Half of Japan firms reviewing work hours, with cuts to overtime in focus - Reuters poll

By Tetsushi Kajimoto and Izumi Nakagawa

TOKYO (Reuters) - Just over half of Japanese firms are reviewing rules on working hours with many looking to cut down on overtime, a Reuters poll shows, in a sign that the government has gained traction in its campaign for more employee-friendly labour practices.

The survey results also come amid a scandal engulfing advertising agency Dentsu Inc this year after a young worker committed suicide, with the apparent trigger 105 hours of overtime in one month - a scandal that has also likely given firms more impetus to reform.

The suicide, later ruled by the government as 'karoshi' or death by overwork, has led to outpouring of public grievances on social media as well as raids on Dentsu by Japan's labour ministry.

The Reuters Corporate Survey, conducted Oct. 26-Nov. 8, found that 56 percent of companies were looking at changes to working hours - measures that could result in tangible benefits for many employees.

While only 14 percent said they were planning to officially lower their maximum working hours allowed, the vast majority of the firms that supplied written comments said they were looking to reduce overtime and work done outside regular hours, such as weekend work.

"We are reviewing rules so that overtime will not adversely affect our employees' mental health or work-life balance. At the same time we are aiming to reform the way our managers think about overtime," wrote a manager at a machinery maker.

Changes would be a positive development but simple reductions in hours worked could lead to less earnings for some companies if they do not change the way they do business, said Hisashi Yamada, chief economist at Japan Research Institute, who reviewed the survey results.

"It's a double-edged sword," he said.

The survey, conducted for Reuters by Nikkei Research, polled 531 big and medium-sized non-financial firms which answer on condition of anonymity. Around 250 responded to questions on employment practices.

Prime Minister Shinzo Abe has made making labour reform a key policy plank and has established a task force to work on the matter. Making it easier for women to participate in the workforce has also been key theme of Abe's.

Only a few firms in the survey touched upon working conditions for women in their written comments, although several said they were looking at introducing flexible employment hours and allowing some work to be done from home.

Encouraging employees to actually take days off owed - something that many Japanese at companies with hard-driving work cultures find difficult to do, was also often mentioned.

Some companies also said they were reviewing their use of Article 36 of Japan's labour code, which leaves overtime pay and limits to the discretion of employers and typically toothless unions.

(Reporting by Tetsushi Kajimoto and Izumi Nakagawa; Editing by Edwina Gibbs)