Overview

Japan will ease overtime regulation starting Tuesday in a move meant to help spur economic growth but criticised as a relapse into the country’s ingrained workaholic culture.

Policy Change

The ruling government led by Prime Minister Sanae Takaichi – a self-proclaimed workaholic – adopted a growth strategy in July calling for revisions to the current oversight of work hours. Roughly 40 per cent of businesses in Japan are operating under specific labour-management agreements that legally allow monthly overtime of up to 100 hours, according to the labour ministry. But those companies were still advised by authorities to cap overtime at 45 hours each month, with that guidance considered on a par with regulation.

A Japan Chamber of Commerce and Industry survey showed in May that this pressure was “restricting” activity of around 20 per cent of Japan’s small and mid-sized businesses, especially in short-staffed industries such as construction, transport and hospitality.

Broader changes

The change in part reflects calls from certain business sectors for more flexible work styles as they grapple with a deepening labour shortage. In recent years, the 2015 suicide of an exhausted 24-year-old employee at advertising giant Dentsu was widely linked to excessive working hours. Critics said the move reversed steps taken by Japan to modernise its corporate culture long centred around marathon work hours. Once a bastion for “corporate warriors” fiercely devoted to their jobs, the country has in recent years ratcheted up efforts toward a better work-life balance.

The government says the change gives organisations greater flexibility to address labour shortages and support economic growth, while the labour ministry stressed it will keep tabs on companies to ensure they take measures to protect the wellbeing of employees in order to ensure that workers are able to meet their needs and to ensure they are able to provide the necessary guidance if there is a high risk that health problems caused by excessive work may arise. Under the new rule, labour standards inspection offices will no longer pressure businesses over the 45-hour limit.

Coverage and context

While the easing of labour regulations is a positive step towards the modernisation of the Japanese economy, it also represents a significant reversal of the government’s position and its impact on the Japanese economy, according to reports.