On Revised Japan Revitalization Strategy

(HARA Eiji, PPPC President)

The Cabinet of Prime Minister Shinzo Abe adopted a set of economic reform strategies to boost mid- to long-term economic growth. The Japan Revitalization Strategy — the “third arrow” of “Abenomics” — includes a pledge to cut corporate tax, welcome more foreign workers, help working women and other challenging reforms.

http://www.kantei.go.jp/jp/singi/keizaisaisei/skkkaigi/dai17/siryou.html

Still, detailed plans are to be elaborated in the future. For example, regarding the corporate tax, while the basic plan is to set at below 30 percent “over several years.” it is yet known how many percent it will actually be. Currently, while the average rate in the OECD countries is 25%, Japan’s corporate tax rate is 35%. There are huge gaps with the neighboring countries including Hong Kong (16.5%), Singapore (17%), and South Korea (24%), which explain the reasons that global companies transfer their business bases abroad. While the market and the public at large expect that the government hammers out measures to attract domestic and foreign investors, specific plans to realize the goal are to be considered. Under such circumstances, Fukuoka and Kansai voiced calls for more speedy and drastic corporate tax reduction than the national effort, and such propositions must be taken into consideration in designing detailed plans of the strategies.

With regard to working-hours regulations, while it is acceptable that the standard subject of white-collar exemption was set at employees receiving 10 million yen/year (there was an idea to subject those receiving 70 million yen) so that performance-based wages and diversity in ways of working are finally to going to be realized in this country, detailed institutional designing will be discussed in the Labor Policy Committee.

Also, while there were certain advancements in the agriculture such as agricultural committee, qualification of agricultural production corporation and JA reforms, specific plans have been postponed to the future so we don’t know yet how far the reforms will be advanced in such a challenge as “privatization/corporatization of JA.”

Attentions must be kept on specific and detailed plans in advancing such reforms in such fields.

Another issue that came to light in the process of revising the Strategy is segmentation of the government panels. For example, agricultural reforms were discussed in the agricultural subcommittee of the Industrial Competitiveness Council, Working Group in the Regulatory Reform Council, relevant panels of the National Strategic Special Zones, etc. In addition to these panels, the Council on Economic and Fiscal Policy discussed the issue of foreign workers. These government bodies are not necessarily communicating each other, and there was not even a discussion on “whether trial projects are to be undertaken as national-level regulatory reform or as regional experiments in the special zones,” as it was naturally so.

In order to realize Prime Minister Abe’s international pledge at Davos in January “to break through the solid rock of vested interests…over the next two years,” organizational arrangements must be made to meet such an issue.

Pointless Debate on “Zero-Overtime-Payment”

(TAKAHASHI Yoichi, PPPC Chairman)

Discussions in the Industrial Competitiveness Council on working hours regulations resulted in vain due to the stupid phrasing by mass media.

An incident which reminded the fact was the interpellation in the Lower House Health and Labor Committee on June 4. To the question by Michiyoshi Yunoki, Democratic Party of Japan, requesting it should be applied to the central government employees, the government official answered that the central civil service is not subject of the Labor Standard Act and therefore not subject of discussions in the Industrial Competitiveness Council.

It was just unfortunate that this DPJ lawmaker regarded the “white-collar exemption” proposed by a private-sector member of the Council as “zero-overtime-payment.”

The “white-collar exemption,” accurately speaking, is a rule to exempt labor regulations such as maximum 40 hours per week of working hours to so-called white-collar workers. In that case, the concept of overtime work itself would disappear. Instead, salaries are paid according to their performance.

There are actually such labor-rule exemptions in the western countries. Ratio of the workers exempted of labor regulations to all the workers is said to be 20% in U.S., 10% in France, and 2% in Germany. It has not been introduced in Japan’s private sector. And, as the official answered in the Diet, the employees of the central government are not subject of the Labor Standard Act. But it does not mean there are no overtime payments to them.

