Japan's Worker Shortage : Planet Money Japan's worker shortage has gotten so bad it's forced some companies to declare bankruptcy. The solution? Telling workers to work less.
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Japan's Worker Shortage

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Japan's Worker Shortage

(SOUNDBITE OF MUSIC)

SALLY HERSHIPS, HOST:

So I was at this party recently at the residence of the Japanese ambassador to New York - totally no big deal, by the way. I go to these things, like, all the time.

CARDIFF GARCIA, HOST:

Sally Herships, we love having you on the show.

HERSHIPS: (Laughter) Thank you. Well, at this party - since I know you want to know - there were cherry blossoms and ceremonial drums of sake and a lot of sushi. The party was to celebrate because 2019, it is a really big deal for Japan.

GARCIA: Yeah, the country has declared a new era known as Reiwa, or beautiful harmony. There's a new emperor. The Olympics is coming up next year in Tokyo. But unfortunately, there's also something else. Japan has been experiencing a critical decline in its birthrate, which has led to a massive labor shortage in some parts of the economy. The country is running out of workers.

HERSHIPS: And that problem is something that Masaru Sato talked to me about. He's deputy consul general at the Consulate General of Japan in New York. He was my host at the party.

MASARU SATO: We have been experiencing labor shortages bankruptcies. Can you believe that?

HERSHIPS: So there are companies that went bankrupt because they weren't enough workers.

SATO: Yes, that's correct. I had difficulty understanding that news. But that is happening.

GARCIA: OK. So critical labor shortage, a labor shortage so bad that companies in some industries are going bankrupt because they cannot find enough employees - now, you might think that the way to solve this problem, at least temporarily, is to get workers to work longer, to put in more hours. But that is actually not the solution that Japan is pursuing.

HERSHIPS: Nope, not at all. Instead, to solve its problem, Japan is asking its workers to work less. It is actually writing this into law. The country of Japan is putting a cap on the number of overtime hours its residents can work. Why? Why would the country do this?

I'm Sally Herships.

GARCIA: And I'm Cardiff Garcia. Today on the show, we explain why Japan, a country caught in the grip of a critical labor shortage, is trying to solve the problem by actually having its workers work less.

(SOUNDBITE OF MUSIC)

HERSHIPS: So to understand why Japan is trying to solve this problem of not enough workers by asking workers to work less, first, you have to know one incredibly important fact about the Japanese. The country is known for the extremely long hours its workers put in. And those long hours, they are a problem. According to Japan's Ministry of Health Labor and Welfare, about 700 Japanese workers die each year from overwork. There is even a Japanese word for it, karoshi. Workers die from heart attacks, strokes, some even suicide, which is incredibly troubling.

GARCIA: And those long hours have brought on another problem. The number of babies born last year in Japan was the lowest since the country started keeping track in 1899. Japan's population is shrinking - drastically. And the country desperately needs people to stay home and make babies.

HERSHIPS: Which, I would like to point out, that you cannot do - or at least shouldn't be doing...

GARCIA: It's bad...

HERSHIPS: ...At the office.

GARCIA: It's bad practice, yes.

HERSHIPS: (Laughter) Right. Yes.

GARCIA: And so at stake here is the future of the country. And these reasons are why Japan wants to implement a cap on the number of overtime hours its workers can put in to attract more workers, to prevent karoshi and to let people try to achieve work-life balance so that they can stay home and make babies.

HERSHIPS: But trying to get the Japanese to work less could be tough because what we're talking about would not just be a change in corporate culture, but also the country's culture.

Why do the Japanese work so much?

STEVEN VOGEL: Well, most people feel that it's not that the amount of work required is so high. It's that you're actually feel intense social pressure to kind of stay no matter what.

HERSHIPS: Steven Vogel researches the political economy of industrialized countries, especially Japan, at UC Berkeley.

VOGEL: For example, there is a feeling that you shouldn't leave the office before your boss. You know, it's kind of considered to be disloyal if you leave the office too early.

GARCIA: So workers in Japan, they just kind of stick around the office. So Japan's new plan, capping overtime, is part of a larger piece of legislation which came into effect on April 1 of this year. And it is meant to improve the workplace as a whole - not just by ending karoshi, or death by overwork, it's also meant to attract more workers to offset the country's labor shortage. This could include foreign workers, senior workers and one other critical group. That group is women.

