Public Policy Planning & Consulting Co. (SEISAKU-KOUBOU) is a public policy consulting firm based in Tokyo, covering broad policy areas such as economic policy, fiscal policy, regulatory policy, administrative reform, international trade and investment, etc.
PPPC provides consulting and briefing services to the clients in the central/local governments, Diet, local assemblies and the private sector.

This blog is aimed at providing general information, latest updates and some of our analytical reports about Japan's public policy in English.
The contents include;
- updates on some important government councils, especially those in which our executive officers serve as the members,
- weekly reports on latest news in Nagata-cho, the political center in Japan, (partially).
- analytical reports and articles by our members and distinguished experts outside the firm,(partially).


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.”

No comments:

Post a Comment