadvantage by being paid salaries lower than their full-time counterparts irrespective of their performance and abilities.

The work-style reform has also been controversial because of revelations of sloppy preparation of evidence in support of the policy. In a major compromise, Abe in February removed the expansion of a so-called discretionary labor system — which was initially touted as a key component of the reform — from the bill after it emerged that key government data used to emphasize its benefits contained a number of statistical errors.

The discretionary labor system allows employers to pay workers according to a predetermined number of hours instead of actual working hours, meaning workers are not paid for overtime work that is not agreed upon beforehand.