KKC International Platform
December 12, 2019

How Japanese and German Labor are Different
Toru Kumagai, Journalist

The first step toward “work style reform“
On March 13th, 2017, Keidanren (Japan Business Federation) and Rengo (Japanese Trade UnionConfederation) set a significant step toward what Japanese call “work style reform”. According
to this agreement between Japan’s largest management and labor representatives, overtime
work of employees exceeding 45 hours a month will be capped at 6 months a year. Also,
overtime work that was de facto tolerated under the “Article 36 Agreement” with special
clauses, so frequently signed between the company and its labor union, is also limited for thefirst time at 720 hours a year. Overtime work during a company’s peak season cannot exceed
100 hours a month or an average of 80 hours monthly over a period of 2 to 6 months. The
Japanese government will further legally bind companies that violate the Labor Standards Act
by enforcing penalties.
The highest suicide frequency among G7 countries
In Japan, a tragic self-killing of a 24-year-old exhausted woman who was compelled tooverwork in a well-known company triggered national interest in “work style reform” in bothpublic and private sectors.
The 2016 version of the “White Paper on Measures to Prevent Karoshi etc.” by the Japanese
Ministry of Health, Labour and Welfare (MHLW) tells that for 14 consecutive years since1998, more than 30,000 people committed suicide in Japan. Although the figure has been
decreasing after 2010, still some 24,000 people took their lives in 2015. This is 5.8 times
larger than the number of deaths resulting from traffic accidents in 2015 (4,117 people).

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Of these 24,000 suicide cases, 2,159 were clearly attributed to labor related problems fromdecendent’s last notes or other evidences. On top of this, around 700 to 900 claims forworker’s compensation are made each year since 2005, reporting brain or heart diseases
caused by overwork.
Mental disorders are more serious. The annual figure for such compensation claims rose by
131% to 1,515 in 2015 from 656 in 2005.
Japan is unhappily one of the world’s greatest suicide nations. OECD’s statistics on suicides
per every 100 thousand residents ranked Japan 4th among 32 countries after Lithuania,
South Korea and Hungary. But among the developed G7 countries it runs the top.
Germany‘s suicide rate is 10.8 people in every 100,000, which is 42% lower than that ofJapan. The German Federal Statistical Office says about 10,000 people ended their lives bythemselves in 2015, meanwhile in Japan the number was more than 3 times larger.
Every year I fly to Japan and take subways or JR trains in Tokyo. So many alerts inform
operational suspensions by railway suicides, which really shocks me. Those are already too
daily for many Japanese people, but for me, this is crazy. Not many people jump into trains tofinish their lives in Germany.
In Germany, suicide from overwork or Karoshi has not grown into such a big social problem. Icouldn’t even find data on suicide cases caused by such overburdens.
Working more than 10 hours a day is prohibited!
The reason why suicides and deaths from overwork are not a problem in Germany, is thatworking hours are set much shorter than other advanced countries.
Germany is one of the world’s greatest time shortening countries. OECD pointed out that theannual working hours per capita in 2015 in Germany was 1,371 hours, 20% shorter thanJapan’s 1,719 and even 23% shorter than the US. Germans work 348 hours less than theJapanese, 395 hours less from OECD average, each year.
Why German working hours are way shorter than Japan- that’s because German laws
regulate working hours strictly. German Arbeitzeitgesetz or the German Act on Working Timebans workers from working more than 10 hours a day, without excuses like the Japaneseconcept of “peak season”, or like sudden increase in orders from clients. It does not allow
any loopholes like Japan’s “Article 36 Agreements”, either.
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Working hours are monitored by a governmental office called Gewerbeaufsict. From time totime, it inspects companies and working hours of their employees without notice. Once itfinds that a company let their staff work more than 10 hours a day, it can levy fines up to
15,000 Euros (some 1.80 million Yen, with exchange rate of EUR1=JPY120). So many offices
and hospitals are actually charged one after another.
The management has to pay
In an extremely malicious case, that Gewerbeaufsict may accuse company heads to theprosecutor, and if the court finds the defendant guilty, the management can end up in
imprisonment up to a year. Moreover the company requires the actual boss on site to takethe blame and compensate, out of his or her own pocket. This process makes many
managers to sputter around their teammates making sure they do not exceed any minutethan 10 hours, no matter how busy they are. In some offices, when an employee works
almost 10 hours a day, a warning that says “working more than 10 hours is against the law,leave immediately” appears on the PC screen. Or, a manager may warn that employee who
has cumulated over 60 hours of overtime work, to cut it down at once.
Take all 30 days of annual leave
Another reason why Germany has less overburdened suicide is that workers are entitled totake a long leave to ensure their well being.
The German Federal Vacation Act enacted in 1963 rules company owners to give employees
at least 24 days of paid leave each year. However, in practice, most companies grant 30 days
and some even 33. In addition, some even let their staff value 10 hours of overwork as onepaid day off, in result offering up to some 40 days in total.
The rate Germans take their annual leave is impressive. Ever since I started observing
German society 27 years ago, almost all company workers except for some managements
take their leave completely. It is common for a young worker to take several weeks offanytime, as long as his or her colleagues can cover. They have no envy because everyone
takes turns, nor do they have any sense of guilt. They do not need to tell their boss theircontacts nor check e-mails while they are away. All these are secured under a social
consensus that workers have the right to enjoy some time off.
Meanwhile in Japan, the number of annual paid leave granted to workers and workers who
actually benefit from them are much less. OECD summed each country’s minimum annual3leave stipulated by their laws, the lengths of paid annual leave offered by the majority ofcompanies although in practice not designated by law, and the number of their national
holidays. Germany ranked the highest in the world, marking 30 days off and 12 holidays,
totaling 42, while Japan was lagged far behind with only 10 paid days off plus 16 national
holidays, in sum 26.
Japan’s statutory annual leave is 10 days. This is obviously less than half of Germany whereworkers are entitled with 24 days, although the majority of generous companies offer 30days in practice.
Just to add some explanation, in the Japanese labor system, the longer the employee
dedicates him or herself in one company, the more paid days off are granted. A company cangive a person with half a year career 10 days of off each year. Those who have been workingfor more than 3.5 years are entitled 14 days and people with 6.5 years can get as much as 20days.
On the other hand, most German companies give 30 days of paid annual leave once theemployee passes a half year trial term. This shows how circumstances surrounding Japanese
workers are unfavorable.
Japanese workers enjoy only half of German paid annual leave
A “General Survey on Working Conditions” by the Japanese MHLW tells that in average
Japanese workers enjoyed 47.6% of its their paid days off in 2014, a figure which is less thanhalf of Germany. The survey points out that the ratio reached a high in 1993 at 56.1% andthen continued to fall. I can say that Japan is the 3rd richest country in the world in terms ofGDP, but in terms of free time, it ranks very low.
I once asked a German person why he or she takes such a long 2 weeks vacation. The person
said that it was difficult to forget about work in the first week, meaning, it is difficult to becompletely refreshed physically and mentally unless you spend 2 weeks off or more. The factthat German workers can secure 30 days of annual paid leave each year gives them a bigrelief.
Nowadays many large firms also provide workers “sabbatical leave” for several months
without pay. A worker I know accepted a 25% wage cut to earn 90 additional days of paid
leave. Another took a 7 month sabbatical. Both of them are assured to return to their current
positions.
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Japan should differentiate paid and sick leave
Another difference between Japan and Germany is that German law draws a clear line
between paid leave and sick leave. In Japan, paid leave is taken first from his or her accounteven if the absence was caused by sickness or for injuries. Sick leave will be consumed only
after the person uses all his or her paid leave, but sick leave is the one without pay.
But in Germany, absences from sickness is differentiated from annual paid leave from thebeginning. Paid annual leave is not an option to fill such absences. A law named
Entgeltfortzahlungsgesetz even enforces the employer to pay 100% of the employee’s wage
during his or her sick leave, for up to 6 weeks (30 days). Following that 6 weeks, employees
are entitled to statutory benefits paid by the German public health insurance system, up to78 weeks. That benefit amounts to 70% of the worker’s usual wage. The German federal
government said some 1.8 million citizens enjoyed this benefit in 2014.
I believe Japan should grant paid sickness leave when a worker is down, without having themuse their annual paid leave, as most of them want to save their paid leave in case they really
get sick or get heavily injured. This is one of the crucial reasons why the Japanese rate oftaking paid leave is so low.
German labor production is 55% higher than Japan
After reading the above, readers may doubt if German businesses and the economy canreally run efficiently with such short working hours. But Germany is indeed the 4th largest
economy in the world with the largest current-account balance among OECD member
nations. Corporate incomes and shareholder dividends are increasing every year. The
government has achieved fiscal surplus every year since 2014 without issuing any new
national bonds. Unemployment rate for December 2016 was only 3.9% to mark the second
lowest among EU nations. Southern German regions have reached full employment andrather scarcity of labor is becoming more serious.
OECD mentioned that Germany’s labor productivity or the hourly output of a country’s GDP
exceeded Japan by 55%, even the GDP per capita was 25% higher. One of the reasons is ofcourse Germany’s short working hours. And since 2009, disposable income per capita has
been rising year by year. So, Germans exert the highest economic performance working only
10 hours a day and fully taking 30 days off a year.
Of course, Japan cannot totally copy the German way because of the large differences inbusiness customs, corporate cultures and the sensitiveness that customers have. A Japanese5