In fact, overtime payments of the central government employees are paid from the budget irrespective of the actual overtime working-hours. In short, paraphrasing the “white-collar exemption” into “zero-overtime-payment” is totally off-the-point.

Being asked whether to apply “zero-overtime-payment” to the central government employees, like this DPJ lawmaker did, the answer would automatically be “no” because there are overtime payments to them. But if the question was whether a “white-collar exemption” should be applied to the central government employees, the answer should have been “it is being applied already. Yet, there are overtime payments.”

After consultations, the Ministry of Health, Labor and Welfare finally accepted parts of the private-sector member’s new proposal by limiting the subject to highly-expertise occupations.

To note, there actually is a rule similar to such labor-rule exemptions in Japan; discretional labor rule that gives additional payments for assumed overtime works irrespective of the actual working hours. It resembles “zero overtime-payments” in that the salary would not change no matter how many hours spent on works.

Workers subject of the rule are 19 types (Labor Standard Act 38-3) including R&D, IT analysis and design, designer, producer and director, etc., amounting to 8% of all the workers.

Yet, boundary and definition of this rule is so ambiguous that its implementation depends on discretion of the officials of the Ministry of Health, Labor and Welfare. In that sense, white-collar exemption and discretional labor rule are similar but totally different ones. Ironically speaking, the “discretion” refers not to the workers’ discretion regarding their working hours but to the discretion of the bureaucrats in the MHLW. On the contrary, there are no rooms for the ministry’s discretion with regard to the white-collar exemption.

The debate resulted to a little “white-collar exemption” and discretional labor rule for the most other parts.

The subject of “white-collar exemption” is to be limited to those receiving more than 10 million yen a year. But the percentage of brochure receiving such salaries is 3.8%. Indeed, because this figure includes managers, the actual ratio of employees receiving such an amount of salary would be as little as 3%. In any case, it does not exceed the “8%” of discretional labor.

With regard to the discussions on relaxation of working-hours regulations, it resulted to 3% of “white-collar exemption,” 8% of discretional labor, which have nothing to do with overtime salaries of the rest 92% workers.

When the media reported the rule as “zero-overtime-payments”, officials of the MHLW should have maintained that “overtime payments of the central government employees are NOT zero.” While the central government employees are not subject of the Labor Standard Act, there are overtime payments from the budget in a manner not linked with their actual working hours. In short, it is totally misleading to name the exemption as zero-overtime-payments.

Winner of the discussions on working-hours regulation was neither the private-sector member of the Council nor the labors but the officials of the MHLW. It succeeded in minimizing the subject of white-collar exemption and responding to all the others by discretional labor. In fact, the “discretion” refers not to the workers’ discretion regarding their working hours but to the discretion of the bureaucrats in the MHLW. On the contrary, there are no rooms for the ministry’s discretion with regard to the white-collar exemption. This time, the interests of MHLW have been secured. The target of “white-collar exemption” will not likely be expanded.

The difference of white-collar exemption and discretional labor is that any change in the white-collar exemption requires legal revisions to the law while it only requires Ministry Order to expand subject of the discretional labor rule. Needless to say, changes to the law require much more efforts.

In any case, there are large rooms for the subject of discretional labor rule to be expanded by the MHLW’s discretions. Attentions should be paid to the “discretional labor rule” instead of the “zero-overtime-payments” having nothing to do with 92% of the entire workers.

The conclusion of the debate resulted in the victory of the MHLW which is not subject of the Labor Standard Act from the first place. While the white-collar exemption has been applied to the central government employees from the beginning, it was now only introduced in a small part of the private sector. Is it not a remaining custom of putting the government above the people?

On Operation of the National Strategic Special Zones

　　　　　　　　　　　　　　　　　　　　　　　　　June 17, 2014

AKIIKE Reiko

SAKANE Masahiro

SAKAMURA Ken

TAKENAKA Heizo

　　　　　　　　HATTA Tatsuo

1.         Operation of the Regional Committee

Among the six special zones selected, some zones schedule to establish the “Regional Committee” as early as in this June. It is important that each zone launches highly-effective “Regional Committee” in a swift manner.

