June 11, 2014 4:42 am JST

Japan's white-collar exemption to start at six-figure incomes

TOKYO -- The Japanese government's proposed alternative to the standard rule for overtime pay is likely to apply to white-collar professionals earning somewhat more than 10 million yen ($96,000) a year.

     The new approach to compensation, which rewards performance, not hours worked, will cover certain specialized jobs such as securities dealers or consultants. But candidates for managerial positions will be excluded.

     The so-called white-collar exemption will form part of a new plan for revving up economic growth.

     Cabinet ministers working on the proposal will decide on a basic framework Wednesday. Economic Policy Minister Akira Amari will propose an income threshold of at least 10 million yen, while Labor Minister Norihisa Tamura favors "a figure somewhat higher than 10 million yen." The final number is likely to be in the 10-15 million yen range.

     Prime Minister Shinzo Abe has instructed ministers to limit the exemption to a clearly defined range of highly skilled professionals. As the prime minister envisions it, the qualifying jobs would not include product planners or overseas project leaders, for example. Abe is hoping to head off criticism from labor unions and others fearing employers may abuse the performance-based compensation system to avoid paying for overtime.

     The income and job title qualifications will be laid out in the upcoming growth strategy. But the details of the exemption will be left up to an advisory panel to the labor minister. Abe's government wants the new system to take effect as soon as spring 2016.

     Only managerial positions are now excluded from Japanese regulations on working hours. Other full-time employees are entitled to overtime pay for putting in more than eight hours a day. But some say such compensation encourages overwork. The government argues that exempting high-income professionals from the rule would boost productivity.