Work-Life Balance Holds the Key to Japan’s Future

The most noteworthy feature of the government’s new plan for “work-style reform,” approved by representatives of big business and organized labor, is its call for a legal limit on overtime hours, with violators subject to penalties. To be sure, people from other cultures may scoff at a cap that can be stretched to accommodate close to 100 overtime hours a month. But for Japan, which has never placed any limit on working hours, this is an important first step, paving the way for pivotal changes in employee evaluation criteria. With adequate support for implementation, the new labor legislation could trigger a shift away from the expectations of chronically long hours that are built into Japan’s corporate culture.

Setting the Stage for Change

A key component of Japan’s workplace culture is a personnel evaluation system based on the volume of work completed per month or year. In countries that have limits on overtime, employers value high productivity in the sense of output per labor hour. In Japan, however, the measure is output per calendar period. This casts the notion of performance-based advancement in an entirely different light. In Japan, where the emphasis is on maximizing output over a period of weeks or months, the most prized employees are those who are willing and physically able to work the longest hours during that period.

How will supervisors evaluate their subordinates once the proposed caps on overtime are in place? Hopefully, they will begin warming up to efficient workers who perform the same tasks in a shorter amount of time, head home at a reasonable hour, and return refreshed the next day. Once that happens, Japanese companies may finally begin to view women employees as valued assets.

Notwithstanding the media focus on 100 hours a month, the initiative actually recommends a maximum of 45 hours of overtime unless labor and management have formally agreed to a higher cap. Under such an agreement, an employee could put in up to 100 hours of overtime in a given month, but not successively; anyone who worked 100 hours one month would be restricted to 60 hours the following month.

The key point to remember is that these will be the first caps of any kind on overtime in the 70-year history of postwar Japan.

Aging Without a Plan

From the mid-1960s until the mid-1990s, Japan reaped a “demographic dividend" from a population with a high proportion of young, productive members. Because of the small ratio of senior citizens in the population, the government could invest in infrastructure instead of spending revenues on social security. These circumstances provided optimal conditions for rapid economic development and growth, and Japan made the most of them. One way it did this was by recruiting homogeneous armies of male workers to labor long hours while their wives took care of things at home.

Since then, however, Japan has transitioned to an aged society, in which a relatively small working-age population must support a large number of senior citizens. In such a society, chronically long working hours do more harm than good. Working people need time to look after their aging parents. They also need time to devote to their children if we are to reverse the drop in fertility that is accelerating Japan’s demographic aging. In such an environment, the important thing for employees is to be able to work efficiently for maximum job performance in a limited amount of time.

Western Europe actually made the transition to an aging society earlier than Japan did. But for the most part, the European nations took proactive policy measures to respond to the shift in population structure. The first step was to make optimum use of a limited working-age population by providing care facilities so that even people with young children or elderly parents could work outside the home. Some European countries also adopted strong measures to boost fertility and secure a labor force for the future. In Japanese textbooks, these countries have been described somewhat pejoratively as welfare states, but history has shown their policies to be a smart long-term strategy for coping with demographic aging.

Japan, by contrast, plunged headlong into the era of rapid demographic aging with no viable strategy for mitigating the impact. Policies to encourage fertility have failed miserably, while Japanese companies continue to effectively bar women from the core workforce by means of employment practices predicated on long hours at the workplace.

In the view of many historians, Japan’s track record during the period of high-paced growth was exceptional, eclipsing even China’s rapid development over the past few decades. Unfortunately, the magnitude of Japan’s success seems to have made it that much more difficult to unlearn the habits learned during that era. Even today, only a handful of business executives seem conscious that they are operating within a rapidly changing demographic structure. These are generally people with a wealth of overseas managerial or work experience, particularly in Europe. (Familiarity with the American milieu is less likely to foster a managerial approach adapted to an aged society, since a constant influx of immigrants has tended to offset demographic aging in the United States.) Moreover, even when corporations’ top executives see the light, they are apt to face daunting obstacles when it comes to convincing Japanese investors and setting the entire organization on course for wholesale workplace reforms.

Local Action for Meaningful Reform

It is difficult to take issue with the basic purpose and thrust of the government’s “work-style reform” initiative, with its emphasis on reducing hours and promoting more flexible modes of labor to allow employees to juggle work with domestic duties and activities. The problem is how to make these goals a reality in Japanese society. For such change to occur, the government must provide resources to encourage and support sincere workplace reform efforts on the part of individual businesses.

Moves are already underway at the local level, including several exemplary initiatives. One noteworthy program was implemented in Mie Prefecture, which was grappling with an exodus of young people and lagging business growth, on top of the demographic issues confronting the nation as a whole. As part of its “local revitalization” plan, Mie Prefecture conceived a program to promote workplace reforms among the prefecture’s major businesses, while encouraging immigration from nearby areas by rebranding Mie as “the work-life-balance prefecture.” In July 2015, with the help of a regional revitalization grant from the central government, Mie's prefectural government launched the Work-Life Balance Promotion Project. The program, which my firm Work-Life Balance was involved in, began with a “consciousness-raising seminar,” attended by executives and workforce managers of 130 local companies, and proceeded to a three-day workshop in implementation of workplace reforms, attended by the personnel managers of 20 of those firms. Finally, professional consultants were sent to 13 companies to help model best practices.

Among those 13 firms was a small office-equipment rental business in the city of Tsu called Chubu Systems Center, which employed just 10 people. In addition to the standard paid vacation, the employer began offering a system of “family leave” under which employees can take time off work by the hour (up to 48 hours annually) for such purposes as helping out at home before and after childbirth, seeing children off to school, attending school events, and caring for family members. It also instituted a plan dubbed “Three-day okay!” to encourage employees to take consecutive days off (for a five-day vacation including Saturday and Sunday), something that employees at small organizations are often hesitant to do. Meanwhile, to ensure that the business could cope with unplanned employee absences, the company adopted measures to improve organizational efficiency, including procedures for internal sharing of customer information and delegation of authority. The result was a 15% increase in labor productivity (gross profit divided by the number of employees) from the previous year. In May 2016, capitalizing on this experience, the company began offering consulting services to help other businesses improve work-life balance while raising productivity.

All in all, the 13 participating companies reported extremely encouraging results. In one case, employees’ use of paid vacation days tripled. Elsewhere, the number of marriages doubled, and births rose 2.5-fold. The birthrate in Mie Prefecture as a whole is on the rise as well. When the husband’s work-life balance improves, the wife feels more confident about having that second child.

The government should institute a similar type of grant to promote its work-style reform plan at the local level, so that regional governments can make consulting services available to local businesses that are serious about implementing workplace reforms. Such support is particularly critical for small businesses that lack the resources to plan and implement workplace reforms on their own.

Under Prime Minister Tony Blair, the British government provided subsidies, limited to two years, to help companies comply with “flexible working” legislation passed in 2000. Japan should follow Britain’s lead and provide companies with limited-time subsidies covering the transition period before work-style reform legislation comes into effect.