Vol.39-No.9 September 1, 2000
However, as the number of part-time workers has been increasing and the differentials between such workers and full-time regular employees have been widening in terms of working conditions, the problem of part-time workers is being recognized as a fundamental issue concerning the employment system in Japan. This article presents the problems relating to part-time workers(1) in Japan with particular reference to legal policies and issues.
2.0 Current Situation and Features of Part-time Work
2.1 The Outlook of Part-time Workers
According to the Labour Force Survey of the Management and Coordination Agency (MCA), the number of employees who worked less than 35 hours per week in 1999 totaled 11.38 million (females, 7.73 million), accounting for 21.8 percent (females, 37.4%) of employed workers as a whole. This marked a rapid increase as the proportion 10 years earlier in 1989 was 13.1 percent (females, 25.26%) (Figure 1). Major industries with the largest proportion of employees working less than 35 hours per week are the wholesale, retail trade, food and drink establishments (3.67 million, or 32.23%), followed by services (3.52 million, or 30.9%), and manufacturing (1.96 million, or 17.2%).
The Special Survey of the Labour Force Survey of the MCA (1999) gives a breakdown by occupation of part-time workers. Clerical and other office workers accounted for 20.8 percent, then craftsmen and workers in manufacturing and construction (19.6%), followed by workers in security and other services (16.5%), sales workers (11.7%), and professional and technical workers (10.5%).
The results of the Survey of How Various Workers are Used in the Workplace by the Ministry of Labour (1999) showed that 90 percent of part-time workers were women, and that women in their 40s and 50s accounted for 36.0 percent and 22.5 percent, respectively. The majority was likely to be responsible for household chores; 73.5 percent had a spouse, and 66.1 percent had children living with them. The majority (63.5%) had completed high school, while 18.0 percent had graduated from two-year colleges or technical colleges.
Meanwhile, the General Survey of Part-time Workers' Conditions (1995) examined the reasons that workers gave for taking part-time jobs: wish to work flexibly, when it is convenient (55.0%); wish to work for a shorter time or fewer days (24.0%); interested in the duties (19.6%); unable to work as a full-time worker because of housework, or child or family care (15.4%); and unable to find a full-time job (13.7%). On the other hand, the reasons firms hired part-time workers were: cheaper labor costs (38.3%); wanting additional staff at busy times (37.3%); for simple tasks (35.7%); and because of an increase in tasks in the workplace (29.8%).
Accordingly, the average part-time worker is likely to be a middle-aged or elderly female worker who is, at the same time, responsible for child or family care and the household chores at home. Such a part-time worker is regarded as a relatively cheap form of supplementary labor.
2.2 Employment and Working Conditions of Part-time Workers
According to the General Survey of Part-time Workers' Conditions (1995), 63.2 percent of part-time workers work under a contract with no fixed terms, while 36.8 percent work under a fixed-term contract(2). Larger firms (more than 80% of firms with 500 or more employees) tend to employ part-time workers with fixed-term contracts. This appears to be attributable to the obvious policy of handling part-time workers differently from regular employees. Part-time workers who have experienced extension of their employment contracts accounted for 83.6 percent, with the average number of extensions per person being 9.5 times (males, 5.7 times; females, 10.4 times). In recent years, the tenure of part-time workers has tended to be longer than before(3), with the longer duration stemming from extension of contracts with fixed terms.
With most part-time work, wages are calculated in terms of working hours. Comparing their scheduled cash earnings to that of regular workers, male part-time workers received 51.9 percent of wages for male regular workers, and females received 68.4 percent (as of 1998). The difference tended to widen in the longer term (Table 1). In terms of annual salary, including bonus payments, the difference between the two groups has grown much wider. In 1977, for example, part-time workers received 69.7 percent of regular workers' salary, but 20 years later in 1997 they received a mere 56.7 percent, which is more than 10 percentage points less.
There are four reasons for this widening difference: (1) a difference in the rate of wage increase due to changes in labor demand and supply; (2) with different wage profiles among workers of different tenures, the proportion of workers of longer tenures (i.e., the proportion of workers with greater differentials) has been increasing; (3) employment adjustment is being carried out in relation to tax and social security burdens and allowances for spouses; and (4) wage gaps between occupations and the relative proportions of occupations have changed(4). Apart from wages, gaps between part-time and full-time workers are observable in terms of retirement allowances and welfare schemes. The proportion of firms equipped with retirement allowance schemes for part-time employees was a mere 9.0 percent in 1995, and even such firms, in general, use different criteria in calculating the amount of payments.
