Business

Japan debuts legal cap on long work hours under labor reform law, but for now only big firms affected

Kyodo

A labor reform law came into force on Monday, setting a legal cap on long work hours to change Japan’s notorious overwork culture blamed for causing sickness and deaths.

The cap, which only targets major companies for now, is one of the three pillars of labor reform pushed by Prime Minister Shinzo Abe, who faces the difficult task of addressing Japan’s shortage of workers that has now become a major issue across various industry sectors.

The law limits overtime work to 45 hours a month and 360 hours a year in principle. The monthly cap can be extended in busy periods, for up to six months a year.

Even in such cases, the ultimate overtime cap of 100 hours a month and 720 hours a year is set. Companies that violate the rules will be punished, possibly with a fine of ¥300,000 ($2,700).

Japan has a tight labor market with companies vying to secure labor amid the aging of its population. In a major policy shift, the country opened its doors to more foreign workers by creating a new visa system on Monday.

As the labor shortage is more severe in certain sectors than in others, construction workers, taxi and truck drivers, as well as doctors will be exempted from the law for five years. The law will become effective for small and midsize companies in April next year.

Such exemptions have already raised concern that smaller companies will be forced to bear the brunt of big companies cutting their own employees’ overtime work.

Critics say it is uncertain whether imposition of the legal cap will drastically change the deeply rooted overwork culture.

The issue of “karoshi,” or death from overwork, was brought into fresh focus after the 2015 suicide of an overworked female worker at advertising firm Dentsu Inc. that was later recognized in 2016 as due to overwork.

In fiscal 2017, Japan had 190 deaths from overwork, including suicides, according to government data.

Skilled professionals with high wages such as consultants and financial traders will be exempted.

Another major feature of the law, ensuring “equal pay for equal work” for regular and nonregular workers, will take effect in April next year.