Human Resources

With COVID, many companies introduced remote working and while some companies asked their employees to return to the office, many kept a hybrid, partly remote/partly office, work environment. In this context, the efforts of the government to launch the digital agency in fall 2021 to further promote digitalization is highly appreciated. Not only will it make administrative tasks more cost-efficient and faster (both for the public purse and for businesses), but it will also allow businesses to grant their employees more flexibility regarding remote-working if paperwork is no longer necessary. The EBC encourages the government to further increase trust in the legal reliability of digital procedures and introduce clear guidelines for acceptance of digital procedures to avoid legal uncertainties due to different practices, e.g. at local administrations.

On the important theme of ‘digitalisation’, the EBC Human Resources Committee welcomed the former Prime Minister Suga government’s active steps in this area, with the passing of laws to promote ‘electronic government’ and reduce the necessity for ‘hanko’ seals, and its planned establishment of a dedicated digitalisation agency in September 2021. For businesses, it is expected that this initiative will provide opportunities to further benefit from productivity efficiencies from paperless processes and electronic documents, in the shift to remote work and hybrid models, by reducing the physical need to stamp ‘hanko’ seals on official documents. It is important that Japan continues these efforts.

The EBC Human Resources Committee is encouraged by the government’s ongoing policy initiatives aimed at shortening the workday by reducing overtime, as a central pillar of the government’s work-style reforms. At the same time, the EBC supports initiatives which encourage a focus on outcomes over time spent at work and promote greater work-life balance. Specifically, the enhancement of the flexitime system, through revisions to the Labor Standards Act from April 2019 allowing the extension of the period of adjustable working hours to 3 months, is seen as a positive step in the right direction by the EBC, as is the policy of ensuring use of annual paid leave of at least 5 days, and capping of overtime working hours to 45 hours per month and 360 hours per year including for SMEs from April 2020.

The EBC appreciates the labour market reform initiatives of the government, whilst at the same time continues to encourage a broader dialogue in promoting productivity and flexible working, through measures that can be taken to improve the way work is done. The EBC Human Resources Committee is also encouraged by the trend of major Japanese manufactures to move towards more performance and merit based pay schemes and personnel evaluation systems, that aim to boost motivation and productivity of their workforces, and hope that this may also lead to greater mobility of workers and matching of transferable skill sets and experiences in the external labour market in Japan.

The labour market in Japan continues to remain tight amid an ageing demographic and declining birth rate, representing a challenge for economic growth and competitiveness, but also an opportunity for labour market reform and deregulation. For businesses, this situation coupled with low unemployment rates has led to a limited pool of active job seekers in the labour market and shortage of skilled and unskilled workers, which has been perpetuated by the pandemic.

The EBC applauds the Government’s policy aims to promote women’s active participation in the workforce, and by calling on companies to increase women in leadership positions. Its steps in improving support for working parents are clearly important initiatives requiring concrete follow-up for a successful outcome. The Government needs for instance to continue to find creative ways to offer more public child-care centres and private child-minding services, and to support and encourage men to take child-care leave. Towards this end, the EBC Human Resources Committee believes that further efforts to change attitudes and awareness in society about childcare and paternity leave should be actively promoted, and the increase in flexible ways of working and remote work associated with the pandemic is seen as a key opportunity going forward in this regard.

Since introducing the Defined Contribution Pension Law of 2001, the Japanese government has rolled out a series of revisions to enable employers to offer more flexible and attractive pension schemes to employees. Given the current demographic trend and the inevitable stress this will place on the Japanese social security system, it is imperative that further incentives are created to encourage individuals to prepare financially for their own retirement, including further enhancing investment education programs and the ability for individuals to increase their contributions to the funds.