2.         Firm Implementation of the Initial Reform Menu

The initial regulatory reform menu entailed in the National Strategic Special Zones Law must be, needless to say, implemented firmly.

With regard to the privately-managed public schools, the Law provides it be legislatively designed “within one year or so.” Accordingly with the provision, necessary legislative measures should be taken immediately. In that process, attentions must be paid to prevent some excessive restrictions or regulations from being imposed.

3.         Toward Additional Regulatory-Reform Menu

①       Second Invitation for Proposals

The Basic Policy of National Strategic Special Zones provides that invitation for proposals be held at least twice a year. Toward swift addition of the reform-menu, the process of second invitation for proposals should be advanced in this summer, following the last year’s schedule (invitation in July, results to be released by September after consultations with the relevant government ministries).

②       Specific Reform-Menu Likely to be Proposed

Based on the past discussions and others, such menu as the following including tax measures will likely be proposed in the Regional Committee to be launched. With regard to proposals to be proposed including the following, swift considerations must be given from the viewpoint of putting weights on operation of the Regional Committee.

<Foreigners>

l  New institutional arrangements must be designed with regard to qualification of foreign residents as startup personnel or Cool Japan human resources, for example, that the Regional Committee handles its standard-making and operation.

<Employment>

l  New ways of working-hours regulation must be considered in eye of startup companies.

<Tax>

l  Tax measures in accordance with governance reforms of companies and universities (corporate tax reduction, expansion of donation-easy tax system, etc.)

4.         Organizational Arrangements for Promotion of Further Reforms

There is only one-year-and-half remaining for the government to realize Prime Minister Abe’s international pledge to “break through the solid rock of vested interests…over the next two years” announced in January this year.

In order to steadily accelerate reforms of bedrock regulations, comprehensive organizational arrangements for promoting various kinds of reforms, such as regulatory reform, special zone, industrial competitiveness, decentralization reform, etc., must be prepared.

This Week’s “Nagata-cho”(June 10-17)

On June 13, the revised bill on national referendum aiming at expanding the voting age from 20 to 18 years old from four years later was passed into legislation due to approval by 8 ruling and opposition parties except the Social Democratic Party and Japan Communist Party. The main opposition Democratic Party of Japan requested a supplementary provision restricting free reinterpretation of the Constitution by Cabinet at times and promoting Diet deliberation on the issue, which was finally entailed in the revised bill.

The current legislation, enacted in May 2007, has maintained that not only the voting rights for national referendum but for general elections and adultery age in the Civil Law should be older than 18 years, but political gridlock has prevented the Diet from designing detailed system of national referendum. This time, it was arranged that the Cabinet should “take necessary legislative measures within two years” by establishing a joint project team by the eight parties in the Diet.

At the same time, accordingly with passage of the bill, moves toward amending the pacifist Constitution kicked off, as well. Since this time’s passage obtained more than 2/3 votes in both Houses which also enables amendments of the Constitution, the ruling Liberal Democratic Party started seeking ways leading to practical discussions on Constitutional amendments. LDP will first grope ways to actually amend some Article which seems to be easier to obtain understanding of the opposition parties within two years or so. In particular, candidates include addition of “the right to environment” and “the right to privacy” to basic human rights. LDP schedules to hold hearings from the party members in the Diet to consider what part of the Constitution are easier to be amended. Yet, because there are wide gaps on views and attitudes among the eight parties so it is yet to see whether they will reach an agreement. Political bargaining will likely continue for the meantime.

Besides that, there were passages of the revised Power Business Act to allow full-scale entry into power sales industry in 2016 on June 11, as well as passage of the revised local education administration act to expand mayoral and gubernatorial authority on education on June 13.

