Under the work-style reform legislation enacted last year, large companies will be obliged to follow the principle of “equal work, equal pay” irrespective of the job statuses of their workers beginning in April 2020 and smaller ones a year later. Ahead of the onset of the legal obligations, major distribution service provider Nippon Express Co. plans to increase the wages of its workers on irregular contracts to be on par with their regular full-time counterparts who work under the same conditions. The firm’s reported decision apparently reflects the particularly serious labor shortage that haunts the trucking and delivery industry, and other companies may follow suit. With a manpower shortage looming as a major obstacle to the operation of businesses, employers need to realize that improving the wages of both regular and irregular employees will be crucial to securing the labor they need.

The number of workers on irregular statuses such as part-timers, those on fixed-term contracts and temporary-dispatch workers has significantly increased since the 1990s as companies cut back on the hiring of regular full-time employees to reduce manpower expenses. Such workers have come to account for nearly 40 percent of the nation’s labor force, but they earn roughly 60 percent of the pay of regular employees. The government has set a target of narrowing the gap to 80 percent as it promotes the equal work, equal pay principle as part of its labor reforms.

The guideline adopted by the government in December for implementation of the rule obliges employers to offer the same level of basic pay to both its regular and irregular workers if they engage in the same work and have equal capability, experience and performance. While it allows the companies to treat the workers differently if they differ in their skills, experience and so on, the guideline prohibits the firms from discriminating against irregular workers in terms of benefits such as holiday and late-night work allowances. It bans irrational disparities between regular and irregular workers, and holds the employers accountable if the workers demand an explanation for the gap.

The increasingly severe shortage of drivers in the trucking and delivery-service sector has prompted major players in the industry such as Yamato Transport to raise their transport fees in recent years. Beginning in April, Nippon Express, which has some 13,000 workers on fixed-term contracts, will upgrade the pay scale of the reportedly several thousand contract employees who work full time to be on the same level as regular employees who face no possibility of transfers outside of their areas. The move by Nippon Express may prompt other large firms suffering from manpower shortages to take similar steps to attract sufficient manpower.

Even before the legal obligation kicks in, courts have ruled that denying workers benefits such as holiday-work allowances and sick leave on the basis of their irregular job status amounts to irrational discrimination that must be corrected. Whether and how the disparity between regular and irregular workers is narrowed ultimately depends greatly on the actions taken by each company with respect to the government’s guideline. The business sector is urged to play a more proactive role in improving conditions for irregular workers, a step that is hoped to provide a much-needed boost in consumer spending.

One source of concern is that some firms may seek to narrow the disparity between regular and irregular workers by lowering the remuneration for regular employees instead of raising the wages of irregular workers. The Japan Post group, which has roughly 190,000 irregular workers on its payroll, is phasing out housing allowances for its regular employees — benefits that have not been provided to the group’s irregular workers. The government’s guideline says it is “undesirable” for businesses to cut wages and allowances for regular full-time employees to close the gap with their irregular counterparts. Employers need to be aware that such a move would defeat the purpose of the reform.

The amended immigration control law, enacted last year in response to requests from business sectors facing a severe domestic manpower shortage, formally opens the door for workers from abroad to engage in manual labor beginning this April. Employers who hire these workers are required to provide at least the same level of wages and other conditions as their Japanese employees receive.

Many of the business sectors that seek to hire foreign workers under the new system have long relied on participants from abroad in the Technical Intern Training Program to provide cheap labor. It’s time for companies to realize that they need to pay the proper cost for the manpower they need.

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