By Naohiro Yashiro*
In June 2021, Japan’s Council on Economic and Fiscal Policy promoted plans for an optional four-day workweek in its annual economic policy guideline. While the policy creates substantial employment benefits for Japan’s aging workforce, the announcement has divided Japanese workers.
Young workers and couples with small children welcome fewer working hours a week, while middle-aged male workers want to avoid their overtime payments from being reduced by fewer workdays. Employers also worry about increasing hourly wage costs without an equivalent productivity growth. If the plan reduces salaries then it may harm the economy by reducing consumption. The key issue is that the program is optional, meaning that the actual effect will likely be limited.
The rapid development of information and communication technologies risks creating a digital divide among middle-aged workers. The government intends to take a larger role in upskilling Japan’s labour force. Traditionally, Japanese firms depended on skill formation through on-the-job training throughout their workers’ lifetime. This scheme is becoming obsolete due to Japan’s increasing life expectancy — 87.7 years for females and 81.6 years for males in 2020. A growing share of college graduate women and resulting two-earner households are also inconsistent with traditional employment practices that are implicitly based on a working husband and a fulltime housewife arrangement.
The optional four-day workweek plan intends to give equal employment opportunities to people with different work arrangements. A significant barrier for working mothers is taking care of small children, which conflicts with the long working hours of Japanese firms. The optional four-day workweek plan improves the balance between work and life and is therefore helpful for child-rearing and family care responsibilities.
The plan also provides more time for older workers to acquire new skills. To accommodate a rapidly aging population, workers should stay in the labour market as long as possible to keep the retired-to-working population ratio stable. For these aged workers, acquiring new languages or computer skills is helpful, alongside general skills like the liberal arts.
Furthermore, Japan’s colleges and graduate schools suffer from a persistently declining youth population and should welcome middle-aged students eager to supplement their skills. Most business schools would relish the opportunity to work with experienced students to form case studies, such as in Master of Business Administration programs. The government has also introduced an incentive scheme providing subsidies for college tuition through employment insurance schemes.
A four-day workweek will also encourage those who prefer more work and money to pursue side jobs. Japanese workers have suffered long-term wage stagnation. Firms strongly demand skilled workers in sectors including information and telecommunications where supply is quite limited. The COVID-19 pandemic has already brought about increasing telework opportunities for workers to pursue multiple jobs. The government has also revised outdated labour regulations that discouraged firms from hiring workers with multiple jobs.
The plan will also better utilise the declining Japanese workforce. It is a significant incentive-boost for the middle-aged population because the traditional practice of lifetime employment and seniority-based wages brings about a high opportunity cost for workers to change jobs. Working part-time for another firm as a side job and gradually increasing the share of working hours would be a smooth way to shift positions between firms.
Traditional on-the-job skill formation in Japan was effective when most Japanese firms were constantly expanding their activities and rotating workers between different divisions. But this has stopped due to sluggish economic conditions. Remobilising the workforce away from declining firms and industries and into developing ones is critical.
The government’s optional four-day workweek is an excellent plan, though there remain many challenges to its actual implementation by firms. Many worry about a reduction of employee engagement with the company. But with decades of economic stagnation in Japan, the loyalty of employees spending 100 per cent of their time at the company is hardly rewarded. In order to retain talent and remain competitive, companies should accommodate hard-working young employees while fairly evaluating employee achievements.
*About the author: Naohiro Yashiro is Professor at the Showa Women’s University. He specialises in labour economics, social security and Japanese economics.
Source: This article was published by East Asia Forum