Refile: Japan Inc braces for labour reform, plans to boost productivity -Reuters poll

Lawson

21/04/2017 01:49

(Corrects date in dateline) 
    * Changes aimed at capping overtime, paying part-timers more 
    * 50 percent of companies expect labour reforms to increase 
costs 
    * 67 percent considering steps to boost productivity 
    * Reforms may be painful but set to spur growth in long run 
 
    By Tetsushi Kajimoto 
    TOKYO, April 21 (Reuters) - Japan's plans to implement more 
employee-friendly laws are set to prove painful for many 
companies, with half saying labour costs will rise and 
two-thirds considering ways to lift productivity to offset the 
impact of the reforms, a Reuters poll showed. 
    Prime Minister Shinzo Abe's government last month endorsed 
an action plan for sweeping reforms of employment practices, 
including caps on overtime and better pay for part-time and 
contract workers. 
    The proposals, which may come into effect from 2019, will 
only add to strains already being felt as firms grapple with a 
deepening labour shortage due to a rapidly aging population. 
That said, more pressure to boost productivity is seen as long 
overdue and could boost growth in the long-term. 
    "Coming on top of labour shortages, Abe's plan will cause 
declines in sales and profits. We have done what we can in terms 
of streamlining," wrote a manager at a machinery maker, one of 
the nine percent of firms which saw a considerable jump in 
labour costs.  
    The Reuters Corporate survey, conducted April 4-17, showed 
41 percent saw costs rising somewhat, while 38 percent expect no 
change and 11 percent forecast that labour costs will decrease. 
    The impact of Japan's labour shortage is already pressuring 
earnings at some firms, and at others, management has found it 
no longer has the bargaining power it used to have as failure to 
reward employees sufficiently can result in less staff. 
    Convenience store chain Lawson Inc  2651.T  last week 
forecast its first decline in annual profit in 15 years, due in 
part to investments in new technology that will help it cope 
with fewer workers. 
    And this week, delivery service firm Yamato Holdings Co 
 9064.T  slashed its profit estimates for the financial year 
just ended by almost half, saying it needed to pay unpaid 
overtime for the past two years. 
    Service sector firms - which include labour intensive 
industries such as retailing and construction - are the most 
vulnerable. Nearly 60 percent of non-manufacturers polled in the 
survey said costs will increase. 
    The survey, conducted monthly for Reuters by Nikkei 
Research, polled 529 big and mid-sized businesses. Around 240 
firms, which reply on condition of anonymity, answered the 
questions on labour. 
 
    SHRINKING WORKFORCE 
    Japan's working-age population shrank to 77.2 million in 
2015 from a peak of 87.2 million in 1995 and is forecast to fall 
further to 45.2 million by 2065. 
    At the same time, Japan - the world's third-largest economy 
- ranks higher than many other advanced economies in terms of 
annual total working hours per worker, while its per-capita GDP 
undershoots most of them, government data shows.        
    "The government wants companies to seize this opportunity to 
raise productivity to cope with labour shortages, and many firms 
appear to share the objective," said Hidenobu Tokuda, senior 
economist at Mizuho Research Institute, who reviewed the survey 
results. 
    Public outrage over long working hours has also motivated 
Abe to make labour reform a key policy plank. The suicide of a 
young worker at advertising agency Dentsu Inc  4324.T  in 2015, 
later ruled by the government as 'karoshi' or death by overwork 
has only fuelled momentum for reform. 
    In addition to legal caps on excessive overtime that would 
carry penalties for infringements, Abe's action plan calls for 
better pay for part-time and contract workers, with the 
government noting that around 40 percent of Japanese workers are 
'non-regular' workers and are paid far less compared to other 
advanced countries. 
    Investing in technology - from new computer systems to 
artificial intelligence, robots and the internet of things - was 
the most cited method of boosting productivity in the survey. 
But implementing this could be easier said than done. 
    "One problem is that Japanese firms are short of talented 
workers in the fields of IT and AI," said Tokuda. 
    Firms also said they would introduce flexible work 
schedules, cut down on internal meetings and train employees to 
multitask more. 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
GRAPHIC: Japan Inc braces for employee-friendly labour reform    
 http://tmsnrt.rs/2otIxQR 
Breakdown of poll results     urn:newsml:reuters.com:*:nL3N1HM1XY 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Reporting by Tetsushi Kajimoto; Additional reporting by Izumi 
Nakagawa and Ritsuko Shimizu; Editing by Edwina Gibbs) 
 ((tetsushi.kajimoto@thomsonreuters.com; +81-3-6441-1829; 
Reuters Messaging: 
tetsushi.kajimoto.thomsonreuters.com@reuters.net)) 
 
Keywords: JAPAN COMPANIES/LABOUR