May 10, 2014 5:05 am JST

Japan eyes higher overtime pay at smaller businesses

Workers at small businesses, like this one in Tokyo, may soon be entitled to more overtime pay.

TOKYO -- The government is considering raising the overtime pay rate at small and midsize businesses to the same level applied to large corporations, aiming to curb long hours and better compensate those who work them.

     The push to increase overtime pay is part of Prime Minister Shinzo Abe's goal of lifting wages to stimulate the economy.

     Under Japan's labor laws, normal working hours are up to eight hours a day and 40 hours a week. Companies must pay a higher rate when employees work longer.

     For small and midsize businesses, the premium is 25% over regular hourly wages. The government intends to raise this to 50% or more for overtime in excess of 60 hours a month.

     For companies with more than 300 employees, the premium went up to 50% or more back in April 2010. Smaller businesses were exempted at the time because some were struggling. The issue was to have been revisited in about three years.

     Smaller businesses employ 32.17 million people, according to the Small and Medium Enterprise Agency -- roughly 70% of Japan's overall workforce. And a Labor Ministry study shows that 4.4% of staffers at smaller companies work more than 60 hours beyond normal working hours a month. Although this is less than the 8.1% at large corporations, actual overtime is widely believed to be longer because some companies do not keep proper records and some do not pay their workers for overtime.

     The overtime pay increase will be discussed by a labor policy panel that advises the labor minister. Plans call for submitting relevant legislation to the ordinary Diet session next year, with the new rules expected to take effect around April 2016.