Japan needs to reform its work-hour culture

Author: Mark Fabian, ANU

Like many developed economies, Japan is currently pushing to get more women into the workforce as a way of lifting its growth potential and financing aged care. The government has flagged expansions in child care services as the principal way it will attract women into the workforce by freeing them from childcare tasks.

But this policy is unlikely to be sufficient because it does not tackle the cultural factors underlying Japan’s labour market inefficiencies and driving the expanding difference in the size of its workforce relative to retirees. If Japan wants to pay for its elderly it needs to change its work hour culture and challenge established gender roles.

Japan’s official work hours are slightly below the OECD average of 1765, with the Japanese worker completing 1747 hours in 2012. But official hours tell only part of the story. Volunteer overtime is pervasive, with research suggesting 85 per cent of full-time workers undertake overtime. The same research, by Kazuya Ogura from Waseda University, suggests 20 per cent of workers aged between 20 and 40 — prime parenting years — work more than 60 hours per week. This corresponds either to weekend work or four hours of overtime per day.

Conventional thinking suggests that these hours are necessary to pay for Japan’s high-cost ageing population: if you need money to pay for something you must work more to earn that money. But long work hours, in Japan or anywhere else, do not correspond commensurately to higher output. Research verifies the intuitive idea that productivity, or the effectiveness of labour, falls away as fatigue increases over long work hours. Firms are largely unperturbed by this as the additional hours are unpaid, but the wider economy suffers because labour is inefficiently allocated. If overworked employees went home after meeting a reasonable quota of work they might contribute more productively to the informal economy, notably through child care and household duties. More leisure time and family contact could also have beneficial welfare effects.

These issues are crucial in Japan because its overwork culture is undermining the nation’s fertility. An ever-increasing number of young Japanese people report being too busy at work to get married. With less than 2 per cent of children born out of wedlock in Japan in 2009 (the OECD average was around 35 per cent), this does not bode well for the birth rate.

An increasing number of women also choose careers over motherhood, with the percentage of women who report no intention to marry having risen steadily to 6.8 per cent in 2010 from 4.5 per cent in 1987. Women of childbearing age feel that work and marriage are incompatible because of the long hours demanded by employers. Thirty per cent of female respondents to a 2011 survey from the National Institute of Population and Social Security Research reported feeling worried about their ability to keep working once married. A factor behind these worries is the expectation that women keep house while men work. A more equal distribution of these tasks between the genders might make women more inclined to marry, but will be difficult to bring about while employees continue to return from work at 10pm. 
Simply getting women into the Japanese workforce will thus not solve the problem of financing Japan’s ageing population; it will merely delay it for another generation as working women retreat from raising children.

The proposed expansion of childcare facilities will help. The Japanese government’s 2007 and 2012 Employment Status Surveys show that the labour force participation rate of women who have children under three years has increased from 33.3 per cent to 42.1 per cent; the number of children under three years old attending nursery school increased by 22 per cent over the same period.

Yet while they are welcome, policies to expand childcare will be insufficient. When the work day is 9am to 10pm you cannot leave your children in childcare while you go to work. Parents need to spend time with their children. Improved child care provision will thus help more women enter the workforce, but the effects are likely to be concentrated in casual and part time positions. The total economic impact of the policy is therefore unlikely to ameliorate Japan’s impending aged care crisis
An effective long-term response requires reform of the labour market around a focus on productive work hours rather than simply long work hours, and a reform of gender roles to allow women and men to share work and child rearing tasks without social opprobrium. This would likely improve the fertility rate, and free up Japan’s younger generation to efficiently allocate their time to productive tasks in both the formal and informal economy, maximising their output and optimally allocate time between work and leisure. It would also have wide-reaching social benefits: karojisatsu or ‘suicide from overwork’ is an increasingly prevalent phenomenon in Japan, and overwork has also been shown to contribute to stress, depression, heart conditions and other negative health outcomes.

Mark Fabian is a postgraduate student in economics at The Australian National University.