Chapter 4. Better job quality for longer working lives in Japan

Job quality is a key determinant of well-being for older workers and plays an important role in their decision to continue working or return to work. However, by international standards, Japan performs less well in terms of the quality of working conditions. A comparatively high share of workers experience job stain and suffer from excessive long hours of work, which can have a negative impact on their health. Under the Japanese employment system, many older workers face a substantial pay cut following mandatory retirement and may end up being rehired in jobs that do not fully utilise their skills, which undermines their job satisfaction, well-being and productivity. Measures which could be taken to improve job quality include: tackling labour market segmentation; eliminating excessive hours of work; better age management practices to utilise more fully the skills older workers and improve work-life balance; greater opportunities for self-employment; and better data on working conditions to provide the evidence-base for effective policies.

Introduction

Promoting good working conditions at all ages is essential for ensuring that people have both the ability and motivation to continue working at an older age. It is also essential to ensure that working conditions are adapted to meet the needs of underrepresented groups (e.g. women with young children, people with disabilities and older people) so that they can participate more fully in the labour market. This chapter, therefore, examines job quality in Japan and current policy initiatives to improve working conditions, including better employment opportunities such as through self-employment, and identifies where further policy action may be required.

Job quality and working conditions in Japan

Many Japanese workers face high job strain

To measure and assess the quality of jobs in an internationally comparable way, the OECD has developed the Job Quality Framework with three objective and measurable dimensions that can be observed for all OECD countries (OECD, 2014[1]):

The first dimension, earnings quality, captures the extent to which earnings contribute to workers’ well-being in terms of average earnings and their distribution across the workforce.
The second dimension, labour market insecurity, captures those aspects of economic insecurity related to the risks and economic costs of job loss, and is defined by the risk of unemployment and the benefits that would be received in case of unemployment.
The third dimension, the quality of the working environment, captures non-economic aspects of jobs including the nature and content of the work performed, working-time arrangements and workplace relationships. These are measured as the incidence of job strain characterised by high job demands with low job resources.

There is substantial evidence that these dimensions contribute to better employee wellbeing and health (Veldhoven and Peccei, 2015[2]; Stevenson and Wolfers, 2013[3]).

On average across all workers, earnings quality is slightly worse in Japan than in the other selected countries in Figure 4.1, although it is close to the OECD average. In terms of labour market insecurity, Japan has one of the lowest levels among OECD countries. This good score reflects Japan’s low unemployment rate. However, Japan performs less well with respect to the quality of the working environment as a relatively high share of workers experience job strain (OECD, 2018[4]).

Poor working conditions have a compounding adverse effect on the health of workers over their working careers. People with poor health tend to work and earn less, which limit their chance to accumulate human capital in the market, resulting in a worse situation in later life (OECD, 2017[5]). Conversely, a recent European study shows that jobs with good working conditions play a protective role on physical health and psychiatric disorders. (Barnay, 2016[6]).

Long working hours are a major driver for high job strain

Long hours of work are one factor contributing to a poor working environment for many Japanese workers. For several decades, Japan has had one of the longest working hours in the OECD area (Figure 4.2). Average annual hours worked in Japan have fallen substantially since 1990 but mainly as a result of the substantial increase1 in female and older workers with non-regular work contracts whose working hours are shorter than for other workers. Currently the average number of hours actually worked annually per worker in 2017 was 1 710, below the OECD average of 1 759 hours but still well above the number for France and Germany.

Nevertheless, a higher proportion of workers in Japan than in a number of other OECD countries suffer from excessively long hours of work (i.e. weekly hours of work of 60 hours or more) (Figure 4.3). This is true for workers in all age groups, except for those in their 60s or older. While employees in theory should be able to decide their work hours, previous research suggests that employers may have more power to determine the level of working hours in Japan2. The results of a survey by JILPT (JILPT, 2016)3 also support this view. While only 6% of workers answer that they work longer to earn more, the biggest reason given is because “new tasks occurred suddenly and the amount of tasks has large fluctuations”, which indicates that many Japanese workers may have little effective control over their working hours.

Long working hours are a long-standing problem facing Japanese workers. Ample evidence show that long working hours can lead to a deterioration in health and in extreme cases to suicide (see Box 4.1). Having good physical and mental health is paramount for older workers to stay in the labour market. Long working hours not only have a direct effect on the labour force participation of older people but it also has an indirect effect as they can have an adverse impact on participation in education and vocational training, which in turn perpetuates a high incidence of low-quality jobs.

More generally, the social burden of mental ill-health is substantial. In on study, the accrued cost of the mental ill health was estimated for 2008, including both the direct costs (healthcare costs and social service costs) and indirect costs (morbidity - including absenteeism and presenteesim, and unemployment costs – and mortality costs) (Sado et al., 2013[7]). The total cost was estimated to be about JPY 2.39 trillion. In particular, absenteeism and presentism (workers present at work but working below their potential productivity) account for the largest share of all costs (59%). The importance of mental health problems has tended to increase over time, of which depression has become the main mental illness in Japan and so should be tackled as a matter of priority.

Box 4.1. White paper on “Karoshi”

In October 2016, MHLW published its first white paper on karoshi, assessing the problem of death caused by overwork. Excessive working hours can cause physical and mental exhaustion, impairing health and sometimes leading to death caused by overwork, known as karoshi in Japan. Although recognised as a social problem as early as the second half of the 1980s, it was not until 2014 that a law addressing karoshi was passed.

According to the analysis in the white paper, payments in cases where death was caused by heart or brain failure have fallen slightly since the 2000s. By contrast, compensation payments related to deaths caused by mental illness have gradually risen. In 2017, there were 506 cases where claimants are approved of labour insurance pay-outs due to depression or other mental illness deriving from the heavy psychological burden of work.

A recent MHLW survey1 found that 22.7% of firms had full-time employees who worked more than 80 hours overtime per month. The industries with the highest proportion of employees crossing this line were information and communications (44.4%), academic research and specialist and technical services (40.5%), and transportation and postal services (38.4%).

← 1. https://www.mhlw.go.jp/file/06-Seisakujouhou-11200000-Roudoukijunkyoku/0000124199_1.pdf.