2.3 Quasi-part-time Work
As can be seen, the most prominent feature of part-time work in Japan is the substantial gap between part-time and full-time workers in terms of employment and labor conditions. This is because the labor conditions of full-time workers (i.e., regular employees) are determined not by the mechanism of the labor market outside the company, but by the rules within the company and by factors such as potential vocational abilities (educational level) and attributes such as age and tenure. Part-time workers, however, are treated as non-regular employees. Thus, individual tasks at individual workplaces determine their wages on an hourly basis, making them ineligible for regular pay hikes, bonus payments, and retirement allowances.
Such differences in the treatment of employees result in the practice of creating employees who work long hours and who are part-time workers in name only (quasi-part-time workers). Regular employees are cared for by employment practices dominated by a seniority system and life-long employment. Once part-time workers, whose wages are fixed on an hourly basis, become available, then companies naturally seek to make full use of such workers. In Japan the term paato taimu, which comes from the English language, has come to mean simply workers paid by the hour, and has lost the short-time aspect. In this sense, quasi-part-time workers are nothing but workers paid by the hour who are treated differently from regular employees in terms of bonus payments and retirement allowances.
2.4. Part-time Workers Adjusting Working Hours
While quasi-part-time workers are definable as non-short-time workers paid by the hour, there also exist part-time workers (in the original sense) who are obliged to shorten their working hours, and are of significance when analyzing part-time work in Japan. Such workers are a creation of the tax and social insurance systems.
Income tax is levied on a part-time worker if annual income exceeds ¥1.03 million, and a residence tax is levied if it exceeds ¥0.99 million. Apart from this, the spouse of the part-time worker in question loses tax-exempt status for income and residence taxes.
In the matter of social insurance, if the annual income from part-time work is less than ¥1.3 million, then the worker is regarded as a dependent of the spouse and does not have to pay the insurance premium. On reaching pensionable age, the worker is entitled to the basic part of the pension from the plan the spouse has joined. On the other hand, if it exceeds ¥1.3 million, then the worker loses status as a dependent of the spouse, and is required to pay insurance premiums for the Medical Care Insurance Plan and the National Pension Plan. Moreover, in such a case, the worker must join the National Pension Plan as a Category 1 insuree, but a part of the pension proportional to the income, unlike with the Employees' Pension Plan, is not paid, and the worker will not necessarily benefit from having paid into the National Pension Plan.
What is more, although quite a few private firms offer family allowances, eligibility is closely tied with the tax and insurance systems, so that an employee whose spouse earns more than ¥1.03 million or ¥1.3 million will not enjoy the allowances.
Under such tax and insurance systems, it is perhaps inevitable that married women engaging in part-time work should adjust their working hours to avoid liability for tax and insurance premiums(5).
3.0 Legal Policies and Problems Related to Part-time Work
3.1 Part-time Work Law
Under such circumstances, the question of how to narrow the gap between employment and working conditions for part-time workers and those for full-time regular employees has become a crucial legal issue. The only legal policies adopted, apart from a refurbished version of the principle that part-time workers receive paid leave proportional to their tenures (now legally enforceable), are administrative guidances to improve the handling of part-time workers. The Law concerning the Improvement of Employment Management, etc. of Part-time Workers (the Part-time Work Law) came into force on June 18, 1993 for the purposes of (1) securing appropriate labor conditions for part-time workers, (2) conducting educational training, and (3) improving welfare schemes. However, it is primarily aimed at improving the treatment of part-time workers by making the contents of the law better known to firms and by giving them subsidies(6).
From the legal point of view, the law's significant contents include Article 6, requiring that employers should provide a hiring notification to part-time workers, and a guideline saying that a part-time worker employed continuously for more than one year should be given advance notice that the contract will terminate at the expiration of the contract period. However, both these represent merely duties to endeavor and thus have no legal binding on firms that violate them. At the same time, as for the issue of equal treatment of part-time workers, the law states that employers shall endeavor to promote effective utilization of part-time workers' abilities in an effective manner, in due consideration of the actual work conditions of part-time workers concerned, and maintain balance with regular workers by securing proper working conditions, implementing education and training, improving their welfare and improving employment management (Article 3). Here again, the law assigns firms only the duty to endeavor.
Consequently, it could hardly be claimed that the Part-time Work Law has made any appreciable contribution to the formulation of employment rules of part-time workers, apart from its stipulation of a hiring notification, which clarifies the labor conditions of part-time workers and the form of working rules for such workers.
