Japan eases overtime guidance amid labour shortages, sparking work-life balance concerns

Japan has eased its approach to overtime regulation from 1 September, in a move the government says will give organisations greater flexibility to address labour shortages and support economic growth, but which critics warn could revive the country’s long-standing culture of excessive working hours.

The change follows a growth strategy adopted by the government led by Prime Minister Sanae Takaichi in July, which called for revisions to existing working-hours oversight. Takaichi has described herself as a “workaholic”, adding another dimension to labour groups’ concerns about the direction of Japan’s workplace policies.

The move is partly driven by calls from organisations for more flexible working arrangements as labour shortages deepen across the country. Around 40% of organisations in Japan operate under labour-management agreements that legally permit up to 100 hours of monthly overtime, according to the Ministry of Health, Labour and Welfare.

However, organisations operating under these agreements have continued to face administrative pressure to keep overtime below 45 hours per month. While the 45-hour threshold was not legally binding in these cases, labour authorities had treated it as an effective guideline because longer working hours can increase the risk of “karoshi”, or death from overwork.

Under the revised approach taking effect on 1 September, labour standards inspection offices will no longer pressure organisations to adhere to the 45-hour monthly limit. The government maintains that employers will remain responsible for protecting employee health and preventing excessive working hours.

The change is particularly significant for small and medium-sized businesses. A survey by the Japan Chamber of Commerce and Industry in May found that the 45-hour guidance was restricting the activities of around 20% of small and medium-sized businesses. The impact was particularly pronounced in labour-intensive sectors such as construction, transport and hospitality, where employers are struggling to secure enough employees.

For organisations, the relaxation could provide greater scope to manage staffing gaps and respond to periods of heightened demand. However, HR leaders will also face increased pressure to ensure that greater flexibility does not translate into unsustainable workloads or deteriorating employee wellbeing.

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Japan has spent the past decade attempting to move away from its reputation for long working hours and a corporate culture built around highly committed “corporate warriors”. Efforts to improve work-life balance gained momentum following the 2015 suicide of a 24-year-old employee at advertising giant Dentsu, whose death was widely linked to excessive working hours.

Trade unions have criticised the latest policy shift as a step backwards. The National Confederation of Trade Unions, known as Zenroren, described it as an “unacceptable shift” away from policies aimed at reducing working hours.

The labour ministry, however, said it will continue monitoring employers and intervene where there is a high risk of health problems arising from excessive work, reported AFP.