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Business trends

'Work from home' to cost Japanese companies $12.1bn, study finds

Effort to halt coronavirus could reshape work, but productivity is a challenge

The Dai-ichi Life Research Institute estimates the initial cost of online meetings at about 4.9 million yen a year per company. (Photo by Yoshiyuki Tamai)

TOKYO -- Remote work introduced to slow the spread of the novel coronavirus will cost businesses in Japan more than 1.3 trillion yen ($12.1 billion) a year, a study by a private think tank has found, as companies are forced to bear the cost of teleworking in response to the government's declaration of a nationwide state of emergency, including stay-at-home orders, on April 16.

The Dai-ichi Life Research Institute estimates the initial cost of online meetings at about 4.9 million yen a year per company. That translates to 1.3 trillion yen a year, given that around 28% of full-time employees are working from home.

"The actual cost is expected to exceed that forecast, as it does not include PC and communication costs," said Toshihiro Nagahama, chief economist at the Dai-ichi Life Research Institute, who conducted the study.

A metalworking company in Tokyo's Sumida Ward allows 10 of its 50 employees to work from home. The company pays personal computer rental fees and communications charges for staff working from home, but a representative of the company's general affairs department said he was surprised the costs were so steep. The company has had second thoughts about setting up more servers to improve data processing capacity, as "it could cost more than 1 million yen," he added.

Flea market app operator Mercari gives its employees an allowance of 60,000 yen over six months to cover the cost of utilities and online communications, while Tokyo-based software developer Six Apart has allocated money it saves on office rent and employee travel expenses to provide staff with a telework allowance of 15,000 yen a month.

A health ministry expert panel said on April 22 that companies have not done enough to promote remote work and staggered working hours to achieve its goal of cutting people-to-people contact by 80% to slow the epidemic.

For companies, maintaining productivity in a cost effective way is another challenge. Yoshiaki Hashimoto, a professor at Tokyo Woman's Christian University, conducted an online survey of 3,192 remote workers nationwide on April 15-17. Although 40% of respondents working remotely said they had more free time, 34% said their productivity has declined. The survey suggests the possibility that many remote workers find it difficult to concentrate at home.

Creating employee evaluation systems that put more emphasis on results than on the number of hours spent in the office is crucial. Lenovo Japan, the Japanese unit of Chinese computer maker Lenovo Group, laid out rules, including requiring employees to report on their work at the start and end of their day when it introduced unlimited remote work in 2016.

According to a 2019 survey, half the company's 300 employees said their productivity had improved, while 7% said it had fallen.

Improving the efficiency of those working from home is a pressing issue for Japanese companies as well. "Teleworking could change how organizations operate, including determining which things require face-to-face communication," said Kotaro Tsuru, a professor at Keio University in Tokyo.

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