Serious flaws in Japan’s new ‘Equal Pay for Equal Work’ law

A worker of Japan Post Co, which has faced controversy for its different treatment of workers, collects postal items from a post box outside a post office in Tokyo, Japan, 2 November 2015 (Photo: Reuters/Toru Hanai).

Author: Naohiro Yashiro, Showa Women’s University

Enacted in June 2018, Japan’s Work Style Reform Bill is a legal package amends eight of Japan’s labour laws. Some of the changes are welcome, such as a law that sets a legal limit on overtime working hours which came into effect this year. But the ‘Equal Pay for Equal Work’ regulation which is set to come into effect in 2020 is much more controversial — especially when examined in detail.

What the regulation says is quite simple — employers are prohibited from treating regular and non-regular workers differently within the same firm. ‘Regular workers’ here refers to those who have an employment guarantee up to the mandatory retirement age while non-regular workers are under a fixed-term employment contract.

But the definition of unreasonable treatment is not clearly specified. This is mainly due to the prevalence of seniority-based wages regular workers in Japan.

Seniority-based wages are generally interpreted to reflect the higher skill of a worker with longer experience at a firm — though this is becoming increasingly irrelevant with the rapid development of information and communications technologies. It is also a way to discourage skilled workers from shifting firms since this would entail losing promised wage increases.

Seniority-based wages are also a major factor behind the large wage gap between regular and non-regular workers in the same job. The new ‘Guidelines for Equal Pay for Equal Work’ indicate that employers are obliged to pay equal wages to regular workers and non-regular workers with the same length of work experience at the same firm.

Put another way, this aims to apply seniority-based wages to non-regular workers. But it will not be effective, as non-regular workers do not stay in the same firm long enough to get the benefits of long-term service to a single firm. It de-facto …continue reading