Work Style Reform: Addressing the Challenges Ahead

The time has come for a reform in the way people work. No one in Japan would disagree, generally speaking, with this idea. The fact that this issue has been raised to the level of national debate gives one the sense that the time is ripe for it at last, and one can hold out some hope that the change will be for the better. But I can’t help feeling a vague sense of anxiety regarding the way the nation is approaching this challenge. Below I describe some of my concerns. I remain hopeful, though, that Japan will adopt an approach that effectively addresses its key labor issues.

Discussing Work Style Reform Is Groundbreaking—But Not Enough

The House of Councillors election held in the summer of 2016 led to the formation of the new cabinet of Prime Minister Abe Shinzō, which dubbed itself the “Future Challenge Cabinet.” The Abe government positioned a reform of the way people work as one key challenge it would undertake. Already the government has brought together representatives of labor and management, as well as experts, to discuss this reform. The September 28, 2016, issue of the Asahi Shimbun presented this list of nine issues as the main topics of the discussions that have taken place to date.

1. Improving conditions for nonregular workers (equal pay for equal work)
2. Increasing wages
3. Reducing long working hours
4. Supporting workers who seek new jobs or careers and providing job training
5. Providing more flexibility for telecommuting or side work
6. Creating work environments convivial to women and young people
7. Promoting employment among older people
8. Balancing work with disease treatment, childcare, or nursing care
9. Addressing the issue of accepting foreign personnel

The issue of reforming the way people work in Japan has become a key media issue that is reported on in various ways every day. Recent coverage has touched on large-scale corporations promoting telecommuting for all employees, letting them work from home (Recruit Holdings and its group companies) or considering the introduction of a four-day work week (Yahoo Japan), as well as individual initiatives related to side work and similar issues. This all falls under the category of reforming the ways people work, and the list of such initiatives being considered is quite broad.

Having said that, two key issues are the problem of long working hours and the need to improve benefits for nonregular workers, particularly the introduction of the principle of “equal pay for equal work.”

A Culture of Long Hours

I particularly want to address the issue of how to deal with long working hours. During my 15 years of working as a company employee, I faced this issue every day. There were times, as a new employee, when I worked all the way from the morning to the early morning of the following day. And some of this overtime was unpaid. I also altered my time card so as to report fewer hours than I actually worked. This was often done under the direction of a supervisor, but at other times I did so on my own initiative. I felt, though, that even though I was putting in so many hours, the level of performance and output was low and the quality of my work was inadequate.

All sorts of reasons came to mind to account for why I was putting in such long hours. I had not received good explanations of the tasks before me; the overall quantity and difficulty of the tasks were too high. I did not want to lose out in the workplace competition and I wanted to complete the work to my own level of satisfaction. And then there was the corporate culture at my company, which was so intense that our workplace was dubbed the “office that never sleeps.”

The problem of long working hours has continued to plague Japan over many years. Compared with workers in other countries, Japanese work some of the longest hours in the world. Over the past two decades, the average for regular employees in Japan has hovered around 2,000 hours per year. If we also include the working hours of nonregular employees, we find that the average was around 1,734 hours in 2015, as compared to 1,910 in 1994. The number of nonregular employees has been increasing since the late 1990s, and currently these workers are around 40% of the overall workforce. Since many of these employees are working shorter hours, it would seem that working hours are decreasing in Japan.

In the debate over reforming the way people work, the government is proposing more robust restrictions on long working hours. There are already such restrictions in place, but as long as an agreement is reached between workers and management in a particular company, it is possible for overtime to be extended much further. This is the so-called “Article 36 agreement,” based on that particular article in Japan’s Labor Standards Act, which states that if representatives of labor and management reach an agreement, it is possible for employees to work beyond the 8 hours per day and 40 hours per week stipulated in Article 32 of the same law. The aim of the reform is to rectify those situations where such agreements are not functioning.

If the choice is between restricting or not restricting long working hours, I would opt for restrictions. However, I do not think that such an approach in itself is adequate. That is to say, this reform does nothing more than introduce restrictions and then leave it all up to the workplaces to come up with creative ways to reduce overtime. Instead of promoting solutions that could reduce the overall amount of work and better divide it among employees, such proposed reforms follow the old model of preaching willpower and perseverance.

Eliminating the True Causes of Overtime

What is utterly lacking in the debate is the question of why overtime arises in the first place. Two factors that form the backdrop to the overtime problem are the competition among workers to climb the corporate ladder and the fact that the work delegated to each employee is not clearly defined.