*The state of deliberations in both Houses and committees are available from the following websites.
 House of Representatives Internet TV：http://www.shugiintv.go.jp/en/index.php
 Live broadcasts and video recordings of the deliberations in the House of Councillors (Japanese only)：http://www.webtv.sangiin.go.jp/

The Diet members entered discussions on the revised Diet Act bill to establish a committee for information protection and oversight based on the Special Intelligence Protection Act enacted late-last year which gives suggestions to the Cabinet and entails punishment to Diet members who leaked information on June 10. On the same day, DPJ, Japan Restoration Party and Yuinotoh jointly submitted a counterproposal bill to the Diet and both legislations were entered into discussions simultaneously on June 10 in the Lower House Rules and Administration Committee and there were voting on June 12 which resulted to passage of the Cabinet’s bill and denial of the opposition camp’s bill. The ruling camp’s bill was immediately sent to the Upper House. For the tight schedule toward end of the ordinary Diet on June 22, the ruling parties and Cabinet will haste on passing the bill on around June 20 through the Upper House. On the other hand, Japan Communist Party and Social Democratic Party submitted a bill to invalidate the Special Intelligence Protection Act in the Upper House. The two parties will call for cooperation to DPJ and other oppositions.

On Lower House election system reforms including reduction of the seats, the Lower House Rules and Administration Committee agreed on an idea to delegate selection of members of a third-party panel to discuss new election system to the Lower House President Ibuki. In a meeting on June 13, it was arranged that an outline of the panel such as number of members and items to be discussed in the Committee’s next meeting on June 20. President Ibuki will then advance selection of members taking into consideration the opinions of the various parties.

Intra-coalition discussions on reinterpretation of Japan’s Constitution to exercise its right to collective self-defense have continued and LDP and its junior coalition partner New Komeito have remained as far apart in a meeting held on June 10. LDP Vice President Komura had asked government officials to prepare a draft of the constitutional reinterpretation and the Cabinet eyes approving the draft on June 20. On the other hand, Komeito officials involved in discussions with the LDP have so far expressed opposition to the Abe administration’s plans to change the interpretation of the pacifist Constitution to lift Japan’s self-imposed ban on exercising the right to collective self-defense.

However, Prime Minister Shinzo Abe has instructed LDP officials to wrap up talks with Komeito so that his Cabinet can approve a change in the constitutional interpretation before the current Diet session ends on June 22.

Under pressure from its coalition partner, Komeito is considering giving its consent for Japan to exercise its right to collective self-defense but only in limited situations.

During talks with Komeito on June 13, Komura presented three conditions for Japan’s use of military force in exercising the right to collective self-defense.

The three conditions, which all had to be met before Japan could exercise the right to individual self-defense, were: a tense and inappropriate invasion of Japan; the absence of other means to eliminate that threat; and the use of the minimum required level of military force. New Komeito officials will take the proposed conditions back to their party for further discussions, as the proposal opens the door for the exercise of the right to collective self-defense. Sharp discussions and bargaining between the coalition partners will likely continue until closing of the ordinary Diet on June 22 .

Toward practical end of the Diet on June 20, the ruling parties schedule to advance the remaining legislations steadily. Meanwhile, there are sharp consultations on controversial issues such as the Constitutional reinterpretation with regard to the collective self-defense and drafting of the new growth strategy to be released within this month. A close look at the delicate political situation is now required.

This Week’s “Nagata-cho” (June 3-10)

Prime Minister Shinzo Abe on June 5 pledged to reduce Japan’s corporate tax rate in fiscal 2015 at the G-7 summit meeting held in Brussels. Also, Abe showed decisiveness to tackle with such issues as regulatory reforms in the power, medical care and agriculture, new growth strategy including new working hours and foreign workers, and public sector reforms such as GPIF that operates pension funds.

Prior to that on June 3, the ruling Liberal Democratic Party finalized its suggestion on the corporate tax　reform in the party’s Tax Commission. While it accepts the in-effect corporate tax reduction, it recommended expansion of the taxation targets to deficit-making companies and creation of some permanent alternative financial source covering the loss to be caused by the tax-reduction. Although LDP Tax Commission and the Ministry of Finance had opposed the corporate tax reduction, it now seems that LDP made conditional concession due to Prime Minister Abe’s strong decisiveness.