Working conditions are highly correlated with mental health

A variety of socio-economic factors generate job strain, leading to risk of injury and mental ill-health. However, the literature suggests that working conditions play a primary role, including long working hours. The National Institute for Occupational Safety and Health (NIOSH) in the United States has put forward a conceptual framework for understanding the structure of stressors and their effect on mental health. Based on this framework, the OECD has investigated the factors causing mental health problems among Japanese workers using microdata from the Japanese Panel Study of Employment Dynamics (JPSED) in 2015 and 2016. Potential bias in estimating the impact of working conditions on health status because of reverse causality4 has been controlled for by using the panel feature of the JPSED. A more detailed explanation of the estimation methodology is given in Box 4.2.

Box 4.2. Fixed logistic model on mental health

The impact of working conditions on mental health were estimated using the Japanese Panel Study of Employment Dynamics (JPSED) in 2015 and 2016 carried out by the private company, the Recruit Works Institute. For the survey, about 50 000 people were interviewed, covering a wide range of questions, such as family situation, detailed work information, training, job satisfaction and stress situation, etc.

The key indicator of mental health stress is constructed on a scale of 1-5 as an aggregated score based on the following mental-health related information: 1) experiencing headache and dizziness; 2) experiencing backache and stiff shoulder; 3) experiencing heart palpitation and short of breath; 4) feeling tired out; 5) feeling nervous; 6) depressed; 7) no appetite; and 8) trouble getting to sleep. Using these aggregated scores, the top 25 % of the samples are categorised as being a mentally-stressed group and the remaining group is regarded a low-stressed group in the analysis.

The selected explanatory variables are usual working hour per week, current age, and other work and life factors, including: 1) fully using up paid leave entitlement or not; 2) there were colleagues having mental ill-health due to stress or not; 3) able to work in desired way or not; 4) satisfied with human relation in the workplace or not; and 5) work-life balance is stressful or not.

The fixed-effect logit model is used in the analysis to control for an individual specific component (i.e. all unobserved fixed factors) which may bias the estimation due to reverse causality between the health indicators and explanatory variables.

Figure 4.5 presents the marginal effects of individual characteristics, and work and life factors as well. Working hours have a significant effect on mental health especially among men. Persons working 45-59 hours per week are exposed to high mental stress by 5 percentage points more than persons working 40-44 hours. This impact becomes larger as people work longer hours. By age, when controlling for other factors, older men are more likely to report higher mental stress. In particular, working more than 80 hours per week has a substantial impact on stress, which could indicate some cumulative adverse impact of working conditions over careers and lower tolerance of stress at older ages. Thus, special consideration of long working hours may be needed for older workers. The workplace environment and work-life balance factors also have a significant impact on mental health. A lack of work-life balance, in particular, has a strong negative influence on a worker’s mental condition, especially for older women. In addition, it would appear that a worker’s own mental health is adversely affected by exposure to other colleagues who are experiencing mental stress. This suggests that workplaces where some workers may be experiencing mental stress need to avoid placing additional work burdens on other workers and provide adequate assistance and counselling to all workers in dealing with mental health problems.

Japanese labour practices can have an adverse impact on older workers’ job satisfaction and productivity

Older workers are unsatisfied with wage reductions after mandatory retirement

In addition to working conditions, the economic literature suggests that earning losses, such as those experienced by many older Japanese workers following mandatory retirement, can have a significant negative impact on workers’ health, job satisfaction and productivity.5 As discussed in the Chapter 2, the Japanese employment system is one of the biggest factors in deciding the wage level of older workers. Following mandatory retirement, many older workers face significant wage reductions even when rehired in jobs with similar responsibilities and tasks compared with their previous ones. A firm-level survey finds that about 80% of older workers rehired by the same firm do not experience any change in their job duties (JILPT, 2016[8]). On the other hand, the wage rate is significantly reduced after mandatory retirement. The share of those who experience a wage reduction of more than 40% is around 30%, while only 10% of them earn the same as previously.

In general. Japanese older workers are not satisfied with these unbalanced wage cuts against unchanged job duties and working conditions. An individual-level survey asks older workers about their perceptions of wage reductions (JILPT, 2015[9]). Thirty percent of rehired older workers said that the “wage-cut is not convincing because their job duties have hardly changed”, 20.8% declared that the “wage-cut is not convincing because their contribution to the company is not lower than previously” and 17% reported that “although the weight of work responsibility has changed slightly, the wage was reduced too much”.

Individual differences in wages can be a driver to motivate workers to be more competitive and work harder, which may result in better performance. However, perceptions of unjustified wage cuts could reduce workers’ cohesiveness and increase feelings of relative deprivation, which may lead to lower productivity (Pfeffer and Langton, 1993[10]; Franck and Nüesch, 2011[11]; Mahy, Rycx and Volral, 2011[12]).

Older workers have fewer opportunities to use their skills fully

While work duties and tasks for some older workers change little when re-hired after mandatory retirement, and despite large wage cuts, they may change considerably for others. This can lead to the underutilisation of their skills. Some insights into this process can be obtained from the OECD’s Survey of Adult Skills (the so-called PIAAC survey) which gathers information on skill use based on detailed questions about the tasks performed by workers in their jobs. Answers to these questions have been combined to obtain four indicators of job complexity: i) whether workers have a responsibility to supervise other workers; ii) the extent to which individuals engage in planning; iii) the degree of task discretion workers have in their work; and iv) the extent to which their job requires them to exert influence on other individuals (Figure 4.6).

A striking fact is that the use of supervisory skills rises much more steeply with age for Japanese workers than for workers in a number of other OECD countries. This is associated with the Japanese employment system in which new graduates without specific job-related skills are hired by firms into long-term employment relationships immediately after graduating schools. Their mentors, responsible for their on-the-job training to acquire the firm-specific skills they need, are typically young senior employees who started to work several years earlier. Subsequently, as seen in the Chapter 1, workers in their 40s or 50s are promoted to managerial positions requiring more intensive use of supervisory skills. In contrast, while task discretion increases with age, the use of other skills such as planning and influencing are more stable over working careers in all of the selected OECD countries. Japan stands out for the more pronounced decline in skills use for workers after the age of 60, except for task discretion.

