Toward the realization ofequal pay for equal work
Policy outline

Keidanren
July 19, 2016

Introduction
Key points of Japanese government approaches toward

The realization of equal pay for equal workand other steps to improve treatment of non-regular workers(from “Japan’s Plan for Dynamic Engagement of All Citizens”;
approved by Japanese Cabinet on June 2, 2016)

 To ensure equal or balanced treatment regardless of form of employment (such as regular
employment, non-regular employment, etc.)
 To not hesitate to pursue preparations for legal reform, while sufficiently taking into accountJapan’s employment practices➔ Formulate guidelines for the appropriate application of existing laws that prescribe rules
regarding the treatment of non-regular workers (Labor Contracts Act, Part-Time Employment
Act, and Worker Dispatching Act)
➔ Consider the possibility of collectively revising, etc. existing laws, including developing
stipulations that form the basis for judicial rulings regarding unreasonable differences intreatment and developing corporate accountability (“obligation to explain”) regarding
differences in treatment between non-regular and regular workers, etc.
Aim is to bring wage gaps between regular and non-regular workers to levels equivalent withthose of the European nations

In order to pursue a system of “Japanese-style equal pay for equal work” that gives due
consideration to Japan’s employment practices, this policy sets out the Keidanren's fundamental
approach and proposes specific measures for improving the treatment of non-regular employees,
taking into account the differences between Japan’s employment practices and personnel/wage
systems and those of European nations.
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I. Comparison of Japanese and European systems and practices
JapanEurope (Germany, France)
Wage systems••

Labor-management relations are fundamentallyindustry-based.
Wage rates that correspond to work type/skills grade
are determined by industry-based collectiveagreements. These are applied to workers regardlessof whether they are regular or non-regular employees.

••

Labor-management relations are fundamentallycompany-based.
Content of wage systems varies from company tocompany.

Employment practices••

Recruitment involves looking for people withexperience/qualifications when a post becomes
available. Contracts limit the scope of work duties.
In many cases, career paths are limited to within thescope of a specific job.

••

Recruitment is mainly of new graduates/people
without practical work experience. This contributes
significantly to the low unemployment rate among
young people.
Companies have established internal human resources
development systems by which workers develop
their careers by experiencing various jobs throughjob rotation.

Legal systems•

It is prohibited to give non-regular employees
working conditions that are less favorable thanthose of a regular employee in a comparable role. In
the event of differences in working conditions that arein violation of this principle, the company isrequested to provide evidence of reasonablegrounds for those differences (Prerequisite thatdifferences are reasonable).

•Based on the premise that wage systems vary, it isprohibited for there to be unreasonabledifferences in working conditions between regularand non-regular employees (Labor Contracts Act,Article 20; Part-Time Employment Act, Article 8).
Whether differences are unreasonable is determinedon the basis a comprehensive range of factors
including job content (Prerequisite that differences arenot unreasonable).

When investigating steps toward the realization of equal pay for equal work, it is important todevelop a system that suits Japan by considering what approaches are compatible with Japaneseemployment practices and other aspects of the socioeconomic foundations.

2I. Approaches for the realization of “Japanese-style equal pay for equal work”
As Japan’s wage systems are varied, it is difficult to introduce European-style equal pay for
equal work, which is based on the premise of job-based pay (principle of paying the samewages to workers who have identical or equal job content)
Japan should maintain the fundamental approach adopted in existing laws (Labor Contracts Act,
Part-Time Employment Act), which determines “equal work,” etc. on the basis of acomprehensive range of factors, rather than job content alone.
In working toward solving the following three challenges, efforts should be made to realize“Japanese-style equal pay for equal work” on the basis of the approaches set out below.
The threechallenges

1. Personnel and wage systems differ between regular and non-regular employees, and it is difficult
for non-regular employees to understand the differences in treatment.
2. It is difficult for non-regular employees to seek legal remedies from the courts.
3. Opportunities for career and skills development for non-regular employees tend to be limited.

“Japanese-style equal pay for equal work”

 Companies making it their fundamental approach to determine whether
work is “equal work” on the basis of a comprehensive range of factors
such as job content and the work, role, and level of contribution expectedof a worker (how they will be utilized as a human resource) and to pay
equal wages if it is determined to be “equal work.” Increasing the effectiveness of existing laws through the formulation ofguidelines, revision of legal systems, and use and application of
simple legal remedies, etc.
 Pursuing comprehensive improvements to treatment of non-regularworkers, such as enhancing education and training, and developing
systems that allow non-regular employees to switch to regular
employment

Ensuresequal/balanced
treatment
regardless ofemployment type3

II. Necessary steps toward the realization of Japanese-style equal pay for equal work
Formulation and utilization of guidelines

Guidelines should provide examples that demonstrate treatment that can be recognized asclearly unreasonable by individual workers and employers and treatment for which
improvement is required.

(1) Examples of cases that companies can check for themselves
Area

Cases that can be self-checked

Allowances paid to employees
in managerial positions

Cases in which non-regular employees are not paid managerial allowances
despite holding a managerial role identical to that of a regular employee andbeing utilized as a human resource in exactly the same way

Improvement in treatment
according to level of proficiency
in work duties

Cases in which non-regular employees do not receive improvements in theirtreatment to correspond to their proficiency (e.g. raises in hourly pay),
despite increases in their level of proficiency

Bonuses/one-time payments
when expecting non-regular
employees to improve
performanceCases in which non-regular employees do not receive such bonuses, etc. atall, solely on the basis that they are non-regular employees(2) Examples of cases in which it is particularly advisable to consider revision/alternative measures
Area
Safety management, travel
allowances, use ofcafeteria/break rooms, etc.