Now the ruling coalition and Cabinet are on the track of practical corporate tax reduction. It will be entailed in the Basic Guideline for Economic and Fiscal Policy to be released in the end-June after consultations within the ruling camp and Cabinet. Final detailed arrangements will be arranged in the end-year tax reform discussions.

While the economic recovery minister Amari announced a numerical target of “20s % in about 5 years,” it is yet clear to what extent and period of time the tax-reduction will be. Also, ministers have different views on alternative financial sources and there have been no sign of coordination so far. It will likely be a focus of bargaining within the ruling coalition and Cabinet.

*The state of deliberations in both Houses and committees are available from the following websites.
 House of Representatives Internet TV：http://www.shugiintv.go.jp/en/index.php
 Live broadcasts and video recordings of the deliberations in the House of Councillors (Japanese only)：http://www.webtv.sangiin.go.jp/

Seven political parties agreed and passed the national referendum bill that lowers the voting age from 20 to 18 years old in the Upper House on June 11. Accordingly with passage of the bill, the submitter seven parties will hold a first meeting of joint project team by the end of this ordinary Diet session.

On a Diet monitoring body over the information protection to be established based on the Special Intelligence Protection Law enacted late last year, the ruling parties and opposition Democratic Party of Japan held a consultation meeting on June 4. LDP and New Komeito suggested a Committee for Information Oversight (tentative) in both Houses that judges appropriateness of information protection and an idea of revising the Diet Act to entail punishments to Diet members who leaked information. On the other hand, DPJ will propose a counterproposal to the ruling camp’s revised Diet Act already submitted to the ordinary session. DPJ’s proposal aims to make it compulsory for the Cabinet to disclosure information when the President of either House request the government with some exceptional cases.

On the Upper House electoral system reform to correct disparity in the weight of one vote, LDP’s Secretary-General in the Upper House Waki drafted a proposal to integrate less-populated 20 constituencies into 10 as well as 10 into 5, along with the already-drafted party line to integrate 22 constituencies into 11. These three proposals will be lined up and be discussed simultaneously in the next meeting to be held on July 26. While each denomination in the Upper House is expected to discuss the proposals, there are strong oppositions even in LDP so there is a possibility that any of the proposals won’t be accepted. LDP will establish a project team soon to carefully discuss its proposal, taking 1-2 month.

On a constitutional reinterpretation concerning collective self-defense, LDP requested to increase the frequency of meeting with the coalition partner Komeito in order to accelerate discussions. Komeito accepted the offer so the meeting will be held twice a week. Out of the 15 scenario of so-called “gray-zone” cases, Komeito leaned to accept two cases. The government further proposed ideas to simplify procedures of Cabinet approval for scrambling (via telephone) and others, but pacifist-leaning Komeito reserved responses as LDP did not deny relooking standard for arms usage by revising the SDF Act. In a meeting on June 6, the parties finally agreed to maintain the legal framework and to respond by changing implementation of the law, due to the concession made by LDP. New legal framework will be considered sometime in the future, they agreed.

At the same time, 4 scenarios in relation to international cooperation activities were discussed in the meeting. 3 gray-zone scenarios and 4 international cooperation scenarios are now displayed on the negotiation table, and the coalition talks started discussions on eight specific scenarios in which Japan can exercise its right to collective self-defense, including protecting U.S. ships and removing naval mines in the Persian Gulf this week. In eye of revising the Japan-U.S. defense cooperation (“Guideline”) in the year-end, Abe instructed to prepare for Cabinet approval before the end of the current Diet session. On the same day during talks between the coalition partners, LDP Vice President Komura asked government officials to prepare a draft of the constitutional reinterpretation for eventual Cabinet approval.