These profiles of skill use by age provide evidence in support of the role of age-management practices in Japan which result in many older workers switching to jobs with fewer responsibilities following mandatory retirement which involve less use of the skills than they were using previously in their former jobs. Perceived skill utilisation has consistently been found to be amongst the strongest predictors of job-related well-being and perceived job satisfaction. Thus, improving the opportunities for older workers to fully use their skills should be a priority for the reform of human resource management practices in Japan. It could also help to boost the productivity of older Japanese workers.

Wage reductions and skill under-utilisation have a negative impact on job satisfaction of older workers

The effects of wage cuts and other potential factors on job satisfaction can be estimated using the 11-years Longitudinal Survey of Middle-aged and Elderly Persons in Japan. In this survey, job satisfaction is measured subjectively and evaluated on a five-point score. A logistic regression was carried out where the scores for job satisfaction (the dependent variable) were collapsed to either zero (not satisfied) or one (satisfied). The explanatory variables included the subjective perceptions of respondents concerning their skills utilisation and human relationships6 in the workplace as well as their working hours and log wage rate.

The regression results for workers aged 60 and over indicate that, if they can fully use their skills or that their workplace human relationships are satisfactory, the probability of job satisfaction is increased substantially (by 28% and 17%, respectively). Thus, the large declines in skill utilisation for workers after the age of 60 that are evident in Figure 4.6 Figure 4.7 are likely to translate into large falls in job satisfaction. The impact of 10% wage changes on job satisfaction also has and important impact with an increase of 17% in the probability of job satisfaction. Assuming that this relationship is linear, a 40% wage reduction – of the magnitude that many older workers experience following mandatory retirement – results in an 81% increase in the probability of job dissatisfaction.

Job satisfaction will not only influence an individual’s work performance, but also firm level productivity. Satisfied workers have more motivation and organisational loyalty, and show less counterproductive organisational behaviour and decreased absenteeism. Thus, working conditions are a key factor ensuring that workers remain highly motivated and productive at an older age.

Measures to enhance working conditions for older workers

Recent reforms on reducing working hours go in the right direction but more needs to be done

There has been considerable awareness of the need to reduce excessive overtime hours in Japan. The media have highlighted recent cases of “Karoshi” linked to excessive overtime, which has triggered a national debate about Japan’s work practices and put pressure on the authorities to take action. In response, the Japanese government launched the “Council for the Realisation of Work Style Reform” with the social partners in 2016. A package of work-style reform bills based on the action plan approved by the council was passed by the parliament in June 2018 (see Box 4.3).

Box 4.3. The Work Style Reform package

On 29 June 2018, the parliament approved workstyle reform legislation which is a package of changes to eight laws mainly aimed to change Japan’s long working-hour culture and reduce the gap in working conditions between regular and non-regular workers.

1. Limits on overtime to 45 hours per month and 360 hours per year. These limits can be exceeded in the case of special, temporary circumstances. However, in these cases, overtime for any individual month must be less than 100 hours, the monthly overtime average over multiple months may not exceed 80 hours, and annual overtime may not exceed 720 hours.
2. Establishing a High-Skilled Professional System: a new work option was introduced which exempts employees engaged in certain specialised work from regulations on working hours while strengthening measures for the protection of employee health, such as obligating employers to provide such employees with at least 104 days of annual leave.
3. Ensuring Fair Working Conditions Regardless of Employment Type by setting out rules intended to eliminate an unreasonable gap between the working conditions of regular employees and those of part-time employees, fixed-term employees, and dispatched employees.

One of the main purposes of the reform is to introduce mandatory overtime-hours caps for the first time in the history of Japanese labour regulation. Under the current working hour regulations, employees can work overtime unlimitedly if there is a written agreement between the employer and the representative of a majority of his or her employees. Under the new legislation, overtime work will be limited to 45 hours per month and 360 hours per year in principle. However, there is still an exemption for overtime work with an employer-employee agreement. During busy times, employers will be able to order employees to work beyond the 45-hour limit up to a maximum of 100 hours per month with an agreement but subject to not exceeding an annual limit for overtime work of 720 hours. In addition, the government has set a penalty (of less than 6 months imprisonment and JPY 300 000) for firms that violate these limits. While this policy reform goes in the right direction, it is unclear that this legislation will effectively change Japan’s long working hour culture.

One big concern is that the very long overtime work is still allowed and can exceed the “Karoshi” line of 80 hours per month without incurring any monetary penalty. The analysis above (Section 4.1.2) suggests even working hours of well below 80 hours per week could be harmful for mental health. Therefore, it will be important that the government monitors closely how firms change their working-time practices. If the situation does not improve much, the government should consider additional measures, such as a stricter cap and higher penalty wages for overtime work.

Compliance is also an issue and, in particular, the compliance of small firms should be improved. According to a MHLW survey (2013)7 prior to the most recent changes in overtime regulation, 59% of small firms did not have a labour-management agreement on overtime and holiday work, whereas over 92% of large firms had an agreement. Some 34% of small firms did not realise that they had to submit an agreement to the LSIO (Labour Standard Inspection Office) and 13% forgot to do so. Moreover, a survey8 by the Japanese Trade Union Confederation (RENGO) indicates that some 44% of workers did not realise that employers should have an agreement to be able to order workers to work beyond their regular work time. Therefore, the government should seek to raise the awareness of the system especially for small firms and workers as well.

While the recent reform seeks to strengthen working-time regulations, it also established a scheme for skilled professional workers with high wages which exempts them from these regulations. The scheme makes sense for workers who have autonomy not only to decide their working style but also workload. However, this may not always be the case. As one study observes, workers even under the current “discretionary working system”9 work longer because their work content and workloads are determined by employers or clients (Takami, 2018[13]). To ensure autonomy for this type of workers, workers and employers should agree not only on job responsibilities and working time arrangements but also on their workload. In addition, even though these workers are exempted from the working-time regulations, companies should still be obliged to check that the working hours of these workers are compatible with good management of their health. Again, it will be important that the government monitors closely how the scheme will be implemented at the individual workplace level in terms of working time, health status and compensation.