client may get so upset if his or her sales representative was away on vacation for 2 weeks,
but in Germany, they think that a job belongs to the company, not to the employee. AGerman client does not expect quality personal service like Japanese do. They are simply
satisfied if anybody else in the office properly meets their needs. This is one of the culturaldifferences between Germany and Japan.
Despite such cultural differences, it is also true that there are some other countries on thisplanet that yield more output from less input than the Japanese do. I would like toemphasize that Japan does not necesarily have to copy them, but there are absolutely things
to learn from the leading Germans in reducing working hours.

Toru Kumagai is a journalist based in Germany. Born in Tokyo in 1959. Graduated from theSchool of Political Science and Politics, Waseda University and joined NHK. Then resignedand moved to Munich, Germany in 1990. Since then, his articles on European and German
politics, economies and societies can be read on various media including Japanese Nikkei
Business.

Keizai Koho Center (Japan Institute for Social and Economic Affairs, KKC) has served
as a bridge for the Japanese business community to interact with its key stakeholders insideand outside Japan. With a wide range of its domestic and international programs, KKC hasdeveloped a worldwide network encompassing businesses leaders, lawmakers, government
officials, journalists, university scholars, and school teachers.
The KKC International Platform is a forum to discuss new developments,changes, and challenges of Japan and the international society.
The views expressed in the essays on the KKC International Platform are solely
those of the authors.

Keizai Koho Center
http://en.kkc.or.jp
Keidanren Kaikan, 1-3-2 Otemachi, Chiyoda-ku, Tokyo 100-0004 JAPANe-mail: platform@kkc.or.jp

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