Archive for the ‘News’ Category

Who benefits from the new overtime pay system?

Monday, February 16th, 2015

On Feb. 13, a Labor Policy Council sub-committee submitted to the labor ministry a report with suggestions for a bill to revise the labor standards law. The revision, which the ministry plans to submit to the next regular Diet session, applies to the work of skilled white collar professionals and will allow them to “work in a manner that demonstrates their achievements” more effectively, which is another way of saying that employers will no longer be required to pay these workers overtime for extra hours on the job, which in turn means that employers cannot be accused of pressuring them to work overtime for no pay, a system popularly known as saabisu zangyo, or “free overtime.”

Ostensibly, the revision will affect a small portion of the labor force, since it will only apply to workers who make at least ¥10.75 million a year, mainly foreign currency traders, financial analysts, consultants, etc.

Burning the candle at both ends.

Burning the candle at both ends.

According to the advisory panel’s recommendations, if a company wants to utilize this new overtime system, it must reach an agreement with the targeted workers and somehow introduce rules that will guarantee the employees avoid overwork as much as possible by, for instance, making sure they don’t work weekends.

The panel also recommends another revision to so-called sairyo rodosei, the “discretionary labor system.” Under to this system the worker and his employer decide together how many hours the former will work and how much pay he will receive based on those hours. If the two parties believe that in order to accomplish his tasks he may occasionally need to work longer hours, then those hours and appropriate compensation should be incorporated beforehand into his wages. But if the worker works even more hours than the overtime covered by the extra wage, he will not be paid extra in accordance with the new system, though there may be special conditions for after-midnight and weekend work.

This system targets sales agents, researchers, legal workers — people who tend to require flexible hours since the size of their work load varies in accordance with the nature of a specific project. The whole point, according to the labor ministry, is to peg pay to achievement.

An report in Tokyo Shimbun points out that there is more to the proposed bill than the two revised overtime systems. The ostensible purpose of the revisions is to prevent “overwork,” so the sub-committee also recommends a law guaranteeing a minimum number of paid vacation days a year, even for management employees; and that overtime rates be increased for employees of small and medium-sized companies to those already being paid by large companies.

With regards to workers on flextime systems, overtime should be paid for any hours that exceed 50 in a week, and employees with small children should be better able to set their hours in order to address parenting contingencies.

These changes sound progressive, but representatives of labor groups who participated in the sub-committee discussions expressed serious reservations about their direction, saying they may actually have the opposite effect and lead to overwork. They may even exacerbate karoshi (death from overwork), something the revisions are supposed to prevent.

To the labor side, the current system of stipulating a normal workload as being five days a week, eight hours a day, with any extra hours worked as qualifying for overtime pay, should remain unchanged. The problem is that it isn’t enforced strictly enough. By deregulating the current law, there is a danger that workers will be pressured even more into working longer hours.

The government has countered by saying that cutting the relationship between wages and work hours will lead to greater economic activity and should even mean shorter work hours. The management representatives on the sub-committee added that a “broader choice of working styles” will mean greater productivity and thus more sustainable economic growth.

The main problem is that there is no definition of what qualifies as “achievement.” For sales agents, it may not be a problem since they have sales targets, but what about researchers? For the time being, the new changes will only affect about 100,000 workers, but in 2005 the Japan Business Federation (Keidanren) said they wanted this kind of “zero-overtime” system for all workers who make over ¥4 million, which is about 40 percent of the white collar workforce.

They’ve since reduced it to 10 percent of the workforce, but obviously they aim to increase that portion. And as one labor lawyer interviewed by Tokyo Shimbun explained, the discretionary labor system already in effect has led to longer hours, so a revised system may simply make matters worse.

But the real issue is how these revisions affect wages. According to a study by Mitsubishi UFJ Research (pdf), the average “fixed wage” (shotei-nai kyuryo) has remained the same since 1995, mostly due to changes in the makeup of the labor force, which now includes more part-time and regular workers than there were 20 years ago. That means any increase in pay for the average worker comes from bonuses (tokubetsu kyuryo) or overtime pay (shoteigai kyuryo).

As the English nomenclature suggests, bonuses are paid at the discretion of the employer, usually as a reflection of either the company’s business achievements or the individual worker’s. However, in Japan, employees consider bonuses to be part of their salary, as do consumer markets. Banks take bonuses into consideration when extending loans. Mitsubishi found that in 1995, bonuses accounted for 22.9 percent of the average pay of workers who received them, and that now bonuses make up only 18.5 percent of their yearly pay. Since salaries have remained flat during that interval, it means overall pay has actually decreased.

The only way a worker can make more money over time is thus to work extra hours. Mitsubishi found that overtime pay increased steadily through the mid-2000s as the Japanese economy grew, and then dropped suddenly with the onset of the recession in 2008. In recent years, as the economy improved, overtime pay has increased.