3.2 Legal Disputes Concerning Part-time Work and the Trend in Court Judgements
Since legal problems involving part-time work in Japan involve non-regular employees, many legal disputes concern the termination of employment and dismissal of fixed-term workers. In the termination of employment, case laws have been established by which the court draws an analogy to and applies the legal doctrine governing abusive exercise of the right to dismiss regular workers, to non-fixed-term part-time workers(7). (Under the doctrine, a dismissal will be valid only if based on objectively reasonable grounds.) This interpretation does not mean that a fixed-term part-time contract becomes an indefinite-term contract if the original contract is prolonged by repeated renewals, but requires certain reasonable grounds for termination.
Thus, it is possible for fixed-term part-time workers to obtain employment security in the form of long tenures. However, it still leaves such workers in an extremely unstable legal status, because application of the legal doctrine regarding abuse of the right to dismiss fixed-term part-time workers does not bind the employer as strictly as it does in the case of dismissal of an indefinite-term employee. What is more, the content of a renewed fixed-term employment contract does not in any sense become the same as that of an indefinite-term contract for a regular employee. Where dismissals are due to employment adjustment (i.e. collective economic dismissal), the Supreme Court does not negate the dismissal of part-time workers ahead of regular employees(8).
The decisions in the Maruko Alarms case(9) in 1996 had significant social repercussions as an issue related to the unequal treatment of part-time workers because they are non-regular employees. Twenty-eight married women, who had worked for the company between 6 and 27 years under repeatedly renewed two-month contracts and were engaged in the same duties for the same working hours and days as regular employees, brought the case to court. They claimed that the wage difference between them and regular employees (¥1.1 to ¥1.5 million per year) was a violation of Article 4 of the Labour Standards Law (the Principle of Equal Wages for Males and Females) and the Principle of Equal Wages for Work of Equal Value. They demanded wages equal to the wages of regular employees. The court said, it cannot be considered that the principle of equal wages for work of equal value exists as a general rule governing labor relations, but, while on the surface regulations for the prohibition of discriminatory treatment, such as Articles 3 and 4 of the Labour Standards Law, simply prohibit discriminatory treatment on the basis of social status and creed, underlying them is a philosophy of equal treatment according to which individuals should be paid equally for work of equal value. The ruling continued, this should be regarded as a universal principle of civil law that treats all human beings as having equal value.
Hence, the court held, the principle of equal treatment ought to be borne in mind as a crucial element in judging the illegality or otherwise of different wage payments, and that setting different wages in violation of the principle may constitute an act outside the employers' discretion, thus violating public order and morals. The court concluded, not all wage differences between the complainants (the temporarily employed) and female regular employees should be regarded as unlawful, given that the nature of their work, the most crucial element, is identical and that seniority should be taken into account for temporary workers who have served for more than a certain period of years, like regular employees... If the complainants' wages are less than 80 percent of the wages of female regular employees with the same tenure, the wage difference clearly exceeds the acceptable level, and to that extent the discretion of the defendant has violated public order and morals.
It could be said that the court decision goes too far in deducing violation of public order and morals from the principle of equal treatment(10), and does not make clear the grounds for making a 20 percent or more wage difference define violation of the law. Nonetheless, the fact that it sees it as unfair for part-time workers engaged in relatively simple tasks under working conditions similar to those of regular employees for a long term to receive 20 percent less than regular employees is important as it highlights one important problem and warns against further delay in legislative response.
4.0 New Measures towards Equal Treatment of Part-time Workers
4.1 Suggestions on How to Realize Equal Treatment
Reflecting these changes, the Part-time Work Law has been undergoing a reappraisal. A review of the law was to be undertaken three years after it came into effect. Hence in 1996, the Ministry of Labour set up the Study Group concerning Part-time Work that submitted a report on policies on part-time work in September 1997. The report cited the need for thorough observance procedures such as the clarification of working conditions, and for employment management matched flexibly to varied types of workers; a balance between part-time and regular employees; problems involved in termination of employment; problems of employment adjustment; and selectable employment patterns. Following the report, in February 1998 the Women's and Young Workers' Problems Council called for a yardstick to gauge the degree of balance in treatment and labor conditions of part-time workers set against those of regular workers. This was followed by the setting up in December 1998 of the Study Group concerning Employment Management of Part-time Workers, which released a report in April 2000.