Cases that can be self-checked
Cases in which the treatment of non-regular employees differs from that ofregular employees, solely on the basis that they are non-regular employees

4II.
requiredworking
towardthe realizationof Japanese-style
equal
pay
equal work
work
II. Initiatives
Necessary
steps fortowardtherealizationof Japanese-style
equal
pay
forforequal
Revision of legal systems“Dynamic Engagement of All Citizens” Plan, Approach (1): “Impose accountability on companies regarding differences in treatment”•➔

Article 4 of the Labor Contracts Act prescribes that employers are to ensure that all workers understand the content of
their labor contracts, but employers are only “obliged to endeavor” to do so, and measures to provide such explanations
to “full-time fixed-term contract workers” are insufficient.
It is necessary to improve explanations to “full-time fixed-term contract workers” regarding wage systems, etc.

“Dynamic Engagement of All Citizens” Plan, Approach (2): “Develop stipulations that form the basis of judicial rulings”••➔

The point at issue is whether to change the existing system of "legislation that prohibits unreasonable working conditions"(prerequisite that differences in working conditions are not unreasonable) to "legislation that states that working
conditions must be reasonable" (prerequisite that differences in working conditions are reasonable), and thereby
ensuring that companies have the burden of proving these differences are reasonable.
If the system is changed to adopt the prerequisite that any differences in working conditions between regular and nonregular employees must be reasonable, companies will have to rigorously prove reasonable grounds for such differences.
It is anticipated that this will result in companies establishing clear divisions between the work of regular and non-regular
employees in order to avoid conflict. This entails the risk of a decrease in the opportunities for non-regular employees toswitch to regular employment, and the risk that it may become difficult for older people to pursue roles in the workplace
after returning to employment post-retirement.
In light of the actual circumstances, Japan should maintain the policy of the burden of proving that differences areunreasonable, which is adopted in existing laws (Labor Contracts Act, Part-Time Employment Act)

Reference table: Difference between the “prerequisite that differences are not unreasonable” and the “prerequisite that differences are reasonable”*If the system is changed to adopt the prerequisite that differences in working conditions must be reasonable, the scope ofdifferences in working conditions that are permitted will become narrower.
Judge’s determination

Recognized as reasonableNot quite recognized as unreasonable

Recognized as unreasonable

Prerequisite = differences must
be not unreasonable (Japan)○ (Legal)○ (Legal)× (Illegal)

Prerequisite = differences must
be reasonable (Europe)○ (Legal)× (Illegal)× (Illegal)

Worker Dispatching Act•➔

Article 30, Clause 3 of the Worker Dispatching Act prescribes that employers are to ensure balanced treatment between"dispatched workers" and “employees who are directly employed by the company to which the worker is dispatched andwho engage in the same type of work," but employers are only “obliged to consider” this, and it is not a provision that canserve as grounds for a judicial decision.
It is necessary to consider revision of the Worker Dispatching Act, with the proviso that consideration should be given
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to the actual circumstances of worker dispatching.

III. Comprehensive improvement of treatment of non-regular employeesIn order to improve the standard of living of the nation as a whole and ensure
positive economic cycles, it is important for the public and private sectors tocooperate to pursue the realization of Japanese-style equal pay for equal work,and the comprehensive improvement of treatment of non-regular employees.

Voluntary efforts by companies

1. Ensuring that more ambitious and talented non-regular employees are able to switch toregular employment/employment with an indefinite term
2. Pursuing further efforts to increase hourly pay or enhance measures for human resources
development, etc.
3. Adopting more diverse recruitment methods and developing environments in which it iseasy for women to return to work/remain in employment after childbirth/raising children.
4. Enhancing communication with non-regular employees
Government efforts

1. Expanding the measures implemented as part of school education with the aim ofpreventing people from pursuing jobs not suited to them. This includes expanding
systematic careers education programs that correspond with students’ stages ofdevelopment in junior/senior high school
2. Implementing tax and social insurance systems that do not differ according to a person’s
way of working
3. Providing support for improving the productivity of small- and medium-sized businesses,
such as support for introduction of ICT
6Conclusion“Employment management categories” (employee categories based on job type, form ofemployment, etc.) and personnel/wage systems change with the times.
With decline in the labor force population tightening the labor market, companies facedifficulty securing talented human resources from within and beyond Japan.

How companies will respond with a view to the future:••

By enhancing initiatives to improve the treatment of non-regular employees and expand options for waysof working. It is possible that there will be a change in the conventional image of non-regular employees(the image that they are employees on fixed-term contracts who mainly engage in routine work duties).
By pursuing revision of the system in order to ensure work-life balance for regular employees. It is also
important for companies to develop environments such that talented workers from outside of Japan areable to work as they would in their home country.
The following approaches are expected to become widespread in the future:(1) Employees employed as a member of the company as a whole (who have no restrictions on theirpotential place of work and type of work) will receive treatment that takes into accountexpectations toward their future work, role, or level of contribution.
(2) Employees employed for a specific position (who choose to limit their work type and develop theirspecialist skills) will receive treatment based on their current work, role, or level of contribution.

It is anticipated that speeding up efforts by public and private sector bodies to work
together to improve the treatment of non-regular employees and encourage varied ways
of working that allow each worker to find the balance between their "work-related needs"
and their "satisfaction with their treatment/sense that their work is rewarding" will makeit possible to transcend the division between regular and non-regular employment, andachieve a society in which the term "non-regular employees“ (and the concept it entails)
do not exist.

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