Prime Minister Shinzo Abe came up with yet another catchphrase for his administration’s agenda — reforming people’s work style — as he reshuffled his Cabinet earlier this month. What he spelled out as the primary targets of this policy — the steep wage gap between irregular workers and regular full-time corporate employees, and the chronically long work hours for company workers — are both serious problems with broad economic and social repercussions, and are worth tackling. Never mind that Abe seems to be recycling the issues already highlighted in the plan for the “dynamic engagement of all citizens” adopted by his Cabinet in June. Abe says work-style reforms will constitute the “biggest challenge” to creating his “society where all citizens are dynamically engaged.”
He has assigned a Cabinet minister to address work-style reforms and plans to compile concrete plans of action to achieve the goals by the end of March. How far he intends to go in resolving these problems, including issues related to long-running labor practices and possible resistance from business management, remains unclear. The Abe administration should set specific targets in the promised efforts to make sure they don’t end in nothing more than symbolic gestures.
The wide wage disparity between regular and irregular workers has widening economic and social implications as people on irregular positions such as part-timers, contract workers and temporary dispatch staff have increased since the 1990s and now account for about 40 percent of the nation’s workforce — much of the job growth under Abe’s watch has indeed been in irregular positions.
According to the Health, Labor and Welfare Ministry, an average part-time worker in Japan earns an hourly wage equivalent to 56.8 percent of that of a regular full-time company employee — compared with 89.1 percent in France, 79.3 percent in Germany and 70.8 percent in Britain. An increase in younger people with unstable irregular jobs is cited as a factor behind sluggish consumer spending, and low marriage and birth rates. The administration says it aims to narrow the wage gap closer to European levels.
Reducing company employees’ long working hours has been singled out for years as a key priority in national labor policies — but no real progress has been made. This problem not only harms workers’ health but leaves them with little time to spend with their families and thus contributes to the low fertility rate.
Since 2003, overtime hours for full-time company employees have been rising year-on-year (except during the period after the 2008 Lehman shock and 2015), and roughly 30 percent of them clock more than 40 hours of overtime a month. A recent government report said the long work hours at many companies effectively keep women and elderly people from working while raising small children or caring for ailing relatives. This is hampering efforts to promote the participation of more women and the elderly in the workforce to compensate for the manpower shortage resulting from the declining population.
Abe has highlighted improved wages for irregular workers as a way to expand consumer spending and achieve his goal of boosting nominal gross domestic product to ¥600 trillion. He has hoisted making the same work, same pay principle a reality — long called for by the opposition camp and labor circles — as a new goal and ordered his administration to come up with a guideline for prohibiting irrational wage discrimination between regular and irregular workers. The question is how specific is he ready to be in identifying examples of unreasonable discrimination that need to be banned.
Complicating matters is the gap between regular and irregular workers relating to the seniority-based wage system prevalent among Japanese companies — in which compensation changes with the length of employment instead being based on a clear set of job descriptions that apply to all workers. The definition of “same work” often gets blurred when the “extra responsibility” of regular employees is counted. Whether corporate management will review the seniority-based pay for their employees to offset increased manpower costs for their irregular staff may be another question. Abe has pledged to “wipe out” the concept of irregular workers through his reforms, but the issues at hand may not be that simple to overcome.
As for excessive work hours, the administration is reportedly considering placing a legal cap in monthly overtime work for company employees — whereas currently a company’s management and labor union can effectively agree to an unlimited amount of overtime per month. How serious Abe is about resolving this problem may be tested by how tight a cap the administration will seek and whether it can overcome possible resistance from business circles.
The Abe administration’s measures on labor issues have so far tended to support the interests of business management. An amendment to the law on temporary dispatch workers enacted last year lifted the three-year cap on companies continuing to use workers from dispatch agents, so that the firms can keep using such staff indefinitely as long as they replace individual workers every three years.
A bill submitted by the administration, and still pending in the Diet, calls for creation of a system whereby certain categories of workers with “highly professional expertise” can be exempted from legal work-hour regulations and paid based on their job performance rather than the hours they spend in the office — a system that has been pushed by business circles and which some critics say will result in such employees working longer hours without overtime. Abe’s new labor agenda will indeed be important for achieving his economic and demographic goals, but he needs to show that he’s serious about making it work.