The government should also consider introducing legal obligations in interval-time regulation (i.e. rest periods between periods of work) that would be applicable to all workers. The Japanese government is well aware of this necessity. The MHLW already established the Overtime Work Improvement Subsidy (Jikangai Roudou tou Kaizen Zyoseikin) from fiscal 2017, and encourages the introduction of rest time for small and medium-sized enterprises. In addition, the recently revised Act on Special Measures for Improvement of Working Hours Arrangements will require firms to make “efforts” to set the interval rest time. However, relying on voluntary efforts by firms may not be sufficient. At present, only 1.4% of firms have introduced this system according to the General Survey on Working Condition 2017, which indicates that, even with a monetary incentive, firms’ voluntary efforts are likely to be limited. In addition, the target of the subsidy is modest. Currently, to receive the subsidy, firms need to establish an interval rest time of at least 9 hours in their rules of employment. Compared with the EU directive on working time10 ensuring at least 11 consecutive rest hours per day, this requirement is not very onerous for firms. Moreover, commuting time in Japan is the second longest among OECD countries (OECD, 2016[14]). Thus, it may be desirable to introduce enough mandatory rest time taking into consideration commuting time. For health reasons and for a better work and life balance, this regulation should also be applied to discretionary workers and high-skilled professionals who are exempted from overtime regulations.

Job strain needs to be addressed more effectively

While long working hours should be tackled to improve the well-being of older workers, a general prevention scheme for mental health in the workplace is necessary in view of the growing absenteesm attributable to mental ill-health. Moreover, poor mental health results in poor job performance and productivity losses (OECD, 2015[15]).

In Japan, with the amendment of the Occupational Safety and Health Act of 2014, a new “Stress Check System” was mandated in firms with more than 50 employees from December 2015. The purpose of the system is to: 1) decrease the risk of mental health problems in workers through periodic surveys and feedback; 2) decrease work-related stressors by analysing stress survey results and improving the work environment; and 3) prevent mental health problems by screening for high-risk workers and providing them with opportunities for interviews with a physician (Kawakami and Tsutsumi, 2016[16]).

Scientific risk assessment and management at the workplace has been encouraged by a number of international bodies (WHO, ILO). While recent Japanese policy initiatives in this area are welcome, there is room for improvement of the stress check scheme in Japan. Enforcement of the stress check is a key issue. As of June 2017, about 17% of firms with 50 employees and more did not implement the stress check for employees. This non-implementation rate becomes higher the smaller firms are. Thus, the government should take further measures to ensure implementation of the system and consider to expand coverage of the legal obligation to smaller firms, taking into account cost issues.

Another key gap is the lack of legal obligations for small establishments with less than 50 workers, although they are encouraged to make efforts by the act. This is critical as almost 95% of workers are employed in these smaller establishments. It will therefore be important to cover those employees. Strengthening the outreach service for small establishments by the Industrial Insurance Center (“Sangyou Hoken Sogo Center”) could be a good option for better mental health prevention.

Even where firms provide opportunities for workers to take the stress check as the law requires, not all workers diagnosed as highly stressed seek appropriate medical treatment due to a lack of information about the stress check test and potential stigma effects. According to one study (Kawakami and Tsutsumi, 2016[16]), only a limited fraction of highly stressed workers underwent a medical interview. The government should make more efforts to increase awareness of employers on proper implementation and follow-up of the stress test. In addition, under the current scheme, workers have to make a request to their employers before taking a medical interview. However, this process would discourage stressed workers to do so because informing firms of their job strain may damage their personnel evaluation. The process to inform employers should be revised to protect workers’ confidentiality and anonymity.

One area of potential interest which could be developed further is in carrying out “collective analysis” in which the diagnostic results of the stress test are statistically analysed to identify problematic workplaces and used to improve workplace-level management. This could be a new data-driven management method if linked with high performance work practice information so that more healthy practices could be identified. In addition, building upon the recognition that the workplace is a core determinant of peoples’ health, the scope of the analysis should be broaden to include other health data, such as the national data base of medical fee receipt information11. Better data on working conditions more generally are needed to identify the links between work and health. For example, the European Working Conditions Survey is carried out every five years and provides a wealth of data on the working conditions of workers and their health status which can be analysed by a range of firm and worker characteristics.

It is also important to strengthen the functions and responsibilities of industrial physicians. Currently, industrial physicians cover a wide range of occupational health activities, such as participation in the health committee, workplace monitoring and improvement of the workplace environment, implementation of health check-ups and follow-up treatments, interviews on overwork, etc. In the process of the stress check, industrial physicians have a key role to improve workplace practices. Nevertheless, for a better implementation of the stress check scheme, there needs to be closer cooperation and coordination between management and industrial physicians as well as with other health professionals such as psychologists. Other countries have taken a range of approaches to ensure a more joined-up approach to improving health at work through a range of preventative measures such as obligatory psychosocial risk assessment of working practices or the use of financial incentives to improve working conditions such as experience-rating of accident, sickness and disability insurance premiums paid by employers to cover their workers (see Box 4.4). Some of these initiatives could serve as useful examples for Japan to strengthen its policies to promote healthier working conditions.

Box 4.4. International examples of strategies to improve health at work

Finland: As part of the National Working Life Development Strategy to 2020, which was introduced in 2012, various measures to prevent ill-health as a result of work are widely available to the working population at all ages and especially to people aged 45 and over.1 In addition, through the so-called “age bus stop” in occupational health centres in some municipalities, a full medical screening is provided free of charge. This allows the early recognition of diseases that are not readily conspicuous (de la Maisonneuve et al., 2014[17]).

Austria: The fit2work programme, rolled out nationwide in 2013, provides information, counselling and support to employed or unemployed persons with health problems, and to employers in need of information on health and work.2 The assistance is voluntary, confidential, and free of charge. It thus serves as a nationwide low-threshold counselling service to reduce periods of sick leave, sustain working ability, and prevent job loss or early retirement for health reasons. The programme is coordinated by the federal Ministry of Labour, Social Affairs and Consumer Protection, and financed from the labour market budget, by social insurance institutions (pensions, health and accident insurances) and the Federal Social Office. The Public Employment Service, the Labour Inspection, the social partners, and the federal Ministries of Health, Finance, Economy, Family and Youth are also involved (OECD, 2018[18]).

