The action plan put forward by the government panel on “work-style reforms” features measures aimed at narrowing the steep wage gap between regular full-time employees and the growing ranks of workers on irregular contracts, as well as a first-ever legal cap on the overtime hours of company workers. They are both steps in the right direction, but much more needs to be done by all parties involved to make sure that the conditions of irregular workers are effectively improved and the chronically long working hours of company employees are significantly curbed.
Many of the planned government steps will only provide bare minimum standards, and a lot is left up to the efforts by individual businesses and their unions to substantially correct the long-standing labor problems. The government needs to take further measures to facilitate such efforts by the companies and their workers, and should be ready to constantly review the steps if necessary.
The proposed reforms — which the Abe administration says are intended to build a society where people can choose diverse and flexible ways of work, and thereby increase productivity even as the nation’s population falls — also includes calls for the introduction of a more flexible work environment such as teleworking, measures to support people working while raising children or caring for ailing relatives, and the promotion of elderly people’s participation in the labor market. Legislative steps to be based on the action plan, including an amendment to the Labor Standards Law, will be compiled and submitted to the Diet by the year’s end, so that some of the steps will take effect in early 2019.
But the key features of the plan are the legal cap on overtime hours — which Prime Minister Shinzo Abe has sought as a crucial step to reduce the working hours of corporate employees — and the measures to realize Abe’s stated drive for the introduction of an “equal work, equal pay” principle.
The total annual working hours of full-scale corporate employees, including overtime, has remained nearly flat at over 2,000 hours on average for the past 20 years, and efforts to curb overtime hours are seen as crucial to reducing the overall work hours of employees. The issue took an urgent note as the deaths and suicides of overworked company employees came under renewed spotlight following the 2015 case of a 24-year-old employee at Dentsu Inc. who killed herself after suffering from depression — and revelations that illegal overtime practices were rampant even in a blue-chip company like the nation’s top advertisement agency.
The plan calls for amending the Labor Standards Law to set legal limits on overtime hours, with penalties on violators. That in itself is progress, given that the current labor laws effectively set no ceiling on workers’ monthly overtime hours. The problem is that the proposed cap — up to 45 hours a month and 360 hours annually in principle — can be extended to just shy of 100 hours a month during a busy period and 80 hours on average if the period stretches over two to six months, within a total of 720 hours a year. That is almost equal to the Health, Labor and Welfare Ministry criteria linking workers’ fatal heart and brain diseases to overwork under the labor accident compensation scheme. There is already criticism that the proposed cap can be taken as the government’s endorsement of excessively long overtime hours that could endanger workers’ health.
Under the plan, the overtime cap will be reviewed in five years. The government should not wait that long to introduce more stringent rules that will effectively reduce the work hours of corporate employees.
The government’s job will not end by simply introducing a legal cap on overtime hours. Those rules will be meaningless unless they are honored. It needs to take steps to crack down on the prevalent practices of “service overtime” in which many companies get their employees to underreport their work hours to circumvent work-hour regulations. Such steps will be crucial if the government is really serious about reducing the work hours of company employees.
The action plan also incorporated a guideline spelled out by the administration in December to eliminate “irrational” disparities in wages and other conditions between regular full-time employees and workers on irregular contracts who engage in the same work. The steep wage gap has become an increasingly serious problem as people on irregular statuses such as part-timers, term-contract workers and temporary dispatch staff have come to account for about 40 percent of the nation’s workforce. Workers on irregular contracts earn roughly 60 percent of the hourly wages of their regular full-time counterparts, and the government seeks to narrow the gap to about 80 percent.
The guideline, based on which the government plans to amend relevant labor laws, says that basic wages and bonuses for workers in both regular and irregular statuses must be equal if their job skills and work performance are equal — and that if they differ in skills and performances, their wages should be differentiated accordingly. Allowances such as those covering the workers’ commuting expenses must be provided equally irrespective of job status. It is significant that the plan requires employers to explain the reasons for such wage disparities if so demanded by workers, since it will be the management of the businesses that judges the differences in the workers’ skills and performances. The government needs to make sure that businesses honor this obligation.
The agenda set by the Abe administration in its “work-style reforms” is a step in the right direction. The administration needs to follow up on the action plan by measuring its practical impact and taking additional steps to ensure that the problems that it purports to address are corrected.
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