That means overtime pay is a better index of economic achievement than salaries or even bonuses, but it doesn’t mean workers are benefiting from better corporate performance, since they are contributing to it with more time spent on the job. When Mitsubishi evaluated industries that tend to demonstrate low productivity, it found that workers also tend to work longer hours, which is particularly conspicuous for young workers, who may need more time to finish projects, and higher-income workers, whose higher incomes are a direct function of working more overtime.

According to Organization for Economic Cooperation and Development statistics, in the United States, which leads the world in per person hours worked with 1,790 a year, part-timers, who are defined as working less than 35 hours a week, make up 13 percent of the labor force, while in Japan, which is second with 1,745 hours a year per person, part-timers make up more than 20 percent of the labor force. That means full-time employees are working more hours than their American counterparts, and Mitsubishi reports that the average number of hours worked by full-time regular employees in 2013 was 2,022.

Though companies have demanded the zero overtime revision in order to increase productivity, their main goal is to reduce personnel costs. If that’s the case, then the revision flies in the face of the government economic recovery strategy, which is to boost corporate profits that will in turn boost wages and consumption. If overtime is cut, then workers lose the only recourse they have — at the moment, at least — for wage growth. Moreover, in order to fulfill work loads that will be used to judge performance they may have to work more hours without pay.

Who benefits in the end?

Show me the money: Who paid for what in the Lower House election

Monday, January 5th, 2015

Posters for LDP candidate still standing (and lying) in a Chiba field a month after the election

Posters for LDP candidate still standing (and lying) in a Chiba field a month after the election

When Prime Minister Shinzo Abe dissolved the Lower House in November and called a general election, some people complained about the cost. Why should taxpayers foot the bill for an election that was more or less being carried out on a whim?

The complaint got lost in the post-election buzz, when other complaints became louder, but at least one person still wonders about all that money. In a new column in the Asahi Shimbun called “Re: Okotae Shimasu” (Re: Answering Questions), a reader mentions that she heard that the election cost ¥63 billion. What, she asks, was that money spent on?

It’s a good question, but one that’s difficult to answer since the government is still adding up all the receipts and won’t actually reveal the results until next fall, by which time the election will be a distant memory. However, the Asahi was able to give the reader some idea based on the last general election held in 2012, which cost ¥58.8 billion.

In addition, when a “snap election” is held, meaning a poll that doesn’t follow the normal election cycle, the money comes from an “emergency fund” (yobihi) that is kept in reserve for when something unexpected happens.

CONTINUE READING about the cost of elections →

Consumer stimulus is not the same as welfare, though the purpose is the same

Monday, December 29th, 2014

Screen shot from Toyonaka, Osaka Prefecture, city office home page informing residents that the deadline for the one-time welfare handout is Jan. 5.

Screen grab from Toyonaka, Osaka Prefecture, city office home page informing residents that the deadline for the one-time welfare handout is Jan. 5.

Last weekend the cabinet of Prime Minister Shinzo Abe reemerged from its victory lap to approve an economic stimulus package worth ¥3.5 trillion whose purpose is to help rural areas cope with inflation brought on by last April’s consumption tax hike, not to mention the more recent drop in the yen’s value, which has made imported goods more expensive. Some of the money will go to local infrastructure projects, mainly in the area of disaster prevention, and a little less will go directly to consumers and companies.

This handout, however, shouldn’t be confused with the one that the government implemented last summer for poor people, though there will be overlap. In fact, some local governments, which administer the one-time welfare handouts (rinji kyufukin), are still looking for eligible people since many residents who aren’t on their welfare roles nevertheless are qualified to receive the money. So far, about 24 million have received the handout.

The only real difference between the welfare handout and the stimulus handout is the ostensible purpose: the former was designed to help low income people adjust to the CT hike, while the latter is a means of getting more money into the distribution system, but in the end the government wants the same thing: higher consumption, which is why the stimulus handout will likely be in the form of a coupon that can only be spent on goods and services. That isn’t necessary with low income people, who by necessity spend everything they get on goods and services.

CONTINUE READING about consumer stimulus →

Are Japan’s public school teachers paid too much?

Monday, November 17th, 2014

Japanese teachers make more money than the world average, but they also work many more hours. (Photo by ajari CC by 2.0

Japanese teachers make more money than the world average, but they also work many more hours. (Photo by ajari CC by 2.0)

Last month the Ministry of Finance presented a policy recommendation based on studies made by an advisory group. Such recommendations are fairly common, but this one caught more than the usual amount of attention because of where it was directed.