Switzerland: The Accident Insurance SUVA is also implementing preventive measures and is counselling companies (OECD, 2014[19]).

Germany: In 2007, the Joint Health and Safety Initiative was set up to improve safety and health protection in workplaces. To ensure that measures are not carried out in a sporadic fashion, it was conceived of as a joint undertaking between the federal government, the federal states, accident insurance funds, and the social partners. Joint health and safety centres provide around eleven work programmes in industries where prevention of poor health as a result of work is particularly important (construction and assembly work, temporary work, work in wet conditions, activities with irritant substances, office work, company-based and public transport, nursing, asymmetric and restricted-motion activities at production workplaces and in the food industry, precision installation activities, and work in catering and hotels) and also work to raise awareness of occupational safety and health in schools (OECD, 2018[20]).

United Kingdom: The Department for Work and Pensions developed a specific initiative for providing small and medium-sized businesses with a greater capacity to deal effectively with health issues and sickness absence, through measures such as the national occupational health advice services. These provide employers and employees in small and medium sized businesses with easy access to quality, professional, tailored advice on individual employee health issues, including mental health and well-being (OECD, 2018[21]).

European Union: The European Agency for Safety and Health at Work (EU-OSHA) E-guide “Health and safety at work is everybody’s business” is a practical tool to help employers and workers manage occupational safety and health in the context of an ageing workforce.3 The E-guide offers simple explanations of the issues, along with practical examples of how to deal with risks relating to ageing and how to make sure that all workers stay safe and healthy in the long term, as well as links to further resources. In 2014-15, a European campaign – “Healthy-workplaces – manage stress well” was launched, which was followed by another two-year European campaign, “Healthy workplaces for all ages”, in 2016-17.

Belgium: As from 2005, the Occupational Experience Fund financially supports companies for projects intending to improve the quality of jobs of workers aged 45 and over (occupational safety, health, ergonomics and psychosocial charge).

Denmark: The Fund for Better Working Environment and Labour Retention launched “prevention self-help kits” with financial assistance to enterprises in 2012 (OECD, 2015[22]). These provide step-by-step instructions for improving health and safety conditions and employees’ health in industries with a high risk of early exit and burnout. A special “Senior Starter Kit” was introduced in 2013.

Sweden: The Swedish Work Environment Authority has issued provisions on workplace adaptation and rehabilitation, where it is stated that the employer must adapt the working situation to the aptitudes of each individual workers, as required by the Work Environment Act. The authority issued a regulation that all employers are responsible for conducting systematic work environment management, called SAM, in the workplace. SAM is a system, in force since 2001, which is designed to incorporate work environment management as an integral part of everyday work. SAM also includes a risk assessment, which requires all employers to take account of and investigate psychological and social conditions, as well as issues of a physical nature with the aim of preventing accidents, illnesses and injuries. SAM is assessed by inspectors from the Work Environment Authority (OECD, 2018[23]; Fries-Tersch and Said, 2016[24]).

The Swedish Occupational Health Service (Företagshälsor) is a trade association for occupational health and safety consisting of about 150 companies with 500 offices that provide expertise in the field of working conditions and rehabilitation. Employers can hire occupational health and safety consultants (e.g. nurses, doctors, physiotherapists) who work on the prevention or rehabilitation of work related injuries, for assistance with the investigation of occupational injuries, substance abuse and stress. Occupational Health Services may also be called upon by the Social Insurance Agency to help assess the work capacity of workers with long-term sickness absence from work. The Swedish Government allocates grants to providers of occupational health services in order to provide services for the medical prevention, investigation and treatment of work-related and non-work-related illnesses and injuries (OECD, 2018[23]).

Canada: The federal government established the Mental Health Commission of Canada (MHCC) in 2007 to maintain an ongoing national focus on mental health issues. The MHCC’s role is to act as a catalyst for improving the mental health system and for changing the attitudes and behaviours of Canadians related to mental health issues by bringing together leaders and organisations from across Canada. On 8 May 2012, the MHCC unveiled a new “Mental Health Strategy for Canada”. It included a new “National Standard of Canada for Psychological Health and Safety in the Workplace”, which was released in January 2013. The Standard sets out a framework that offers guidance to Canadian businesses and organisations in creating psychologically healthy and safe workplaces. This process includes: i) identifying and eliminating hazards; ii) assessing and controlling the risks associated with hazards; iii) implementing practices that support and promote psychological health and safety; and iv) fostering a culture that promotes mental health and safety. The compliance component of the Standard is the establishment of a psychological health and safety management system (PHSMS), which can help employers to recognize, evaluate, and plan for these risks. Although the Standard was not developed specifically for older workers, the implementation of a PHSMS could be of direct benefit for them through a reduction in disability and injury rates. The Standard has received very positive responses from unions, employers, employees and the media, and has been adopted fully or partially by a number of businesses, universities and provincial governments.

France: The “personal occupational hardship account” (Compte personnel de prévention de la pénibilité), established by legislation in January 2015, gives employees who are exposed to occupational risk factors extra ‘points’, which are credited to a personal account (OECD, 2014[25]). These points can be used to attend a vocational training programme to move on to less exposed jobs, finance a period of part-time employment or acquire pension rights and thus retire earlier. As most employers have not been supportive of this account, which they consider very complex to implement, the new government is currently redesigning this account.

← 1. http://www.tyoelama2020.fi/files/104/Strategy_2020.pdf

← 2. www.fit2work.at (accessed 22 January 2018).

← 3. https://healthy-workplaces.eu/en/healthy-workplaces-all-ages-e-guide.

← For more information, see: www.mentalhealthcommission.ca/English/issues/workplace/national-standard.

Strengthening the role of labour inspectors

Proper application of labour legislation depends on an effective system of labour inspectorate. As workplace issues become more prominent and complicated, the role of labour inspectors in monitoring working conditions has become more important. Across the OECD they are involved in carrying out controls, imposing fines and providing consultancy services.

With regard to health issues, the ILO points out that increasingly inspectors are directly involved in workplace risk prevention strategy: “The inspector is playing a proactive, anticipatory role, operating directly within the workplace” (ILO, 2011[26]). Some country examples of the role of labour inspectors in relation to the working conditions of older workers are provided in (Box 4.5).

