Can a four-day workweek solve Japan’s labor market issues?

As the pandemic lays waste to traditional mindsets around work, Japan is looking to push ahead with ambitious reforms.

Domestic media have reported that the government plans to include the promotion of a four-day workweek in its Basic Policy on Economic and Fiscal Management and Reform that is expected to be approved in June.

If the policy makes it onto the priority list, it will be reflected in next year’s budget and will likely prompt more companies to introduce the four-day workweek option.

The blueprint that the government may be picturing is that people who get extra days off will have time to study and acquire new skills or take on part-time work to improve their careers, which will improve productivity and boost their income while also making the labor market more fluid.

But some experts have voiced doubts, saying things probably won’t go down that easily.

“I think it’s good that people can reduce their work days, but the critical point is whether they would accept a decline in their incomes,” Hiromi Murata, an expert in labor issues at the Recruit Works Institute.

A shorter workweek will affect their pension and retirement bonus, so those wanting to make that change need to check with their companies about their salaries and also find out if they can flexibly switch back to a five-day workweek, she said.

Murata added some people might try to cover the loss of income by taking on a side job, but they need to be careful about those plans, as they could end up working long hours in order to manage the two jobs.

The government is apparently considering a system where individuals can choose either a four-day or five-day workweek, rather than having companies decide.

Polling shows a majority of workers have positive opinions on four-day workweeks. An online survey of 400 individuals in April by Tokyo-based Financial Academy shows that 77% who responded are supportive or supportive to a certain degree.

Yet there are concerns over pay cuts and that was the top reason cited among those who are against the four-day workweek.

According to a survey by the labor ministry conducted in January last year, 8.3% of the 4,191 companies polled gave more than two days off per week.

Based on some of the companies that have already introduced such workstyles, two basic pay systems are expected to be common.

One system would keep salaries at the same level by having employees work the same number of hours across four days. The other would simply cut workers’ pay due to the reduced number of working days.

The income levels for those taking the first option may appear to be unchanged, but because of longer regular working hours, such employees will likely receive less overtime pay.

In many cases, “it’s pretty much inevitable that income will diminish” for those taking three days off, said Toru Suehiro, senior economist at Daiwa Securities.

“It would be best if workers can produce output in shorter hours by increasing productivity, but that’s not possible to do all of a sudden.”

Suehiro estimates that the four-day workweek will slash workers’ monthly income by about ¥51,000 on average.

The timing for such a shift is not ideal, either, as a raft of companies are suffering from the pandemic and relying on financial support from the government to keep their workers employed. Thus, if firms introduce a four-day workweek, they may be criticized that their intention is really to cut labor costs, Suehiro said.

“Getting more leisure time is a positive thing, but it comes with a negative factor of income decline. We need to look at both sides,” Suehiro said.

The idea of promoting the four-day workweek has been discussed by the Council on Economic and Fiscal Policy, a key economic policy panel of the government, while a group of lawmakers with the ruling Liberal Democratic Party also proposed the idea in April.

The LDP proposal states that, although the nation’s tradition of lifetime employment has contributed to the country’s stability, Japan needs to diversify its workstyle to facilitate innovation by getting individuals from different backgrounds working together.

If people can take three days off weekly, they will have more time to balance work with child-rearing or taking care of their parents. It will also allow them to attend college or take on other jobs to acquire more knowledge and experience for their career, the proposal says.

The real objective of this policy, therefore, seems to be to encourage people to engage in recurrent 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.

Experts said giving the option of a new workstyle is welcome, but it is questionable whether the four-day workweek will be an effective policy for solving those issues.

Murata said many of those who make the switch will probably use the extra time for leisure rather than studying, since Japan’s education infrastructure is not well-prepared for part-time students at this point.

Suehiro of Daiwa Securities echoed that sentiment, saying that it will take time to nurture such educational opportunities as well as a new work culture.

Proponents of the policy may be thinking that “if workers get more days off, they will be self-motivated to do recurrent education and productivity will just improve, but the cause-and-effect logic seems weak,” Suehiro said.

Without proper preparation of society as a whole, “(the four-day workweek) could be nothing but just cost-cutting.”