The Impeder of Economic Growth

Jan 30, 2017

Overtime work is a deeply rooted social issue in Japan as 21% of employees worked over 49 hours weekly in 2015, which is the highest percentage among major developed countries¹. In 2016, the Japanese government tightened its scrutiny on companies’ overtime work management² and started discussions on possible new rules to limit overtime work hours³. Moreover, recent controversies relating to overwork such as an employee’s death resulting from overwork in Dentsu turned much public attention to this issue.

Companies face reputational risk once these controversies occur or when warnings are issued by the authorities. These events may affect revenues due to adverse impact on corporate brands and may impede the hiring and retention of talented employees. As the Japanese government and companies reform the work hour policies, shareholders may pay attention to the link between companies’ financial performance and their efforts on employment management and productivity enhancement.
 

¹ LOSTAT as of December 14 2016, ILO

² According to “Overwork 80 hours, tightening oversight” article (Nikkei, April 2nd 2016), the Ministry of Health, Labour and Welfare reinforced a rule to investigate companies on overwork issues from April 1st 2016: companies where at least one employee allegedly having over 80 overtime work hours a month are covered while 100 hours a month was the previous threshold.

³ “Prioritizing reality check for overtime limit, the first meeting at MHLW”, Nikkei (September 9th 2016)