Box 4.5. International examples of the role of labour inspectors in promoting occupational health and safety

Estonia: The Occupational Health and Safety Act obliges employers to conduct risk assessments, which involve identifying workplace risk factors and assessing the potential risks to employees’ health and safety, taking their age and gender into account. Since 2009, the employer is also required to devise an action plan to address and avoid safety and health risks for their employees on the basis of the risk assessment (OECD, 2018[27]). The Estonian Labour Inspectorate regularly carries out different activities to raise awareness among employers and employees regarding the importance of good working conditions. The Estonian Labour Inspectorate publishes a journal on this four times a year (“Working Life”). It organized a campaign on working with machinery in 2017, and campaigns on the right to instruction, job contract negotiations and healthy workplaces for all ages (with EU-OSHA) in 2016.1

Lithuania: Since 2013, it is mandatory for all employers to prepare and submit a declaration on occupational safety conditions in their enterprises to the State Labour Inspectorate. Regional inspectorates monitor whether or not employers are in compliance with the requirements of collective agreements in relation to contract award, execution, and completion. Their task also includes checking for discrimination related to older and disabled workers and ensuring equal opportunities for development (Kaminskas Kazys Algirdas and Fries-Tersch Elena, 2016[28]). An increasing focus of the work of labour inspectors is on prevention, advice and consultation. Labour inspectors have developed risk assessment and inspections often targeting smaller businesses and specific sectors which are most likely to infringe law. However, sanctions may be too low to effectively dissuade violations (OECD, 2018[29]).

Germany: Since March 2009, the Committee of the Länder for Occupational Safety and Health (LASI) has been producing handbooks and checklists for inspectors, as well as organising training courses, with the aim of mainstreaming psychosocial risks into the inspection procedures of the federal states.

Denmark: Labour inspectors include trained psychologists and, since 2000, the labour inspectorate has produced a publication entitled Surveying the psychosocial environment, to inform the general public on approaches to such risks and to serve as a handbook for inspections (ILO, 2011[26]).

Austria: Since 2007, the Austrian labour inspectorate has prioritised advising and monitoring actions in small and medium-sized enterprises (SMEs). The aims of the strategy include: motivating companies to analyse the workforce’s age structure; identifying harmful work processes and practices that could be specifically linked to age; and establishing age-friendly working conditions. Since 2013, special guidelines for the various labour inspectorates have been developed on the website of the Austrian Labour Inspection, in addition to a range of leaflets for experts and companies.12

← 1. See http://www.ti.ee/est/meedia-trukised-statistika/teavitustegevus/kampaaniad/ (available in Estonian only) for further information.

Tackling labour market dualism and ensuring equal pay for equal work

Both older workers after manadatory retirement and many women at all ages are likely to be working as non-regular workers. Consequently, they may face a large gap with regular workers in terms of wages, training opportunities and poorer working conditions, all of which may perpetuate their vulnerable positions. The Japanese government is aware of the importance of the “Equal Pay for Equal Work” (EPEW) to deal with the differential treatment in working conditions between regular and non-regular workers. As part of the workstyle reform legislation package, the Act on Improvement of Employment Management for Part-Time Workers, the Labour Contracts Act and the Worker Dispatching Act were amended to rectify unjustified discrimination in terms of the working conditions of part-time, fixed-term contract and dispatched workers. The revised acts require that employers must consider the reasonableness of differences across contract types in each component of working conditions considering its nature and purpose. According to legislative requirement, the government will release a guideline which shows what gap of each component in working conditions is reasonable or not.

These policy initiatives are steps in the right direction to achieve a more inclusive and fairer labour market. However, the weakness is that the legislation focuses only on the differential treatment of regular and non-regular workers. The EPEW concept is intrinsically interlinked to how jobs are defined while considering a reasonable wage level of corresponding jobs. A more comprehensive approach is needed to promote equal pay not only between regular and non-regular workers, but also among regular workers. This includes requiring firms to provide more detailed job descriptions. Currently, job duties of Japanese regular workers are not stipulated by any detailed job description including the range of job duties, expected responsibilities, required skill sets, etc. Thus, employers have wide discretionary powers in terms of personnel management13 and the wage level of regular workers is typically decided by a worker’s vocational competency closely related to tenure, but on weakly related to their job and performance. Moreover, non regular workers are not evaluated by the same standards as regular workers.

Japanese wage setting practice in the private sector could be influenced by governmental initiatives and case law. The Japanese government has started to discuss extending the mandatory retirement age of government officials until the age of 65 from the current age of 60 by 2033. In the process of the extension, it will consider reducing the wage level of older officials beyond the age of 60, consistent with labour practice in the private sector. However, as mentioned previously, this could have an adverse impact on the motivation and productivity of older workers. Given the necessity in Japan of extending working lives further, it is time to change age-management practices. The government could be a role model of personnel management for private firms to develop a new personnel system.

In June 2018, the Supreme Court decided on two ground-breaking cases14 which were filed by fixed-term employees including re-hired older workers to ask for equal treatment in the working conditions with permanent employees in the same firm based on article 20 of the Labour Contract Act. The court judged differences in the individual working conditions are not unreasonable if balanced treatment or equal treatment are ensured according to details of job duties, possibility of change of duties and job responsibilities. While the High Court approved that differences in working conditions are valid because the labour practice to reduce wage level after mandatory regiment is widespread, the Supreme Court has not supported this view. The guideline for EPEW that the government will release should help shift Japanese labour practices toward a fairer system.

More generally, the importance of non-regular work has increased over time, driven in part by a large gap in the strictness of employment protection legislation with respect to regular and non-regular employment. Continued efforts should be pursued by the Japanese government to reduce this gap and, hence, the incentives of firms to hire workers on non-regular contracts as a way of reducing their labour costs.

