Policy Proposals  Labor Policy   Summary of the 2017 Report of the Committee on Management and Labor Policy Promoting an Active Workforce that Will Turn Population Decline into an Opportunity and Raising Productivity

January 17, 2017

Keidanren publishes annually a report by the Committee on Management and Labor Policy, setting out employers' basic stance toward the spring labor negotiations and consultations, and our basic policy position on employment and labor issues.

The subtitle of the 2017 report is "promoting an active workforce that will turn population decline into an opportunity and raising productivity." This subtitle reflects Keidanren's determination to avoid focusing only on the negative aspects of the medium to long-term problems arising from declining population. Instead, Keidanren observes the population decrease in a more positive way as an opportunity to engage in raising productivity by accelerating "Reform of Work Practices, including breaks and leaves", and in the advancement of a more diverse workforce, thus contributing to company growth and the development of the Japanese economy. The report consists of three chapters:

Chapter One:
"Reform of Work Practices, including breaks and leave, for Company Growth";
Chapter Two:
"Policy Issues on Employment and Labor"; and
Chapter Three:
"Employers' Stance toward the 2017 Spring Labor Negotiations and Consultations."

The following is a summary of the main points of the report.

Reform of Work Practices, including breaks and leaves for Company Growth

Keidanren designated Financial Year 2017 (FY2017) as the year for focused efforts to reform work practice, including breaks and leaves, and has implemented a wide range of activities and initiatives to this end. Companies are being called on to eliminate excessively long working hours and to provide safe and healthy working environments, under the strong leadership of their top executives. Raising labor productivity is essential to companies' sustainable growth. A particularly great challenge is to raise productivity among white-collar workers and in SMEs, in which productivity can be low. To promote a more diverse workforce, it will also be important to pursue initiatives for active participation of youth, women, aged white-collar workers, and persons with disabilities, and for greater acceptance of foreign nationals into the current workforce.

Policy Issues on Employment and Labor

In terms of the promotion of reforming working hours, Keidanren hopes for the early passage of the bill to revise the Labor Standards Act, which will serve to prevent excessive working hours and promote flexible working styles, while contributing to raising productivity. Any upper limits on the number of overtime working hours an employee can engage in will first require sufficient deliberation on how this will affect employees on the ground. Regarding the issue of equal pay for equal work, it is hoped that companies will undertake self-checks on their own practices to determine whether there are unreasonable differences in the treatment between regular and non-regular workers, and make every effort to retain a happy workforce that engages in discussions on labor and management, based on the draft guidelines released by the government in December 2016.

Employers' Stance toward the 2017 Spring Labor Negotiations and Consultations

Principle on Wage Determination

It is a fundamental principle that wages should be determined based on what a company can afford to pay, taking a variety of factors into account, in line with the need to keep total personnel costs within appropriate levels. Increases in statutory welfare expenses, such as social insurance premiums, place downward pressure on both corporate profits and employees' take-home pay, and have the potential to harm the effectiveness of wage increases. These should be limited as much as possible.

Employers' Stance

To keep the virtuous economic cycle, efforts should be taken to maintain the momentum of wage increases seen over the last three years. On the other hand, concerns over the future and the changing habits of consumers are factors behind the lack of improvement in consumer spending despite big wage hikes. Increasing wages without addressing these issues will undermine the effectiveness of those wage hikes., Therefore, the government and the private-sector need to work together to manage those challenges.

During this year's spring labor negotiations, it is desirable that companies place importance on their "social requirements" to maintain a virtuous economic cycle. This involves taking positive steps to respond to social issues, commensurate with their profits based on the fundamental principle of wage level determination. Specifically, we hope that companies whose profits have increased and companies which have established an improving profit structure in the mid-term will continue to positively consider over wages hikes on an annual income basis.

When considering this, companies will need to come up with a diverse range of options to suit their respective circumstances, including the key areas of annual increment on basic wages, across-the-board wage hikes, bonus increases, and the review of various allowances.

Possible actions to achieve reform of work practice, including brake and leave ensuring that reduced scheduled working hours do not unfairly result in reduced pay and ensuring improved working conditions which could be funded by the reductions in overtime pay that would be achieved through the correction of long working hours. Other measures that should be considered to stimulate consumption include efforts to shift non-regular employees to regular employee status, the improvement of conditions for workers who are re-employed after retirement, and the establishment of the nursing care allowance and a Premium Friday allowance (Note).

We also hope that workers and employers will engage proactively on issues that will realistically take multiple years to resolve, such as the review of wage systems.

In addition to these initiatives by companies, we urge the government to engage swiftly in a range of policies to respond to concerns over the future, including the pursuit of social security reform and policies to alleviate the burden of education costs.

(Note) Premium Friday is a public-private initiative to create and entrench the practice of people spending a more enriching time than usual on the last Friday of each month, which began in February 2017. Keidanren fully supports this initiative, and has released a statement under the signature of Keidanren Chairman, Sadayuki Sakakibara, calling on member companies and organizations to cooperate in promoting flexible working practice.