Working conditionsIn exchange for permanent contracts, Japanese employees are often required to agree to, for example, branch relocations, department transfers, and/or extended working hours at any point of their career. Performance-based evaluations are also often still used under these conditions and unpaid overtime and overwork are common. These conditions have led to an increase in work-related illness or deaths (suicides or deaths from overwork- karoshi) since the 1990s.
Despite long working hours, labor productivity in Japan is lower compared to the Group of Seven nations. To improve working conditions for employees, the government enacted the Work Style Reform Act in 2018. The act included labor law amendments such as setting a limit to overtime. Since 2019, employees are allowed to work a maximum of 45 hours of overtime a month. Closing the gap between permanent and non-permanent employees in income and working conditions was also addressed in the reform. All employees within a company must be paid equally when engaging in the same task starting from 2020.
The outbreak of the coronavirus disease (COVID-19) facilitated broad changes to the traditional working style of many companies. The proportion of remote working, for example, leaped by more than 27 percent to around 48 percent in 2020 compared to the previous year. It is not yet clear if this trend will continue after the end of the pandemic.
Unemployment rate and labor shortageJapan's unemployment rate has been relatively low compared to other nations recently. Despite the COVID-19 pandemic and reported number of dismissals directly related, the unemployment rate remained at around three percent during 2020. The comparatively low unemployment rate is mainly due to a general labor shortage as a direct consequence of Japan’s super-aged demographic and shrinking work population. The government has promoted active labor participation of women and seniors aged 65 years and older to alleviate the long-term workforce shortage.
The female employment rate exceeded 50 percent for the first time in 2018. The employment rate of seniors was 25 percent in 2021. This number is expected to substantially grow in the coming years because companies are obliged to make efforts to offer working opportunities for employees until the age of 70 from 2021 and onwards. Furthermore, foreign workers are also anticipated to increase through labor-related immigration in the coming years.