Japan’s optional four-day week divides workers
Author: Naohiro Yashiro, Showa Women’s University
In June 2021, Japan’s Economic and Fiscal Policy Council promoted plans for an optional four-day work week in its annual economic policy directive. As the policy creates substantial employment benefits for Japan’s aging workforce, the announcement has divided Japanese workers.
Young workers and couples with young children are accommodating fewer working hours per week, while middle-aged male workers want to prevent their overtime payments from being reduced by fewer working days. Employers are also concerned about increasing hourly labor costs without corresponding productivity growth. If the plan cuts wages, it can hurt the economy by reducing consumption. The key problem is that the program is optional, which means that the actual effect is likely to be limited.
The rapid development of information and communication technologies threatens to create a digital divide among middle-aged workers. The government intends to play a larger role in the development of the Japanese workforce. Traditionally, Japanese companies have depended on the acquisition of skills through lifelong on-the-job training of their workers. This scheme is becoming obsolete due to the increased life expectancy – 87.7 years for women and 81.6 years for men in 2020
The optional four-day work week plan aims to provide equal employment opportunities for people with different working arrangements. A significant barrier for working mothers is caring for small children, which conflicts with the long working hours of Japanese companies. The optional four-day work week plan improves work-life balance and is therefore useful for child rearing and family responsibilities.
The plan also gives older workers more time to learn new skills. To accommodate a rapidly aging population, workers should stay in the workforce as long as possible in order to keep the ratio of the retired population to the labor force stable. For these older workers, acquiring new languages or computer skills is useful, alongside soft skills like the liberal arts.
In addition, colleges and higher schools in Japan suffer from a persistently declining youth population and are expected to welcome middle-aged students eager to supplement their skills. Most business schools would appreciate the opportunity to work with experienced students to form case studies, such as in MBA programs. The government has also set up an incentive program offering subsidies for college tuition fees through employment insurance plans.
A four-day work week will also encourage those who prefer more work and money to pursue side jobs. Japanese workers have suffered from long-term wage stagnation. Companies are in high demand for skilled workers in sectors such as information and telecommunications where supply is quite limited. The COVID-19 pandemic has already resulted in an increase in telecommuting opportunities for workers who want to do multiple jobs. The government also revised outdated labor regulations that discouraged companies from hiring workers with multiple jobs.
The plan will also make better use of the declining Japanese workforce. This is an important incentive for the middle-aged population, as the traditional practice of lifetime employment and seniority-based wages results in a high opportunity cost for workers to change jobs. . Working part-time for another company as a secondary job and gradually increasing the share of working hours would be an easy way to change jobs between companies.
The traditional on-the-job skills training in Japan was effective when most Japanese companies were constantly expanding their businesses and rotating workers between different divisions. But it stopped due to gloomy economic conditions. Re-mobilizing the workforce from declining businesses and industries to growing businesses is essential.
The optional four-day government work week is a great plan, although there are still many challenges for companies to actually implement it. Many are worried about a reduction in employee engagement with the company. But with decades of economic stagnation in Japan, the loyalty of employees spending 100 percent of their time with the company is hardly rewarded. In order to retain talent and stay competitive, companies need to welcome young employees who work hard while fairly evaluating employee accomplishments.
Naohiro Yashiro is a professor at Showa Women’s University. He specializes in labor economics, social security and the Japanese economy.