Correcting long working hours

Oct 9, 2018 [No.56-2018]

Dr. Hisashi YAMADA
Research Director, Chief Senior Economist
The Japan Research Institute, Limited


In Japan, the legal upper limit for working hours is 8 hours a day and 40 hours a week in principle. However, if labor and management conclude an agreement, employers can let employees work more than the legal upper limit by paying extra wages. Guidelines for the upper limit for overtime have been shown as 45 hours a month and 360 hours a year, but working hours can be set unconditionally for the period of half a year through the conclusion of a special clause of a labor-management agreement. This kind of lax regulations for working hours is one of the causes for the spread of long working hours. Therefore, in this work-style reforms, we set an upper limit of 45 hours a month for overtime. In addition, even for special situations, we introduced with penalties an upper limit of 720 hours a year, less than 100 hours a month and an average of 80 hours for several months. This will be implemented from April 2019 and small and medium-sized enterprises are given the one-year grace period to apply.


New working hour regulation is modeled after Europe. However, employees express dissatisfaction that regulations this time are insufficient. An upper limit of 720 hours a year and an average of 60 hours a month is substantially longer than in Europe. On the other hand, there are opinions that the implementation will not be easy for the workplace in Japan where long working hours have become the norm. Actually, correcting long working hours has been a long-running political theme, but it has not been achieved. While Europe has achieved short working hours, why has this not been achieved in Japan? It is because employment system in Japan is substantially different from in Europe and we cannot abolish long working hours easily.


One of the differences between Japan and Europe is the way we develop human resources. In Europe, practical training from companies has been incorporated into regular school curriculums and there are many internships that run for a longer period. Certain skills are required in regular employment; therefore, in many cases, people are employed as regular employees after they have worked for a certain period as non-regular employees. In other words, in the case of Europe, employees have acquired basic skills and the abilities to conduct work efficiently at the stage when they become regular employees. On the other hand, Japanese employees generally acquire practical skills after entering a company. Also, the way to acquire skills in Japan is through OJT, a form of training where work and education are joined together. For this reason, the concept that long working hours can be human resources development has been popularized. In order to correct long working hours, restructuring the effective methods for human resources development is vital. If working hours are shortened without restructuring, negative effects may occur to human resources development.


Another important difference is that long working hours in Japan are caused by industrial relations which put an emphasis on securing employment at one company. Because securing employment at one company is strongly sought after, the number of regular employees whose employment adjustment is difficult is narrowed down and the workload per person increases. As a result, it tends to cause long working hours. In addition, putting an emphasis on employment security makes it difficult to readjust profitable business; low profitability and profits tends to lead to long working hours in search of more work. This is different from industrial relations in Europe where personnel retrenchment accompanied by unprofitable business readjustment is accepted, but at the same time sustaining security for living expenses and support for reemployment are paid attention to. In Europe, readjustment and dismissal itself are accepted; the number of employees can be increased during busy seasons to control work load per person and unprofitable businesses which compels long working hours are readjusted.


We cannot ignore that there have been many inefficient ways of using time in Japan because staying in the workplace for long time tends to be highly evaluated by managers. This is one of the reasons of long working hours in Japan. In this sense, under strong leadership from top management, leaders of each workplace must determine work priorities and take action to get rid of low priority duties. What is required to reduce overtime work more than this is improving human resources development and facilitating smooth labor transfers between companies beyond the scheme of one company.

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