The ministry thinks that the maximum class size for first year elementary school students should be increased from 35 to 40. In purely economic terms, such a change would result in a reduction of as many as 4,000 teachers, which would translate as ¥8.6 billion in savings for the central government alone. However, the ministry’s explanation for why the change should be implemented was not made in fiscal terms. It was made in educational terms.

Until the Democratic Party of Japan became the ruling party, maximum class size was 40, and the DPJ changed it to 35 in order to address the bullying problem. But the finance ministry says that bullying incidents have increased slightly since class sizes were reduced, so obviously it has had no effect.

CONTINUE READING about education budgets

The case for a higher consumption tax

Tuesday, November 4th, 2014

Big needs: Should daily necessities by exempt from the consumption tax?

Big needs: Should daily necessities by exempt from the consumption tax?

Right now the government is fretting over whether or not to raise the consumption tax to its planned level of 10 percent in October of next year. For a while it seemed like a sure thing, but the drop in demand that accompanied the most recent hike to 8 percent in April, coupled with less inflation than the administration and the Bank of Japan had hoped for, has put the plan into doubt. The fear is that another boost in the tax will send the economy into a recessionary tailspin.

Akira Sugawara, a high school teacher who has published an economics primer for businessmen, recently wrote a simple, easy-to-understand polemic in favor of raising the tax for the online version of the business magazine Toyo Keizai. In line with his mission to explain economic principles to people who don’t have a strong grasp of basics, Sugawara starts out by explaining what the consumption tax is supposed to do, rather than what it is actually doing.

Originally, the purpose of the tax was to bolster social security in the face of a rapidly aging society, and though so far revenues from the tax have been used to pay off Japan’s massive debt, Sugawara still thinks social security should be prioritized when discussing the consumption tax.

CONTINUE READING about higher consumption tax →

Political gift culture refuses to die

Tuesday, October 21st, 2014

Former Justice Minister Midori Matsushima faces the error of her campaigning ways in the Lower House on Oct. 15. | KYODO

Former Justice Minister Midori Matsushima faces the error of her campaigning ways in the Lower House on Oct. 15. | KYODO

With almost breathless speed, two of Prime Minister Shinzo Abe’s most recent cabinet appointments, trade minister Yuko Obuchi and justice minister Midori Matsushima, resigned after it was revealed they violated political funding laws. Matsushima’s downfall, which revolves around her free distribution of uchiwa (round fans) to voters, may have as much to do with political expediency as with breaking rules, but Obuchi’s use of funds earmarked for public use to purchase gifts and supplement recreational outings for supporters was clearly illegal.

Which isn’t to say it’s not common. As one anonymous veteran of the ruling Liberal Democratic Party — to which Obuchi belongs — told Tokyo Shimbun, the Gunma lawmaker’s problematic actions used to be a fairly normal practice in the Diet. Obuchi is accused of using her political funds, which come from taxpayers in the form of seito kofukin (political party subsidies), revenues from tickets sold for fund-raising get-togethers, and donations from individuals and groups, to supplement “theater tours” for her supporters. Obuchi’s supporters each paid ¥10,000-¥12,000 to go to Meiji-za in Tokyo to enjoy a day of stage performances. However, in her required political funds report there was an obvious discrepancy. Since 2007, the amount received from supporters for these excursions totaled ¥11.9 million, and it is deemed they cost more than ¥60 million to carry out, with the difference being ¥53.3 million that came from Obuchi’s funds.

The veteran says that such jaunts for supporters were normally arranged directly by the politician’s staff, but ever since the law became more thoroughly enforced, lawmakers have entrusted the job to travel agencies so as to divert the trail of money.

CONTINUE READING about political gifts →

Foreign tourists expected to take up (some of) the slack in consumption

Monday, October 6th, 2014

Everyday low prices: Duty Free store at Narita Airport

Everyday low prices: Duty Free store at Narita Airport

According to a survey of 12,000 tourists in 2013 carried out by the Tokyo Metropolitan Government, the Chinese spend more than any other group, which isn’t surprising. What is surprising is by how much they outspend other nationalities.

On average, a Chinese visitor spends ¥191,741 in Tokyo. The average spent by all foreign tourists in Tokyo is only ¥46,546, which means Chinese spend about three times as much.

After China, the most spent is by Singaporeans (¥135,377), and then Spaniards (¥129,558). Another notable aspect of Chinese spending is that the bulk is not spend on accommodations or dining, but rather on souvenirs, about ¥122,000. The most popular area for Chinese shoppers is Ginza, because that’s where all the luxury brand stores are.

The government wants them to spend even more, and is thus expanding the list of items that foreign tourists can buy without having to pay consumption tax. Previously, consumables like food, liquor and cosmetics were not exempt from CT when bought by foreign tourists at stores in Japan, but since Oct. 1 they are.

CONTINUE READING about new duty-free lists →

RSS

Recent posts