This report states that because almost 60 percent of establishments have part-time employees engaged in duties similar to regular employees; because approximately 50 percent have part-time workers who have worked with them for 10 years or more; and because 20 percent have part-time workers who work hours similar to regular employees, working overtime and being reallocated to different sections within the establishment the question of whether the duties of part-time workers are identical to those of regular employees should occupy a central place in consideration of the balance. In line with this, the report suggests a possible means of gauging the balance by dividing part-time workers into two groups: Type A, engaged in the same duties as regular employees; and Type B, engaged in different duties.
With regard to part-time workers in the Type A group, the report calls for the application of identical methods of determining treatment and labor conditions for both regular and part-time employees (that is, application of the same elements of wage structure, criteria for payments, criteria for personnel evaluation and assessment and payment methods). Where there is reasonable justification, it would still be possible to apply different treatment and labor conditions to part-time workers, though some method of safeguarding the balance in terms of levels of treatment and labor conditions would be necessary, and part-time workers ' hourly wages would need to be balanced with the wages of regular employees. At the same time, where levels are concerned, the report allows the possibility of reasonable differences on the grounds that part-time workers do not work overtime, do not work on holidays, do not transfer to different sections, and do not transfer to different offices or workplaces. As for bonus payments and retirement allowances, the report states that it would be appropriate to establish some reasonable scheme, from the viewpoint of maintaining identical determination methods and a balance of levels.
The report does not reach any concrete conclusions on how to handle part-time workers in Type B group in a way that maintains the balance. It simply recommends that wages, bonus payments and retirement allowances should be considered in relation to the duties and levels of the workers in question; that, for part-time workers in charge of specialized, highly responsible, or managerial duties in particular, treatment should be determined on the basis of the degree of specialization, their ability in carrying out their duties, past achievement, and so on. In cases where part-time workers' abilities improve with time, such improvement should be reflected in their treatment; and that opportunities should be provided for education and training.
In addition to a balanced treatment of part-time workers, the report also calls for setting-up of preconditions to allow part-time workers more choices in working styles. A system that allows them opportunities to become regular employees after being hired as part-time workers should be adopted. This would require: (1) clear specification of criteria for altering employment contracts; (2) outline of working conditions after a change; and, (3) making the scheme known and releasing relevant information. In addition, the report also states that firms should consider the workstyles of regular employees and make it possible for them to become part-time workers.
4.2 Significance and Limitations of the Report
The chief feature of this report is the elaboration of the proper approach to equal treatment in cases where part-time workers are engaged in identical duties as regular employees, and, specifically, the stipulation of identical methods to determine treatment and standards for labor conditions. However, the idea of balance, while seeming implicitly to assume equal treatment in the sense that wages should be the same if the tasks involved are identical, does not reject the idea of reasonable difference between part-time and full-time regular employees. Rather, the report is significant because it asks those concerned in labor and management to explain any difference in treatment of the two types of employees, and because it attempts to make the differences quantitatively specific.
Some might still be skeptical about this method of remedying differences, but the report's approach offers a possible way to bridge the gap between the treatment accorded regular and part-time employees, and possibly to bring about a reappraisal of the treatment applied to the former. The report considers that, so long as the same duties are being assigned, if the firm in question is required to apply the same method in determining the treatment of both types of employees or at least to make a balance between them, it will expect part-time employees to be more competitive. This is so it can fully utilize their specialized ability. At the same time, the firm will prefer to form groups for particular tasks or specialist groups among regular employees.
However, firms are more likely to entirely separate tasks for part-time employees from those for regular ones. In other words, because the report presents no concrete yardstick for assessing the equal treatment of part-time workers engaged in different duties from regular employees, the most effective way for firms to accommodate the idea of equal treatment will be the division of tasks.
5.0 Future Tasks
Legal policies concerning part-time work have focused on the prevention of labor disputes by making firms clarify their employment and labor conditions. Such policies must now center on the issue of how to realize equal treatment. However, so long as the legal nature of the current Part-time Work Law is maintained, further progress is likely to be difficult. It is impossible to fulfill the desire of part-time workers for equal treatment simply by asking firms to improve employment management, nor can that approach to the problem constitute a clear guideline from the viewpoint of legal theory. It will be necessary in the future to reinforce the legal norm aspect of the Part-time Work Law and to encourage the establishment of a case law concerning reasonable differences by introducing a provision prohibiting employers from treating part-time workers differently from full-time workers (regular workers) without reasonable grounds. From the viewpoint of legal theory, it will be necessary to clarify the meaning of balance in the Part-time Work Law, in the distinction made between balance and equality.
