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


* Changes aimed at capping overtime, paying part-timers more
    * 50 percent of companies expect labour reforms to increase
    * 67 percent considering steps to boost productivity
    * Reforms may be painful but set to spur growth in long run

    By Tetsushi KajimotoTOKYO, April 20 (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.

    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
    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
Breakdown of poll results    [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:


This article appears in: Politics , Stocks , World Markets
Referenced Symbols: 2651 , 4324 , 9064

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