The Pandemic Depression
The Global Economy Will Never Be the Same
No workers in the world are as loyal to their employers as the Japanese. Physical health, family life, and spare time are all subordinate to the success of the company. But the socioeconomic costs of such strong work ethics are now outweighing its benefits, and the government knows it. After reshuffling his government in August, Prime Minister Shinzo Abe has put “work style” reforms at the top of his policy agenda, with a focus on capping Japan’s chronically long work hours. “We'll tackle this issue with a strong will,” Abe statedin a recent press conference, “no matter what.” His determination makes sense: as odd as it may sound, to boost a stagnating economy, Japanese workers should work less and sleep more.
Japan is a sleep-deprived nation. Statistics from Sleep Cycle app users show that the Japanese spend, on average, 5.52 hours in bed per night—the lowest level in a ranking of 50 countries and below the seven hours of minimum sleep recommended by doctors. Further, according to the World Sleep Federation, Tokyo workers sleep 36 minutes less than New Yorkers and 54 minutes less than Parisians. As a result, it’s not uncommon to see Japanese workers sleeping while standing in the metro or napping at work—inemuri—where, according to the OECD, 13 percent of Japanese workers spend more than 50 hours each week. Only about four percent of their Italian and German counterparts do the same. And roughly 30 percent of Japanese employees clock more than 40 hours of overtime per month, with some professionals in the IT industry doing even more than 80 hours of monthly overwork.
According to current law, overwork should not exceed 45 hours a month, but in practice, workers are asked to exceed the ceiling so often that the cap is meaningless. A recent survey released by the Health Ministry reported that illegal overtime work was confirmed at 4,790 of 8,530 workplaces surveyed. To make things worse, overwork is considered to be proof of attachment to the firm and is seldom financially remunerated. Moreover, workers are reluctant to take full advantage of their scant ten days of annual paid leave for fear of being considered disloyal to the firm. According to the Ministry of Health, Labor, and Industry, the average Japanese worker takes only 48.8 percent of his or her annual paid leave.
Workaholism is detrimental to the health of the Japanese workforce. There is even a word for death from overwork: karoshi. In 2015, official legal claims for karoshi rose to a record high of 1,456 from 1,181 in 2010. The suits usually involved employees who had worked more than 160 hours overtime in a month and died from a heart attack or a stroke. In other cases, stress and work overload push Japanese workers to commit suicide. Even if few actually die at work, cardiovascular and mental diseases due to an unhealthy work style are very common.
Overwork has a negative impact on the economy, too. Sleep deprivation decreases workers’ productivity, and long working hours do not necessarily lead to better economic outcomes. In an hour, the average Japanese worker produces only 62 percent of the GDP generated by the average American worker in the same time span. Moreover, excessively long hours make childbearing and elderly care nearly impossible, preventing women from joining the labor force. According to the World Bank, Japan’s female participation rate stands at 48 percent—almost 25 percentage points less than in Germany. The lack of a proper life-work balance contributes to the low fertility rate that is compressing the Japanese workforce. Finally, millennials themselves, who are interested in enjoying their free time as much as possible, shy away from large corporations, increasing the obsolescence of traditional business models and indirectly putting at risk the jobs of those who are employed there.
Negotiations to strictly limit overtime have been continuing for almost two years, but with little result so far due to the obstructionism of the main Japanese corporations and a lack of commitment on the government side. But now, as part of a broader set of reforms aimed at increasing productivity, Abe is pushing for real change and will chair a panel—known as the council for the “Realization of Work Style Reforms”—that’s in charge of making a concrete proposal to tighten overtime rules by March 2017. Setting a reasonable cap on working hours, allowing few exceptions, and introducing penalties for noncompliant companies are all important steps in the right direction. What’s certain is that Abe will have to invest a great deal of political capital in order to get meaningful reform, since labor has only one representative on the 23-member council, while corporate management has three.
Meanwhile, local governments are already taking action for their own staffs. Yuriko Koike, Tokyo’s governor, has introduced “overtime prevention teams” in each department in the metropolitan government tasked with forcing workers out of the office by 8 p.m. and taking notice of the long stayers. Koike is also pushing for legislation that compels public sector employees under her jurisdiction to take full advantage of their holidays. And the mayors of the main Japanese cities are cooperating to adopt measures to help government personnel balance work with child and nursing care, including the promotion of parental leave for men and the introduction of no-overtime days. This new approach to professional life should become a model for the whole country.
However, no innovative legal framework will be effective without a change in the mindset of both workers and employers, especially in the private sector, where the enforcement of stricter overtime rules is harder. Employers should recognize that long hours might impair productivity. Rather than squeezing their scarce human resources, they should use them more efficiently and change the incentives. Financially rewarding those workers who achieve pre-specified goals with little or no overtime, while penalizing those managers who force their subordinates to stay late, should become common practices.
At the same time, workers should rethink their idea of professional loyalty. Very often, the Japanese work until late because they feel they are honoring a sort of moral duty. Or they hope to increase their chances of promotion if they stay longer than their colleagues or as long as their bosses. Trade unions should actively negotiate with employers a better life-work balance, refashion the deeply rooted Japanese work ethic, and prevent a race to the bottom among coworkers.
More hours of sleep will not solve Japan’s daunting economic challenges. But they will help increase productivity and beef up the workforce through higher female participation and higher fertility rates, boosting the GDP more than any additional dose of monetary stimulus.