Labour market regulations, flexibility & digitalisation

The future prosperity of Japan in an increasingly globalised world hinges on ensuring a highly skilled, diverse and competitive workforce that can support its ageing population and drive its economy. Key to this are ongoing policies, now and in a post-COVID-19 world, that allow more flexible approaches to working, greater female participation in the workforce, new ways of sourcing foreign labour and use of automated processes and artificial intelligence where meaningful and appropriate. The EBC strongly urges the Japanese Government to place focus on achieving greater productivity in the workplace and flexibility for both employees and employers.


  • Encourage companies to create ongoing lasting policies, during and well after COVID-19, to allow greater numbers of employees to continue to take advantage of flexible ways of working, including remote working from home, by providing government guidelines to support this. Overcoming workplace cultures that place value on physical presence over outcomes gains is a key focus area.
  • Introduce employment legislation that encourages the creation of a competitive workforce based on merit and performance. Adequate protection of employees is required, but employers also need a legal framework within which to remove under-performing workers, and whose skills may be transferable. The same shall apply for corporate re-structuring with clear rules on how to compensate affected workers.
  • Introduce legislation to speed up court procedures in labour disputes. Long court procedures lead to legal uncertainty and slows down corporate investments. The efforts of the Japanese government to digitalize court procedures to accelerate decisions are much welcomed by the EBC.
  • Continue to actively promote the uptake of technology that contributes to boosting productivity in the workplace, including incorporating digitalisation and artificial intelligence into daily operations, while considering the interests and well-being of the human workforce.
  • Increase and improve the infrastructure necessary to support greater work-life balance, by ensuring sufficient child-care facilities to support female participation in the workforce and male participation in the home. Further promotion of part-time jobs for working parents.
  • Encourage companies to set up child-care facilities by offering them identical or similar financial contributions to those given to public day-care centres.
  • Remove the spouse special income tax credit (haigusha-tokubetsu-kojo).
  • The Japanese Government and universities in Japan should promote the set-up of internship and vocational programmes for university students in incorporating work experience, reflecting the changing needs of businesses. The EBC is willing to support government initiatives by sharing experiences in Europe, for example best practices from the German dual education Vocational Education Training ‘VET’ programs.
  • Amend the employment legislation to expand the “highly skilled system” to include employees who earn less than the current system regulating highly skilled professionals, while keeping adequate protections of employees. People with high skills and high motivation want to work based on output instead of work hours.