Panel pushes for labor law revisions

Panel pushes for labor law revisions

White-collar workers exempt from working hour limits; overtime pay rates boosted

A Labor Policy Council subcommittee meets on Dec. 27 to formulate its final report to the welfare minister.

The business community welcomed a recommendation late last year by a government panel to exclude certain white-collar employees from working hour limits. Many companies plan to exercise the exemption following the revision of the related labor laws.

The final report of a subcommittee of the Labor Policy Council, an advisory panel to the minister of health, labor and welfare, also calls for increasing overtime pay rates. Based on these recommendations, released on Dec. 27, the Welfare Ministry will submit revisions to the labor standards law as well as other measures to the Diet this year. With upper house elections slated for the summer, however, some members of the ruling coalition are expressing concerns over the potential impact.

Under current laws, working hours are limited to eight hours per day and 40 per week. The provision was designed to protect the health of factory workers. But working conditions have changed drastically amid globalization and the growth of knowledge-intensive industries. The original rules are no longer seen as appropriate in light of the increased proportion of white-collar workers.

The proposed exemption applies to those with annual remuneration exceeding a certain threshold, who would have discretion in adjusting their hours to accommodate work schedules, but would not be eligible for overtime pay. Businesses contend that such flexibility would bolster their competitiveness.

Union opposition

Labor unions oppose the proposed exemption, arguing that employers only want to reduce their overtime pay and that the measure will lead to heavier work loads. The report acknowledges their objections, noting that the unions do not recognize the need for the provision.

The panel will reconvene to work out a specific pay threshold, with the Welfare Ministry envisioning the exemption for those with annual pay of about 8-9 million yen ($67,000-76,000). The business community wants a threshold of about 4 million yen.

Toshiba Corp., NEC Corp., Nippon Express Co. and general contractor Taisei Corp. are among those seeking to adopt the exemption soon after restrictions are lifted. Advertising agency Hakuhodo Inc., Canon Inc. and real estate developer Mitsui Fudosan Co. plan to eventually implement the measure.

On raising overtime pay rates – a measure aimed at encouraging employers to reduce extra work – union representatives demanded a uniform premium of 50% to replace the current standard of at least 25%. But with companies arguing that their costs will increase, the report does not give specifics.

The panel also proposed creating a labor contract law that would establish safeguards against wrongful dismissals as well as outline basic rules covering such issues as transfers and disciplinary punishments.

But the panel decided to postpone proposing a system to allow employers to financially compensate dismissed workers, because it spent most of the time discussing work hour limits and failed to have sufficient debate on the issue. The business community, which argues that Japan’s rigid restrictions on firing workers are the cause of low mobility in the labor market, has called for the creation of such a system so problems related to dismissals can be settled.