Of course, there are also factors related to corporate culture, as I touched on earlier. And some people even point to the diligence of Japanese people as a root cause. However, it seems to me that the problems that need to be remedied concern a society where everyone is aiming for a higher position and in which employees are given all sorts of different tasks to handle. Restrictions placed on long working hours will prove to be meaningless unless efforts are made to promote reforms that address those two issues. What needs to be done first of all is to rethink the overall work load and the way that tasks are assigned to employees.

I would be in favor of reforms in the ways people work that head in that direction, such as introducing new promotion systems, clarifying the scope of job tasks, and improving the way work is apportioned. But reform that does nothing more than urge workplaces to reduce working hours, or arbitrarily restricts overtime, will be no different from the outdated appeals to willpower and perseverance.

Indeed, placing all the onus on the workplaces will only end up fostering unpaid overtime. Employees will end up putting in extra hours as their own personal responsibility to avoid being blamed for rushing through their tasks in ordinary work hours or capping their time in the office before the work is done.

Of course, some also believe that there is no limit to human possibilities. Companies that place hard caps on work hours, ordering their employees to go home at a certain time each day, may succeed in changing the workplace mentality, inspiring the workers to find innovative ways to get the job done more quickly. And in point of fact, there are already workplaces where a negative stigma is attached to working long hours. However, it is clear that not all companies will be able to navigate such changes so successfully.

Government-Led Reforms Must Address All Workers’ Needs

The government has designated a minister in charge of the reform of work styles in Japan—along with the minister in charge of “promoting dynamic engagement of all citizens”—and has set up expert panels to tackle the relevant issues. All this shows the level of seriousness with which the Abe administration is grappling with these issues. But there seems to be a blind spot with regard to these Cabinet-led initiatives.

Although it would seem that appointing officials to direct these efforts and soliciting expert opinion is the most appropriate way to approach reform, these steps can also be seen as an attempt to placate voters. During the July 2016 House of Councillors election, the opposition parties presented their own policies on employment and labor issues. By flexibly incorporating some of those opposition ideas, the ruling Liberal Democratic Party may simply have been seeking to shut down debate and shore up public support.

For its expert panel on labor reform, the government has gathered representatives of both labor and management, such as the heads of the business federation Keidanren and of the labor union Rengō. But both sides primarily represent the interests of large corporations, whereas more than 60% of workers in Japan are employed by small and medium-size enterprises. How can the interests of those workers be incorporated into reform? On top of this, some 40% of Japanese workers are nonregular employees. Will the reform be able to take into consideration this diversity in the labor market?

That seems unlikely, since the process so far has failed to reflect even the views of business executives adequately. It goes without saying that it is businesses that must be profitable if they are to improve the lives of their workers. Will the reforms now being discussed lead to enhanced corporate profitability? Not if they result only in caps on human resource expenditures. The reforms that Japan needs now are those that contribute to higher productivity at its companies.

The Productivity Problem

Approaching the question from this angle requires a rigorous theory-based examination of productivity, focusing on the amounts of labor input and added value generated. Japan is commonly labeled as a country with low productivity. But this tends to be in isolation from other factors, and countries that rank higher often have industries with scarcity value, whether it is the natural resources the possess or the fact they are financial centers, for example. Media reports sidestep this, though, preferring instead to focus on low productivity in Japan as illustrated by the abundance of useless meetings. I would hope to see the media cast a more questioning eye on figures that show Japan falling behind even countries that have faced intense economic crisis, like Iceland and Greece.

If the nation jumps into discussion of how to change ways of working without having a vision for long-term growth—meaning a way to make industry profitable—the discussion will remain mired in detailed measures to take on a small scale, rather than the broad strategy Japan needs. Productivity is unlikely to improve as long as there is no conception of how to increase added value.

In order to truly reform the ways people work, we need to set aside emotion and abandon the conventional wisdom to explore just how the problem got to where it is today. Long working hours are obviously a negative thing in terms of the health and safety of workers; the fact that this situation has continued for so long shows that there is a certain “rationality” behind it. The ability to extend workers’ hours allows companies to respond flexibly to business conditions, good or bad, without having to increase or reduce head count. When it is difficult for companies to obtain from the labor market personnel with the same qualifications as existing workers, they will naturally have their employees work longer hours. The question thus comes down to how we can combat this rationality.

My concern is that the effort to reduce long working hours and, more broadly, to reform work styles overall could end up as a Cabinet-led reform proposal that foists all responsibility for change on the workplace. We need to raise our voices now so that this reform effort does not end up lacking the perspective of workers and exerting a destructive effect on the nation.