Japan's government laid out a plan on Tuesday that improves pay for contract employees but takes a soft-touch approach to reigning in the country's notoriously long working hours. The plan is a crucial part of Prime Minister Shinzo Abe's labour reforms, which he has touted as a way to narrow the wealth gap and make it easier for more women, elderly, and the young to join the workforce.
Raising pay should be a welcome boost to consumption, but reducing working hours could prove more difficult, because Japan is already short of workers in several industries.
"I support anything that will increase wages for low-income earners, because they have a higher propensity to spend," said Hiroaki Muto, economist at Tokai Tokyo Research Center.
"The overtime policy is a compromise, because the government was worried about making sudden changes that would shock the economy."
Through regulatory changes from the 2000s, Japan has developed a two-track labour system. Companies can often hire non-regular or contract employees who earn less pay and benefits but do the same work as better-payed regular employees.
The government said on Tuesday it will start preparing laws that will eventually eliminate the pay gap between regular and non-regular employees doing the same work. The government plans to submit the necessary bills from next fiscal, which starts in April.
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