Japan’s Parliament tightened limits on overtime hours, responding to concerns about karoshi, or death by overwork, and seeking to improve productivity in a country where long hours are often more a custom than business necessity.
The legislation, a priority of Prime Minister Shinzo Abe, won final approval Friday in Parliament. It limits overtime work to less than 100 hours a month and less than 720 hours a year, and it sets penalties for companies that violate the limits.
Until now, employers could effectively ask employees to work without limit if workers’ unions and management agreed to it, which they often did without much scrutiny.
“Work-style reforms are the best means to improve labor productivity,” Mr. Abe said in Parliament June 4. “We will correct long working hours and improve people’s balance between work and life.”
The new law also seeks to improve the lot of Japan’s growing pool of “nonregular” workers in temporary or part-time jobs who don’t have the job security of full-time regular employees. It says employers must pay equally for the same work, regardless of workers’ status. In a 2016 interview with The Wall Street Journal, Mr. Abe said he wanted to “eliminate the word ‘nonregular’ from the lexicon.”
A culture of brutally long work hours is common in East Asia, and Japan isn’t the only country looking to change. In South Korea, a new work-hours law takes effect Sunday capping the workweek at 52 hours. President Moon Jae-in has said workers have the “right to rest” and lawmakers have blamed long hours for everything from sluggish job creation to low birthrates.
Opposition parties in Japan said Mr. Abe’s legislation didn’t go far enough, and they criticized one part of it that actually eases work-hour rules instead of tightening them. Under that part, companies have the option of putting professional workers such as financial analysts with annual salaries of more than ¥10 million ($90,500) into a separate category under which they are exempted from work-hour regulations.
Opposition parties said that would encourage long hours and lead to an increase in karoshi—death by overwork.
The issue of karoshi has been in the spotlight since the suicide of a 24-year-old female worker at Japan’s biggest advertising firm Dentsu Inc. on Christmas Day in 2015. Government labor officials blamed her death on excessive work hours, propelling the movement for tighter limits that resulted in the legislation passed Friday. Dentsu apologized and its chief executive resigned over the issue.
Yukimi Takahashi, the mother of the Dentsu employee who died, criticized the exemption for highly paid workers in the new law.
“The government says the scheme for highly skilled workers would be adopted by consent of workers, but employees and employers are not equal,” Ms. Takahashi said. “Employees may have no choice but to agree if they are worried about their bosses’ assessments.”
Economists say Japanese companies need to improve working conditions to cope with serious labor shortages. Government data released Friday showed Japan’s jobless rate hit a 26-year low of 2.2% in May, and there were 160 job offers available for every 100 job seekers.
“The law wouldn’t instantly encourage nonworkers to come back to the labor market,” said Takayuki Miyajima, an economist at Mizuho Research Institute. “But the Dentsu case, the law and, most importantly, growing concerns over labor shortages will help companies promote work-style reforms to keep talented employees with them.”