On Thursday Prime Minister Shinzo Abe announced plans to retract a fundamental section of the work style labor reform package that pushed the expansion of a “discretionary” work contract system aimed at covering more industries promising a new era of “flexible” work styles.
After being re-elected for a third term as prime minister in October last year, Abe has been campaigning for labor reform as the key to unlocking sluggish wage growth, productivity, and labor shortages, all of which are viewed as obstacles to economic growth. Despite successfully prioritizing labor reform as a key policy agenda, Abe has now hinted that initial plans to see the bill approved by cabinet members by mid-March will take a back seat.
The latest scandal embroiling the Abe administration unfolded in late January. During a Lower House budget committee deliberation, Abe cited a 2013 Labor Ministry fiscal survey making incorrect comparisons between the two categories of workers, and falsely deducing that workers in full-time employment worked longer hours than their “discretionary” or irregularly employed counterparts. That survey was used to justify the widespread adoption of a “discretionary” payroll system that encourages performance-based outcomes founded on predetermined fixed income, irrespective of how many hours employees actually work.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
Scandal ensued when the 2013 labor questionnaire of full-time and irregular workers was found to be riddled with extensive statistical flaws, originally estimated at 117 errors. The Ministry for Health, Labor, and Welfare added fuel to the fire on Monday by admitting an additional 233 statistical flaws in the government report on workers’ overtime that was cited by Abe.
The scandal triggered a wave of clashes with opposition lawmakers in parliament, who have grilled cabinet ministers about the possibility of deliberately smudging figures to back up their case for overtime reform. Opposition leaders have urged the government to retract the data and redo the survey, while also proposing the “discretionary” labor system be removed from the labor standards reform bill.
On Wednesday, Abe took a step back and announced an official inquiry into the abnormal data, vowing not to proceed with the bill “without fully grasping the actual situation.”
Abe’s new work style reform package seeks to amend the Labor Standards Act — the first attempt in 70 years. It includes a monthly overtime cap of 45 hours, an evaluation of work based on performance rather than hourly pay for highly skilled professionals (who are also exempt from overtime caps), and a fixed pay for fixed hours system for workers. The most controversial amendment is the expansion of the “discretionary” work style payroll into other growing sectors such as IT. At present only 19 industries are eligible to offer “discretionary” work contracts to workers.
There is no doubt Japan needs an urgent labor market overhaul. In the current system, a grueling corporate work culture is synonymous with long working hours, excessive overtime, and alarming rates of death by overwork — not to mention workers in irregular employment earn 60 percent less than those in full-time, “regular” positions. The fixed pay for fixed hours initiative was devised to clamp down on stark wage disparities between regular and irregular workers and to provide a level playing field.
However, labor unions have labeled the “equal work equal pay” feature of the labor reform draft as a pathway to exacerbating the current culture of overwork. If that model is expanded as a contract option in all fields, unions argue, employees will be susceptible to working overtime without pay unless previously agreed upon with their employer in advance. The latest opinion polls by Mainichi Shimbun showed 57 percent of participants surveyed were against the government’s expansion of the discretionary work hours scheme.
Civic groups criticized the reform package for favoring business interests and said that it would cause further worker exploitation — the opposite effect of what Abe intended — if widely adopted. On Tuesday, hundreds of protesters gathered outside Shinjuku station, the world’s busiest station and also home to the Tokyo Metropolitan Government Building, chanting slogans for relief from further overtime traps. Protestors held signs saying “stop making us work as much as you like for minimum wage.”
Abe said it was deeply “regrettable” that public distrust has been compromised. He issued a public apology accepting full responsibility for the data flaws, but attributed the mistake to administrative oversight and careless data entry as opposed to deliberate data falsification.