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No.230 (2017/2/13)
Economic and Labour Situation in Japan (February 2017)
Government Proposes 60-Hour Overtime Cap

At a meeting of the government's work reform committee, Prime Minister Shinzo Abe said that "Overtime work hours are a structural problem, so it is necessary to reconsider corporate culture and business practices." He also announced that the government would present a draft proposal at the committee's next meeting on February 14 restricting overtime to 720 hours per worker per year, which means basically that the monthly average throughout the year would be 60 hours at most. However, the rules would allow companies to authorize up to 100 hours of overtime during a single busy month. If the peak period spanned two months, the average cap for that timeframe would fall to 80 hours.

The business community has accepted the need for tougher overtime restrictions with some conditions and sufficient leeway in terms of time. But Rikio Kozu, president of RENGO (Japanese Trade Union Confederation), retorts that the government is not going far enough. "A hundred-hour benchmark is unacceptable," he said. "We need to convey a clear distance from the standards set for death from overwork [karoshi in Japanese]."

The specific revision of labor legislation will be discussed in the Diet this autumn.

Industrial Production
The industrial production preliminary report for December showed some improvements. Production, inventories, and inventory ratio increased, while shipments decreased.

2010 average=100
  Seasonally adjusted index Original index
  Index Change from
previous month (%)
Index Change from
previous year (%)
Production 100.4 0.5 100.7 3.0
Shipments 99.2 -0.3 100.6 2.4
Inventories 107.1 0.2 106.7 -5.0
Inventory ratio 108.8 0.9 105.8 -6.5

Industries that mainly contributed to the increase were as follows: (1) transport equipment, (2) chemicals (excl. drugs), and (3) electronic parts and devices, in that order.

Industries that mainly contributed to the decrease were as follows: (1) information and communication electronics equipment and (2) general-purpose and business-oriented machinery.

According to the Survey of Production Forecast in Manufacturing, production was expected to increase by 3.0% in January and by 0.8% in February 2017.

Family Income and Expenditure Survey in December
(1) Expenditure for Two-or-More-Person Households

The average monthly consumption expenditure per two-or-more-person household in December was 318,488 yen, up 0.1% in nominal terms but down 0.3% in real terms year-on-year.

(2) Income and Expenditure for Workers' Households
The average monthly income per household stood at 924,920 yen (include bonus payment), up 2.7% in nominal terms and 2.3% in real terms year-on-year. The average consumption expenditure was 394,214 yen, up 2.6% in nominal terms and 2.2% in real terms year-on-year.

Labour Force Survey Monthly Results
(1) Employment

The number of employed persons in December was 64.66 million, an increase of 810,000, or 1.3%, over the same month in the previous year.

(2) Unemployment
The number of unemployed persons in December was 1.93 million, a decrease of 110,000, or 5.4%, from the same month in the previous year. The seasonally adjusted unemployment rate in December was 3.1%, the same level as the previous month. The unemployment rate for men was 3.4%, up 0.2 point, while that for women was 2.7%, down 0.2 point from the previous month.

(10,000 persons)
  December figures Change from previous year
      (%)
Population aged 15 years or over 11,077 0 0.0
Labour force 6,658 70 1.1
Employed persons 6,466 81 1.3
Employees 5,798 104 1.8
Unemployed persons 193 -11 -5.4
Not in labour force 4,411 -71 -1.6
Labour force participation rate (%) 60.1 0.6 -
Employment rate (%) 58.4 0.8 -
Unemployment rate, original series (%) 2.9 -0.2 -
  Current month Change from previous month
Unemployment rate, seasonally adjusted (%) 3.1 0.0 -

(3) Job availability
Japan's job availability in December was at the highest level since August 1991, with the ratio of job offers to jobseekers standing at 1.43, up 0.02 point over the previous month. This figure means that there were 142 jobs available for every 100 jobseekers. The ratio of new job offers to applicants, a leading indicator for the labour market, rose to 2.18. Japan has likely achieved full employment and faces a severe labour shortage.

Consumer Prices
The consumer price index in December was 100.1 (2010 = 100), down 0.2% from the previous month and up 0.3% over the same month of the previous year. The inflation rate remains far below the 2% target set by the Bank of Japan.

December 2016
Index Monthly
change (%)
Annual
change (%)
All items 100.1 -0.2 0.3
All items, less fresh food 99.8 0.0 -0.2
All items, less food (less alcoholic beverages) and energy 100.4 -0.1 0.0
All items, less imputed rent 100.3 -0.2 0.4
(10 Major Group Index)   
Food 102.5 -0.9 2.5
Housing 99.8 0.0 -0.2
Fuel, lighting, and water charges 91.8 0.8 -4.8
Furniture and household utensils 99.7 0.0 -1.0
Clothes and footwear 103.5 -1.2 0.6
Medical care 101.0 -0.1 0.8
Transportation and communication 98.4 0.3 -0.7
Education 101.9 0.0 1.5
Culture and recreation 101.4 0.0 0.5
Miscellaneous 100.5 -0.1 0.3
(Goods and Service Group Index)
Goods 99.9 -0.4 0.5
Services 100.4 0.0 0.2
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