In a bid to gain the support of reluctant Komeito, the Abe administration is preparing "guidelines" to limit the activities of the Self-Defense Forces when exercising the right to collective self-defense: A key element of the guidelines will be a restriction on dispatching SDF members overseas and Diet involvement. The coalition talks have faced a climax this week.

There was a party leaders’ debate this week on June 11, whose tone remained relatively calm. It might trigger other moves toward realignment of the opposition parties. Remaining less than two weeks to the end of the Diet session, let’s see impacts of the leaders’ debate carefully.

How Much of the Corporate Tax can be Reduced?

(HARA Eiji, PPPC President)

Since this June, Prime Minister Shinzo Abe has announced to “reduce the corporate tax from the next fiscal year.”

Traditionally in the Liberal Democratic Party, the party’s Tax Commission has had more influences with　regard to the tax system than the Cabinet. In the last year’s budget-compiling process, too, it only resulted to termination of the special corporate tax for reconstruction, i.e., 38% to 35% in effect which had already been agreed even though Prime Minister Abe had shown a strong decisiveness to reduce the corporate tax.

This year, given the Prime Minister Abe’s remarks at many occasions, it seems that certain agreements have already been made with the ruling party and some message will likely be released within this month in eye of the Basic Guideline for Economic and Fiscal Policy and new growth strategy to be released in this June.

Yet, the question is how much reduction will be arranged.

In contrast to Japan’s 35%, the average rate in the OECD countries (except Japan) is 25%. There are wide discrepancies even with the neighboring countries such as Hong Kong’s 16.5%, Singapore’s 17%, and　　South Korea’s 24%.

Such gaps give global companies reasons to transfer their basements abroad and it derives domestic people of their employment opportunities.

Although Abe announced in Davos in January “to reduce the corporate tax to an internationally-compatible standard,” now it is a test for Abe whether to really keep his own words.

Nonetheless, so far as the government discussions are going on, it isn’t clear whether the Cabinet will really implement such drastic reductions.

For example, a document submitted by a private-sector member to the Council on Economic and Fiscal Policy on May 15 suggested that the government seek a tax reduction to some below-30 percent as a temporary measure in eye of 25% in the future, in a bid to realize “the easiest country to do business.”

http://www5.cao.go.jp/keizai-shimon/kaigi/minutes/2014/0515/shiryo_01_2.pdf

As the “below-30%” means “29.**%,” the intension of this proposal can be read as

l  Reducing the tax rate by 5-6% in the coming several years

l  To 25% in the later future

So, it will be long later when the country really becomes an “easiest country to do business.”

In government panels, the general pattern is that private-sector members make drastic suggestions at first and discussions reach moderate conclusions as result of consultations. But this time, the private-sector member’s suggestion is already so moderate that gives us unsatisfactory impressions. Please note that “reduction by 5-6% in the coming several years” is more passive than a “5% decrease on surface (35% in effect)” suggested in the past Democratic Party of Japan government.

In the meantime, local governments have made more drastic suggestions.

For example, Osaka Prefecture and Fukuoka City, selected as the National Strategic Special Zones, have proposed to decrease the corporate tax rate largely and more quickly in the Zones with certain restrictions. Especially Osaka has made this proposal based on its experience of reducing the local tax rates on certain companies (local corporate tax, fixed property tax) to zero both in the Prefecture and City.

In order to call back the outflowing industrial basements and to seriously consider attracting the world’s companies and human resources to the domestic land, we need to seriously consider drastic and speedy tax reductions even if such measures are to be applied in the special zones.

What is “Zero-Overtime-Payment”?

(TAKAHASHI Yoichi, PPPC Chairman)

Naming is an important matter. Media reports paraphrasing the “white-collar exemption” into “zero　overtime-payment” remind me of that fact.

The white-collar exemption accurately speaking, is a rule to exempt labor regulations such as maximum 40 hours per week of working hours to so-called white-collar workers. In that case, the concept of overtime work itself would disappear so the phrasing “zero overtime-payment” is not a precise expression.