Ensuring a better work-life balance

Difficulties in reconciling work and care are holding back labour force participation

A key aspect of job quality is workers in their jobs can find a good balance between work and family responsibilities. This not only affects the well-being of workers but also their decision to continue working or to take up work, especially for women. Recently greater attention has been devoted to managing work and family care responsibilities. The Employment Status Survey reveals that, between 2012 and 2017, about 500 000 workers left jobs due to family nursing care, of which the top reason was “the workplace issue where it is difficult to balance work and family care” (about 60%), followed by “deterioration of physical and mental health” (around 30%) according to the MHLW survey15. As the working-age population is decreasing and labour shortages rising, this is becoming an increasingly pressing issue for companies to tackle in order to prevent employees from leaving. Since 2010, there has been a considerable increase in the number of workers quitting their jobs each year because of family care responsibilities, with a considerable share of these workers aged 50 and over (Figure 4.8).

In 2016, the Japanese government announced “Japan’s Plan for Dynamic Engagement of All Citizens”. One of the targets of this plan is that “No one will be forced to leave their jobs for nursing care”. In order to achieve this target, it is proposed to expand care facilities and their personnel along with policies to create a workplace environment where workers are encouraged to take nursing care leave by making this leave more flexible and the benefits more generous. Whether these policies succeed or not, however, depends heavily on corporate culture as well as the situation of the nursing-care labour market.

In terms of the nursing-care labour market, the government has decided to expand the number of nursing care facilities for the elderly in need of long-term care and increase the number of new caregivers by 500 000 by the beginning of the 2020s. However, according to the MHLW, the job openings to applicants ratio in the nursing care sector is approximately two times as large as the average for all industries, so that this sector already struggles to hire new people as the labour market becomes the tightest in decades. The MHLW has projected that, while there will be a demand for 2 530 000 care workers in 2025, the prospect for the supply of these workers is only 2 152 000. It is noted that the mismatch is mainly caused by lower wages in the sector compared with other industries. In addition, since it is still a young industry, future career paths of workers are unclear so that young graduates are reluctant to enter in the field. Therefore, along with subsidies that motivate companies to improve treatment of care workers, the government is required to improve social perceptions about the attractiveness of working in the care sector.

The revised Child Care and Family Care Leave Act (CCFCLA) 2017 offers flexible nursing care leave options and encourages firms to create a workplace environment where workers can balance nursing care duty and work. It allows workers to take nursing care leave three times during the care period for up to 93 days which was supposed to be taken only once previously. In addition, it became possible to use care leave as a half-day up to five days per year with one family member requiring care or ten days per year with two or more family members. The act requires firms to exempt long-term caregiving workers from overtime work, while previously exemptions were only available for childcare leave purposes. Although such efforts are welcome, the fact that many workers do not yet know of the existence of nursing-care leave entitlements in their workplaces should be noted. Therefore, further efforts should be undertaken by the government to promote the awareness and use of nursing care leave entitlements among companies and workers.

Even if they know about these entitlements, many of the workers are hesitant to use their rights in workplaces. According to the Employment Status Survey 2017, the fraction of workers with nursing families who actually used the system was only 1.2%, which dropped by 2.0 percentage points from the 2012 survey. The government should strongly urge companies to promote a family-friendly environment for workers to balance nursing care and work. Policies that give incentives to workers and employers to encourage the use of nursing care leave systems are important (see Box 4.6 for some international examples). In particular, subsidies for companies in which more workers use the system and companies that encourage worker to telework could be useful tools.

Box 4.6. International experiences on balancing working life and care responsibilities

Belgium: The time-credit system created in the mid-1980s has been revised several times. From April 2017, the entitlement to time credit on the ground of “care” was extended to 51 months (48 months in the past). This covers: caring for a child under the age of eight; providing palliative care; providing assistance or care to a member of the household or the family with a serious illness; caring for a disabled child under the age of 21; and providing assistance or care to a minor child with a serious illness (OECD, 2018[30]).

Germany: In 2008, the Home Care Leave Act was passed, easing the reduction of working time and improving the conditions for switching temporarily to part-time work or for taking specific leave when caring for (elderly) parents. The law on better combining care, family and work came into effect on 1 January 2015. It introduced the right to take care leave for a period of up to 24 months (OECD, 2018[20]).

United Kingdom: From 1 April 2015, the Care Act 2014 gave new duties to local authorities in England to assess and support adult carers. To determine whether carers are eligible for support, local authorities must assess the impact of caring on a carer’s well-being and consider the carer’s ability to achieve certain outcomes. One of the relevant outcomes is “engaging in work, training, education, or volunteering”. This means that, where relevant, local authorities are to support adult carers in maintaining or re-entering employment and training. Such support could include, for example, working with them to put a plan in place to ensure that the person they care for is looked after while they are at work (OECD, 2018[21]).

There is much potential for older workers in self-employment

Self-employment is an underutilised but increasingly important pathway for older workers to continue working after the age of 60. According to the Employment Status Survey, those who wish to start a business has declined from 1.67 million in 1997 to 0.73 million people in 2017 (Figure 4.9). Similarly, the number of entrepreneurs who started a new business in the past year also decreased from 287 thousand in 1997 to 236 thousand in 2017. However, by age, the share of entrepreneurs aged 60 or older has risen substantially. Currently, female and older entrepreneurs account for around 30% each of the total. According to the White Paper on Small and Medium enterprises in Japan 2014, women tend to run small enterprises that are rooted in the needs of their lives. On the other hand, the motivation of older entrepreneurs is different. They wish to use their experience and knowledge and contribute to society. The Japan Survey on New Business Activities 201716 reveals that 95% of entrepreneurs have worked as employees prior to becoming entrepreneurs, of which 85% were regular workers before starting their business.

Promoting self-employment could help older workers remain in employment longer as well as open up greater employment opportunities for women. However, in order to foster greater entrepreneurship, a broad strategy is required that starts early with the teaching of entrepreneurial skills in schools. The government should also facilitate contact with successful entrepreneurs who can act as mentors. It can also help to change social perceptions as many Japanese people do not think that being an entrepreneur is a good career choice.

Improve experience for entrepreneurship

Prior to starting a business, most people already have work experience. However, it would facilitate the transition if workers could combine their main jobs with a side job as an entrepreneur. Currently, there is no law regulating concurrent business or side jobs in Japan. However, most companies set their employment contracts using the contract model released by the Ministry of Health, Labour and Welfare, in which there is one provision for prohibiting concurrent or side jobs. The model 2018 version has deleted that provision in order to promote concurrent or side jobs in companies so that more and more people may experience work variety in the future. However, this will depend on changes in long-working hour practices in Japan since side jobs and concurrent business are carried out outside of core business hours. Changing Japanese labour customs and effective implementation of working hour regulation should be strongly pursued.

