Original artwork by Michelle Ferreira
In popular Western media, Japan is often portrayed today as some high-tech utopia where bullet trains and fancy vending machines are the norms. But on the dark side of things, Japan is known for its strict, even toxic, work culture. In the Japanese language, there is a term, karoshi, meaning “death by overwork.” That a specific term like this exists exemplifies the extreme work culture in Japan where employees put in long hours at their desks and decline taking off national holidays for fear of getting behind or inconveniencing colleagues.
In recent years, the Japanese government – after much urging from the families of karoshi victims – has taken steps to address the life-threatening work culture. Most notably, the government’s annual economic policy guideline from 2021 encouraged firms to offer an optional four-day work week for employees to take care of their children, care for elderly family members, and learn new skills. Since then, corporations like Panasonic and pharmaceutical giant Shionogi have followed the government’s direction and made plans to adopt a four-day work week under certain conditions. But when a country infamous for overwork is on the frontlines of such a progressive policy, it likely has a unique benefit to the country, outside of merely increasing leisure time for employees.
What a Four-Day Work Week Looks Like
Companies are able to offer one of three variations of the four-day work week. Each variation depends on whether weekly working hours and pay change.
The first option is working hours and weekly pay stay the same. Employees work ten hours per day instead of the usual eight and receive equal pay. Employees with this option at UNIQLO have said that they benefit from receiving as much job training as colleagues while being better able to balance work, study, and caring for aging parents.
The second option is both working hours and weekly pay decrease. Employees work eight hours per day and receive 80% of their original pay for working four out of five days. Those at Mizuho Financial Group have said that although their pay decreases, they benefit from having their tasks and working hours reduced.
The last option is working hours decrease, while pay stays the same. Employees work eight hours per week and receive the same pay as those working five days. This is obviously the ideal option for most employees because they receive the same pay and work less, with 92% of employees showing satisfaction when Microsoft Japan tried the model in 2019.
After a company decides on which model to adopt, individual workers decide whether to join in or not. Though a four-day work week may interest some, the reality is that many would still prefer to work five days. Working parents who need to care for young children cannot work longer hours per day, nor can those struggling financially work less for reduced pay. For others, it may be a matter of preference: they may assume that working four days while their co-workers are working five will complicate internal scheduling. As a result, only a small portion of employees usually opt in to work four days. Companies like Hitachi have opened up the four-day option to 15,000 employees whose schedules better fit with the four-day work style. Nevertheless, most employees in companies that have adopted the four-day work week are pleased with the flexibility: having the option to work four days is better than having no option.
The four-day work week gives employees much-needed flexibility since workers have struggled to break free from the legacy of Japan’s postwar employment system.
Japan’s Postwar Employment System
After World War II, Japan’s economy grew rapidly, pushing firms to expand business operations by hiring more people. As a result, labor demand skyrocketed during the 1950s and 60s. As firms rushed to employ more people, they faced competition to secure the best talent. Even if firms were able to hire skilled workers, firms risked losing them because skilled workers tend to leave their jobs in search of higher pay. Large firms, therefore, adopted distinctive practices that allowed them to “put dibs on” talented people right after graduation and keep them all the way until retirement.
This practice is known as shūshin koyō, or lifetime employment. Firms recruit new graduates and employ them all at once every April, then implicitly guarantee them stable work within the same company until retirement. Since firms do the bulk of recruiting from a pool of new graduates, they only hire mid-career workers for the purpose of supplementing labor shortages. This makes landing a job as a mid-career worker extremely difficult because firms don’t prioritize hiring them. Workers are thus reluctant to leave and firms get to hold onto their talent.
Another practice is the seniority-based wage system (nenkō joretsu), where firms automatically increase their workers’ salaries every year. Since pay is based on how long one has worked for the company, mid-career workers had to start at the bottom of the pay pyramid. This made workers reluctant to leave and again, allowed firms to hold onto their talent.
Although this system looks like a case of corporate abuse of power, many Japanese people believe that this system responded to workers’ needs at the time. After a long period of war, many workers were looking for stability and security in their lives. These employment practices provided just that: a lifetime guarantee of employment at a large firm, plus an automatically higher paycheck every year.