While the rule has not been introduced in Japan, there are actually such labor-rule exemptions in the western countries. Ratio of the workers exempted of labor regulations to all the workers is said to be 20% in U.S., 10% in France, and 2% in Germany.

To note, there actually is a rule similar to such labor-rule exemptions in Japan; discretional labor rule that　gives additional payments for assumed overtime works irrespective of the actual working hours. It resembles “zero overtime-payments” in that the salary would not change no matter how many hours spent on the　works. Workers subject of this rule amount to a little less than 10%.

Yet, boundary and definition of this rule is so ambiguous that its implementation depends on discretion of the officials of the Ministry of Health, Labor and Welfare. In that sense, white-collar exemption and discretional labor rule are similar but totally different ones. Ironically speaking, the “discretion” refers not to the workers’ discretion regarding their working hours but to the discretion of the bureaucrats in the MHLW. On the　contrary, there are no rooms for the ministry’s discretion with regard to the white-collar exemption.

There have been a course of discussions represented in the government’s Industrial Competitiveness Council regarding relaxation of working-hours regulations.

In the first place, all the members voiced relaxation of working-hours regulations. A new “working-hours rule (white-collar exemption)” subject to workers receiving more than 10 million yen/year or other designated occupations by which salaries are calculated according not to the working hours but to the performance based on agreements between management and employees was submitted. Given the suggestion, labor　unions appealed strong oppositions as there will be no overtime payments.

Indeed, there is an aspect that the confrontation was accelerated by the media reports which phrased the policy as “zero overtime-payment.” Nonetheless, besides that aspect, the points of debate between the members of Industrial Competitiveness Council and labor unions are not meshing with each other. The Council members’ explanation is that it is to introduce a new working-hours regulation (white-collar　exemption) targeted at workers not having discretion on their own working hours for the reason that their working hours are very long. In this logic, because their salaries and working hours are not linked with each other, there is no concept of “overtime work” itself. On the other hand, the labor unions accuse the Council of representing the managers’ opinions alone and became suspicious that the government’s intension is to expand such “no overtime-payments” policy to the general workers.

In the background, managers think that workers make performance not proportional to their salary and receive additional payments by staying overtime in vain. On the other hand, workers cannot admit legalization of such policy without settling the social issue of “service overtime-work” that payments are not made　according to their actual working hours even though they did not desire to stay overtime. Such an emotional gap between management and labor exists at the bottom line.

A new proposal was made by one of the private sector members in a meeting of the Council on May 28. It targets at positions with certain expertise and responsibility including such occupations as leaders of management planning, foreign projects, planning and development of new goods, etc., fund managers, business consultants regarding IT, financial services and others, economic analysts, etc., regardless of salaries. It excludes on-site workers, workers engaging in routine or subsidiary operations and younger workers with less experience.

In the meantime, there was a new proposition from the MHLW. The ministry, having opposed to the private-sector member’s new proposal on the working hours regulation, turned to accept parts of the suggestion by limiting the subject occupations.

A difference between the ministry and the private-sector member is, with regard to certain occupations requiring high expertise, whether to apply a new working hours rule (white-collar exemption, exemption of working-hours regulation) or to apply the already-existing discretional labor. Seemingly the opinion of the MHLW is superior and the discussion will likely be settled as expansion of the existing discretional labor rule.

In any case, when rules are to be changed, why is it not to be started in the government sector first? Because the government is the employers of public officials, it should be easier to experiment new policy by itself than to enforce the private sector to follow new policy. There will likely be less concerns for the private sector if the government went ahead.

However, a realization of such proposition will inevitably be stumbled by the fact that the central government employees are excluded from subject of the Labor Standard Law. It is ironical that even though the government does not want to accept exemption of labor regulation to private sector workers, the government employees are already exempted.

The difficulty of labor reforms lies in the fact that even the government cannot take into practice the saying “practice what you preach.”