HERSHIPS: I mean, I'm a fan of the working woman.

VOGEL: So one of the obvious ways to resolve that would be to have higher participation by women. But unless you improve the working conditions, you're not really going to be - have more women in the workforce.

HERSHIPS: Working moms in Japan face some pretty serious barriers if they want not just a part-time job but a real deal career. There are those long hours - not to mention, Japanese dads help around the house less than dads in other rich countries. So Japan is notorious for the number of women who, after giving birth, return to work only to quit or just work part time. Japan did pass an equal opportunity law back in 1986, but there is the intent of a law versus the letter.

VOGEL: You know, on paper, the Japanese law is very equitable. But the practice isn't.

GARCIA: Japan has been making a big push to get more women into the workforce, and it has had some success. But that success has come with a catch. Gender discrimination is illegal in Japan, but it's not illegal for there to be two different tiers of workers. So there's this group of permanent full-time jobs. And these jobs tend to be more demanding, where you're expected to stay till 11 o'clock at night and go drinking with the boss. And so those jobs, they tend to end up going to mostly men. Then there's this other group of jobs, part-time temporary jobs. And women are more likely than men to end up in those jobs because they're expected to stay home and take care of the kids.

HERSHIPS: So women in Japan, they often end up feeling like they have to choose - have kids and maybe work part time, or skip the kids and the family and go for a career instead. And this is what Japan is hoping to change with its overtime cap. But making these kinds of changes could be really tough, even if they're written into law.

GARCIA: Here's how the new legislation works. If you are a Japanese worker, you are allowed to work no more than 45 hours of overtime a month. That sounds great. But if you just do a little back-of-the-napkin math, that actually comes out to roughly two hours a day every single workday in the typical week. So that's still a considerable amount of overtime you're putting in.

HERSHIPS: Yeah. And because Japan's labor shortage has hit certain industries especially hard, some workers are exempted altogether. The Olympics is coming up. So if you work in construction, drive a truck or a taxi, you are exempt for five years.

GARCIA: Now, it's not the entire Japanese economy that's experiencing a labor shortage - because wage growth actually is kind of sluggish in Japan. And the reason is that a lot of the new jobs, they're going to part-timers. Still, Vogel says he's optimistic because, he says, Japanese companies tend to follow the rules. So if you change enough of those rules, eventually the companies are going to get on board. And they're going to hire more foreign, senior and women workers full time. And Masaru Sato at Japan's Consulate in New York, he says there are times that Japan has succeeded in making big cultural changes.

SATO: We used to have four classes - warriors, farmers, artisans and tradesmen. But we, you know, eliminated this class discrimination and gave equal opportunity, basically, to all members of society. Now we are trying to do the similar thing.

GARCIA: What Sato is saying here is that the Japanese workplace is trying to become more inclusive for women, older workers and foreign workers - or at least the Japanese government really wants the workplace to become less discriminating towards these groups of people. And if you are worried because the big cultural shift that Sato was talking about was 150 years ago, he knows it. But, he says, change is happening in today's Japanese workplaces.

HERSHIPS: What do you say to skeptics, people who say - in Japan, people work these really long hours; we can't change the culture?

SATO: Actually, it may take a generation, but the change is already taking place. And if you ask younger workers, they have to stop work after, you know, 6 o'clock or 7 o'clock because, otherwise, the company management will chase you - make sure that you are not working.

HERSHIPS: It's almost 8:30 at night. So maybe we should finish the interview so you set a good example.

SATO: Yeah, because we are only allowed to work overtime, on average, two hours.

HERSHIPS: Cardiff, what is it? It's, like, 2 o'clock.

GARCIA: Yeah, it's 2:35.

HERSHIPS: I'm thinking it's time for me to clock on out (laughter).

GARCIA: Get on out of here, Sally Herships. Thanks so much for bringing us this story. Go have some fun. It's the summer.

HERSHIPS: Thank you.

GARCIA: This episode of THE INDICATOR was produced by Rachel Cohn and fact-checked by Emily Lang. THE INDICATOR is a production of NPR.

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