Firms Don’t Invest in Workers…
While the ethics of the system are debatable, one clear effect is that traditional employment practices failed to properly invest in workers. OECD data shows that Japan’s per-hour labor productivity and labor mobility – two measures of human resource investment – have been the lowest among Group of Seven nations since the 1980s.
This is a problem because investing in workers should be Japan’s top economic priority. For a country whose labor force is shrinking, the future economy depends on how much Japan can increase each worker’s output and move workers to growing industries. In other words, Japan needs to increase labor productivity and labor mobility. These two factors not only benefit the broad economy but also benefit workers on an individual level: they will be able to earn higher wages and have the freedom to switch careers.
Japan’s traditional employment system failed in both areas. Workers are discouraged from being productive under a salary system that rewards years of service instead of performance. Workers are also less equipped for a career change because firms don’t prioritize hiring mid-career workers. Workers are left with firm-specific skills (a result of having stayed at one firm for a long period of time), and would have to start at the bottom of the pay pyramid.
Lifetime employment also created other consequences that further prevent firms from properly investing in their workers. One consequence is overtime work. In 2020, the Japanese government’s Ministry of Health, Labor and Welfare found that 37% of companies were working their employees for over 45 hours per week, the legal limit of overtime work. Overtime work was normalized under lifetime employment because firms tended to adjust to economic downturns by increasing working hours rather than layoff full-time employees. Extreme work culture not only is concerning because of the severe health consequences on workers (putting them at a higher risk for brain and heart disease) but because it also hinders productivity and labor mobility. It has been proven that firms that spend more on training have higher productivity, however, working long hours doesn’t leave time for such training programs. Workers also cannot pursue a new career because they don’t have the time to learn the new skills required.
The increase in part-time workers is another consequence that prevents firms from being held accountable for investing in their workers. The percentage of part-time workers has more than doubled in the past thirty years, from 15.3% in 1984 to 37.9% in 2018. Ever since economic growth slowed in the 1990s, firms became more cautious about hiring full-time workers (whom they couldn’t lay off) and started hiring huge amounts of part-time workers (whom they could). This created a huge disparity in treatment between full-time and part-time workers, with full-time employees receiving better pay and more training than part-time employees. Not only is this practice hugely unfair to part-timers, but it also hinders productivity and labor mobility as firms focus less on training their part-time workers.
… So Workers Invest in Themselves
An interesting phenomenon has emerged from the problem of firms failing to train their workers: individuals are starting to develop their skills by themselves. Job market trends show that the majority of workers use free time outside of their job to learn new skills or take on second jobs. This is where the four-day work week comes in – more free time from work afforded by a four-day work week means more opportunities to learn those additional skills.
According to a Persol Research Institute survey last year that asked 10,000 workers nationwide about their working styles, 53% of people working full-time were studying outside of work such as taking an online course, studying for a qualification, preparing for a foreign language exam, or enrolling part-time in university. The number of people taking on a second job while working full-time also increased, particularly in “retail/services” and “sales,” which grew by 5.7% and 4.9%, respectively. These statistics reflect a nationwide “I’ll do it myself” response to firms that are not investing enough in their workers.
With all things considered, the aim of a four-day work week in Japan is to support individuals who are actively learning new skills outside of work. Studying or working a second job while juggling a full-time job puts a burden on one’s health, so the four-day option opens up time for new initiatives while protecting workers’ health. As stated in the Japan Times, “the real objective of this policy, therefore, seems to be to encourage people to engage in continuing education to obtain new skills for their career, which could result in increased productivity and move some of the workforce into growing business sectors that are often at the heart of Japan’s chronic labor issues.”
The Four-Day Work Week is a Temporary Solution At Best
Japan’s four-day work week policy is an example of a popular idea turned practical. The policy may fall short of dreams of a working-class utopia, but it solves a very specific labor issue in Japan: firms are not properly training their workers, so the policy supports individuals who are actively learning new skills in their free time.
While this policy is a step forward, it is a temporary solution at best. The core problem with lifetime employment was that the system hindered firms from properly investing in their workers. The model of the four-day work week is a continuation of this: it gives firms a loophole through which workers are expected to use their time off to learn skills and increase their productivity. Workers are investing their time off into benefiting the firm, while the firm doesn’t have to invest back; in fact, some firms may even save money by paying workers less. While this policy works, for the time being, Japan should also introduce policies that transform the labor market into one where firms are held accountable for investing in their workers.