Promotion of social business of the elderly

As local communities are ageing, a wide range of social issues is emerging. These challenges require community-based and tailor-made approaches to respond to the complicated and more specific needs in the community which may be difficult for local government on their own to solved. Not only local governments, but also more players closely connected to communities may be better at providing such services. One possible solution could be social entrepreneurship17 including non-profitable organisations. The establishment of these social entrepreneurship initiatives should be encouraged and supported drawing on best practice in other countries.

Summary and recommendations

Job quality is an important determinant of well-being for older workers and plays an important role in their decisions to continue working or to return to work. By international standards, the quality of working conditions as measured by job strain (the difference between job demands and job resources) is poor on average in Japan compared with some other advanced OECD countries. This may be deterring some older people from working longer and preventing some women, especially mothers, from entering employment at younger ages and pursuing longer work careers.

There are a number of areas where more could be done to improve job quality for older workers in Japan and to increase opportunities for them to continue working at an older age. This includes: tackling labour market dualism; tackling excessive hours of work; better age management practices to utilise more fully the skills and abilities of older workers and improve work-life balance; and greater opportunities for self-employment. More generally, better data is needed on working conditions in Japan to provide the evidence base to guide effective policies.

Action on all of these fronts will require a coordinated approach from the government, employers and worker representatives as well as civil society representing older people.

Box 4.7. Key Recommendations

Monitor closely how firms are changing their working-time practices as a follow-up to the revised regulations to tackle excessive working hours. If the situation does not improve much, the government should consider taking additional measures, such as a stricter cap and higher penalty wages for overtime work.
Monitor closely how the scheme which exempts skilled professional workers with high wages from overtime regulation is being implemented. This should be carried out by the government at the individual workplace level in terms of working time, health status and compensation.
Consider introducing interval-time regulation (i.e. rest periods between periods of work) that would be applicable to all workers.
For a better implementation of the stress check scheme, ensure closer cooperation and coordination between management and industrial physicians as well as with other health professionals such as psychologists to follow-up results of the stress test.
Improve data on working conditions to identify the links between work and health. The European Working Conditions Survey provides a possible model for the type of data that should be collected.
Inspired by good practice in other OECD countries, develop a more joined-up strategy to promoting healthier working conditions through a range of preventative measures such as a more systematic and obligatory psychosocial risk assessment of working practices. This could include more extensive use of financial incentives such as experience-rating of accident, sickness and disability insurance premiums paid by employers.
Strengthen the role of labour inspectors to improve working conditions, drawing on international best practice, which would include an advisory role in addition to their compliance role.
To promote more effectively equal pay for equal work, especially for older workers switching status from regular to non-regular workers following mandatory retirement, the government should require firms to provide more detailed job descriptions. The government could be a role model of personnel management for private firms by developing a new personnel system for public officers.
As a follow-up to the important revisions in the Child Care and Family Care Leave Act in 2017, further efforts should be undertaken by the government to promote awareness and use of nursing-care leave entitlements among companies and workers. Take-up should be strengthened through incentives to workers and employers.
Employers, in cooperation with worker representatives, should be encouraged to develop and share best practice in adopting age-management practices that utilise more fully the skills and abilities of older workers and provide workers at all ages with the flexibility required for a good work-life balance.
The government in cooperation with employers and civil society should take action to promote self-employment, including social entrepreneurship, as an attractive pathway to working longer for older people as well as to open up greater employment opportunities for women at all ages.

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Notes

← 1. Female and older workers account for around 90% of the growth of non-regular workers in Japan from 2004 to 2014. (MHLW, 2015[31]).

← 2. Using the natural experiment of an extra wage hike, the empirical facts suggest that the labour demand side has more influence on employees’ working hours. (Kawaguchi, Naito and Yokoyama, 2008[32]; Kuroda, 2017[33]).

← 3. For more information, see (JILPT, 2016[34]).

← 4. For example, individuals having innately good resilience and health might prefer hard work and longer working without damaging their health condition in order to increase their earnings and career prospects. In contrast, individuals with more fragile health may choose less onerous working conditions.

← 5. There is substantial evidence pointing to the positive relationship between wage, job satisfaction and worker productivity The meta-analysis of (Judge et al., 2001[37])confirmed that there is a positive correlation between job satisfaction and productivity. In addition, (Judge et al., 2010[38]) find there is a causal relationship between wage levels and job satisfaction.

← 6. The questionnaire asks people about their perception on if they are satisfied with skill utilisation and human relationship in workplace using a 5-point scale.

← 7. https://www.mhlw.go.jp/content/11201000/000357447.pdf

← 8. https://www.jtuc-rengo.or.jp/info/chousa/data/20170707.pdf

← 9. The discretionary labour system enables employers to pay employees according to a fixed number of hours that they determine in advance as opposed to the actual number of hours worked, while employers have to give enough discretion to workers to complete their task.

← 10. https://www.nippon.com/en/currents/d00088/

← 11. Ishikawa (2016[35]) presents recent usage of big data in the medical field in Japan.

← 12. www.arbeitsinspektion.gv.at (accessed 22 January 2018).

← 13. https://www.nippon.com/en/currents/d00088/, (Tsuru, 2017[36]) discusses more comprehensive issues generated from Japanese employment system from a comparative institutional perspective.

← 14. http://www.courts.go.jp/app/files/hanrei_jp/785/087785_hanrei.pdf.

← 15. https://www.mhlw.go.jp/bunya/koyoukintou/dl/h24_itakuchousa05.pdf.

← 16. https://www.jfc.go.jp/n/findings/pdf/topics_171221_1.pdf.

← 17. In European countries, discussions on social enterprise hve already been progressing in response to community interest. The European Commission adopted in 2011 the Social Business Initiative (SBI), which aims to support the development of social enterprises by improving their access to funding, raising their visibility and fostering a friendlier legal environment (OECD/EU, 2017[39]).

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