The author sees balance as a matter of adjustment between the intra-organization principle (equality) and the market principle (freedom of contract). In other words, sameness in work or duties does not necessarily lead to the premise of equal treatment. Unless the difference in question is caused by factors recognized as social discrimination due to, for example, sex, creed and nationality, different treatment for the same work or duties can still be regarded as within the scope of freedom of contract. However, as an employee who works in one particular company for a long period becomes internalized, the issue comes to be related to the intra-organization principle, so that treating the worker in question differently is highly likely to violate the principle of equality. In short, the greater the involvement of the employee with the firm, the more the firm is required to treat him or her in equal fashion. In this sense, to create a balance means to adjust the equal treatment to the degree of internalization of the part-time worker(11).
Another crucial point when considering part-time workers and non-regular employees is to respect their vocational abilities. At present, the traditional seniority system is undergoing drastic revision with the gradual adoption of a system based on achievement. On their side, workers are also eager to improve their vocational abilities in order to achieve a professional life independent of their employees. Female workers in particular are anxious to have a wage system that focuses on the content of the task. Herein is a possibility for establishing another principle concerning the treatment of employees respect for vocational ability apart from the principle of equal treatment. Even if separate handling of part-time and regular employees according to duties was introduced, this would make more realistic a legal structure that called for exchanges of employment status according to the degree of internalization.
Finally, there are limits to legal attempts to realize the equal treatment of part-time workers. Because the issue of legally equal treatment is a matter affecting the intra-organization principle, this approach is naturally confined within individual firms. The fairness of wages has two aspects, internal and external; the legal approach pursues fairness within the firm. When wages are actually determined in the external labor market, there is a limit to the correction of wages of part-time workers under a wage scheme determined within a firm. If a fair wage determination mechanism, existing in the external market and based on the vocational ability of workers, is established, then the burden placed on the law will be reduced. In achieving this, labor and management organizations as well as the government will be required to play important roles. Reform of tax and social insurance systems that affect the way part-timers work is also necessary. Under the principle that taxes and insurance premiums are paid according to the individual's employment, part-time workers adjusting their working hours could hinder improvements in the status of part-time workers in general within the economy, unless these schemes are modified to be based on individuals not on households.
(1) Part-time workers are in general definable as workers whose scheduled working hours per week are shorter than those of regular employees in the same workplace (Part-time Work Law). However, the definition varies in different surveys. In Japan, there are quasi-part-time workers; some surveys take these into account along with part-timers.
(2) The Ministry of Labour's Shokuba ni Okeru Tay-o na R-od-osha no Jittai ni Kansuru Ch-osa (Survey of How Various Workers are Used in the Workplace) (1999) gives different figures: 72.6 percent of workers who work less than 35 hours a week are employed under fixed-term contracts (55.8% of whose terms are seven to 12 months, and 30.4% have terms of four to six months).
(3) According to the Shokuba ni Okeru Tay-o na R-od-osha no Jittai ni Kansuru Ch-osa (Survey of How Various Workers are Used in the Workplace) (1999), 25.3 percent of part-time workers have worked for one particular firm for five to nine years, and 17.6 percent for 10 years or more.
(4) The 1998 White Paper on Labour.
(5) According to the Shokuba ni Okeru Tay-o na R-od-osha no Jittai ni Kansuru Ch-osa (Survey of How Various Workers are Used in the Workplace) (1999), 42.3 percent of part-time workers actually adjust their working hours.
(6) The subsidies are given to firms that improve their systems for handling part-time workers, for example, by providing health examinations and educational training, and to firms and organizations that conduct surveys and seminars concerned with the improvement of such systems.
(7) Toshiba Yanagimachi Factory case, Sup. Ct. July 22, 1974; 28 Civ. Cases 927.
(8) Hitachi Medical Corp. case, Sup. Ct. December 4, 1986; 486 R-od-o Hanrei 6. The court held that it is not unreasonable for managment to terminate the employment of fixed-term workers prior to calling for regular employees' voluntary retirement.
(9) Maruko Alarms case, Nagano Dist. Ct., Ueda Br. March 15, 1996. 690 R-od-o Hanrei 32.
(10) In the author's opinion, it is appropriate to see the general principle of equal treatment, unlike the prohibition of social discrimination, as a duty based less on the principle of public order than that of good faith.
(11) Because the problem of part-time work in Japan is in fact one of non-regular employees, then the legal restrictions on fixed-term contracts cannot be overlooked; the internal principle, which emphasizes equal treatment with increasing length of tenure, is also applicable in their case.
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