Takaichi expected to scrutinize Japan’s discretionary work system

With Prime Minister Sanae Takaichi set to tackle work-style reform, Japan’s discretionary work system is expected to become a major focal point.

The system allows employees to work flexibly at their own discretion to improve efficiency but concerns remain that it could lead to excessive working hours.

Takaichi announced in her policy speech at parliament last week that she plans to review the system. The issue will be discussed by a labor ministry panel.

Under the discretionary work system, labor and management agree on "presumed working hours" in advance to decide wages, instead of calculating the actual hours worked.

Labor regulations limit overtime to under 100 hours per month, but the presumed hours apply in the case of discretionary work. This means that exceeding regulatory limits would not be considered illegal for those under the discretionary work system, which has led to persistent criticism that it allows “work without limits.”

According to a labor ministry survey, actual working hours are on average about 50 minutes longer per day than the presumed hours. Some workers are skeptical about the system and have called it a "means to evade overtime pay."

Discussion regarding a review of discretionary work will likely accelerate due to Takaichi’s policy priorities. Yet it is uncertain whether the discussion will reach a win-win agreement given that labor and management are deeply divided.

“To maintain and improve international competitiveness, it is crucial to boost productivity by extending self-directed work styles to a broader range of people,” a management representative stated at a meeting of the labor ministry panel late last year.

Fewer than 2% of workers in Japan currently operate under the discretionary labor system. While the system is limited to 20 job categories, Keidanren — Japan’s powerful business lobbying group — is calling for greater flexibility based on labor-management agreements.

The labor side is concerned because it claims that the system could result in longer working hours.

“It could pose a risk to workers’ lives and health. We stand firmly against it,” said Tomoko Yoshino, who chairs Japan's largest trade union federation, Rengo.