Reforms aim to change excessive work culture

TOKYO >> At what had been a quiet weekly meeting in April, Mitsuki Shimoji’s boss startled his staff of 20 system engineers with a drastic new policy aimed at curbing overtime.

The manager told them he would be speaking with each staffer daily to check their plans for overtime and whether their reasons for working late were valid.

A shocked silence fell over the teams.

“Deep down, they should have thought that was a positive change, but it was also a pain (to have to explain themselves),” said 26-year-old Shimoji, who is in her fourth year at the Tokyo-based life insurance company.

For decades, it was common for employees in Japan to clock in long hours, take just a fraction of their annual vacation and adhere to a rigid work schedule. Under Prime Minister Shinzo Abe’s drive to transform the way people work, there has been indication of incremental change.

But a review of work habits is gaining traction since the Diet in 2018 passed a work-style reform bill to encourage a healthier work-life balance. The regulation took effect in April.

For three months, Shimoji’s boss’ persistent grilling paid off: Average overtime fell between 20% and 33%. Shimoji’s overtime went from 10 hours to five.

But the effort was short-lived. When the staff hit their busiest times of the year, overtime increased sharply — it was as though the manager’s policy hadn’t changed at all.

But in the past year, other more advanced work-style reforms have taken hold.

In April, Sumitomo Life Insurance Co. instituted employee productivity points, used for evaluation. The points rate workers based on their output as well as the value of insurance contracts. The initiative — a rare move for a Japanese company — gives a higher score to workers who maintain their level of performance in fewer hours.

In August, Microsoft Japan Co. sparked a flurry of media attention after it announced the trial of a four-day workweek for 2,300 of its workers. Along with other factors, the change led to a 40% jump in productivity.

Before work-style reform was enacted, overtime was virtually unlimited in offices that allowed workers to exceed the basic cap of 45 hours a month, or 360 hours a year. Taking annual paid leave was not mandatory.

The new regulation imposes a hard cap on overtime at 720 hours a year starting in April for large companies and a year later for smaller businesses.

It also pushes employers to require workers granted 10 days or more of paid vacation to take at least five days off a year. Companies that fail to do so will be fined up to 300,000 yen (about $2,740) per employee.

The changes are seen as a step forward in a country notorious for exhausted employees and even death from overwork, known as karoshi.

An Expedia online survey of 19 countries shows that Japanese workers took only 50% of their holidays in 2018, last place among countries surveyed. The Japanese government aims to raise that rate to 70% this year.

The figure for Japan compares with 93% in South Korea and Singapore, 71% in the U.S. and 100% in France.

Fifty-eight percent of Japanese workers said they felt guilty taking days off.

Companies are also taking a fresh look at worker benefits. Some are giving employees freedom to choose when they work.

Flextime lets workers decide when to start and finish their work as long as they work the total number of hours scheduled. But flextime has yet to become widespread, partly because it’s not a one-size-fits-all solution. In 2018, just 5% of private companies with 30 or more full-time workers implemented flex time, according to health ministry data.

At least one Japanese company has reported positive results from its flextime policy. In May, e-commerce operator DMM.com allowed its employees flexibility on start and end times, and asked them to assess the impact after a month. According to 77% of respondents, the change made working easier.

The flexibility was intended to alleviate congestion at elevators, offer more freedom in work styles and generate a positive impact on recruitment.

One challenge to the reforms is getting older managers on board.

“In 2019, the biggest mindset change was required for managers,” said Yoshie Komuro, president of work-style consultancy Work Life Balance Co.

She said today’s midlevel managers cut their teeth between the 1960s and 1990s, when labor was plentiful and cheap, and the longer employees worked, the more money companies made.

Current work reforms are steering managers in “the polar opposite direction,” Komuro said. For the reforms to take root, managers must understand that the country’s shrinking and aging population has forced a paradigm shift.

Komuro believes that over time, “more companies will get the message.”