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A Japanese Company Bans Late-Night Work. A Baby Boom Soon Follows

Posted in Featured, S. Asia

Published on July 17, 2023 with No Comments

Japan has long been known for a work culture in which grueling hours at the office-often followed by evenings spent eating and drinking with work colleagues-make having a family challenging, especially for female workers. When Masahiro Okafuji became chief executive officer of Itochu Corp. in 2010, he made improving productivity a top priority so the company could compete against bigger rivals in Japan. His approach was counterintuitive. Working in the office after 8 p.m. would be banned, and there would be no more overtime-with rare exceptions. Security guards and human resources staff would scout Itochu’s office building in Tokyo, telling people to go home. Those clinging to their desk were told to come in early the next day to get their work done-and get paid extra.
The tough love worked. A decade later, the company-whose businesses range from the FamilyMart convenience store chain to metals trading-reported a more than fivefold jump in profit per employee from 2010 to 2021 as surging commodities prices and a weak yen buoyed its bottom line. What also changed, to the surprise of Itochu’s management, is that more female employees took maternity leave, had kids and came back to work.

“We set out to boost productivity but had no idea it would have an impact on the birthrate,” says Fumihiko Kobayashi, Itochu’s executive vice president.

The trading house has emerged as an unlikely trailblazer in bucking a falling birthrate trend that Japan’s government and others around the world have tried hard to reverse, without much success. Itochu saw the fertility rate among full-time employees double in the years since Okafuji became CEO, reaching almost two children per female employee in the fiscal year ended March 31, 2022-far exceeding Japan’s current national rate of about 1.3.

The birthrate spike caught the attention of Itochu board member Atsuko Muraki, who previously served as director of equal employment and child welfare at Japan’s Ministry of Health, Labour and Welfare. She encouraged the company to make the trend-defying numbers public last year, seeking to send the social message that, for women, raising kids and having a career don’t have to come at each other’s expense. Mixed reactions followed. Some criticized Itochu for meddling in employees’ lives and being insensitive to those with reproductive challenges.

Japan has long been known for a work culture in which grueling hours at the office-often followed by evenings spent eating and drinking with work colleagues-make having a family challenging, especially for female workers. As a result, many women exit the workforce to care for kids. Itochu’s night work ban eased some of that pressure. And after the Covid-19 pandemic, employees were granted the option to work from home two days a week. The company went further last year, when it cut core office hours from eight to six, so people can punch out as early as 3 p.m.

So while getting pregnant might effectively mark the end of a woman’s career at lots of other Japanese businesses, many female employees at Itochu returned, thanks to the curtailed working hours and a day-care center the company set up near its office, making it easier to juggle jobs and caring for kids.

Itochu’s experience could offer some particularly important lessons for Japan and its neighbors in East Asia battling falling fertility rates. Japanese Prime Minister Fumio Kishida is seeking to halt an accelerating birth decline that he calls a “national crisis,” which threatens to create an 11 million worker shortfall by 2040 and lead to a collapse in the nation’s pension and health-care system. A new agency for children and families was created in April to tackle these challenges, while in June Kishida pledged $25 billion in new policies to encourage people to have more babies.

Outside Japan, falling fertility rates risk taking the steam out of Asia’s economic powerhouses. South Korea has had the world’s lowest birthrate for years, dipping to 0.78 in 2022. The proportion of women age 25 to 39 dropping out of the workforce there is also the highest among developed nations, believed to stem in part from a lack of child care-another driver of low fertility.
Growing financial strain and lack of child support have also led China’s population to shrink for the first time in six decades, handing the crown of the world’s most populous country to India.

It’s no secret that a punishing, unsupportive corporate culture across these Asian economies has taken a toll on women’s willingness to have children. Many working in China’s tech industry lament an overtime culture known as “996”-working from 9 a.m. to 9 p.m. for six days a week. Jack Ma, founder of Alibaba Group Holding Ltd., drew widespread criticism in 2019 for calling “996” a blessing.

One Chinese company recently sought to ease that toxic work culture. In June online travel agency Trip.com Group Ltd. said it would offer annual 10,000-yuan ($1,379) child-care subsidies to employees for every newborn child through the age of 5, in addition to options to work from home and assisted-reproduction benefits.

While trading houses such as Itochu have underpinned Japan’s postwar economic miracle, they also embody the nation’s corporate culture characterized by male dominance, long working hours and pressure to join drinking parties with bosses and clients after work. Few expected major companies like Itochu, Mitsui, Mitsubishi or Sumitomo to break away from the decades-old ethos of extreme dedication to work and become a pioneer in the push for better work-life balance.

So when Anna Furuya returned from maternity leave in 2013 to her job at the time in Itochu’s textile division, in the early days of the company’s working-hour reforms, she felt like an outlier whenever she left for home earlier than her colleagues. “The change hadn’t sunk in yet, so I was a minority using it and felt guilty to leave early,” she says.

Now the 38-year-old, who these days works in Itochu’s corporate division, says she’s “incredibly happy” with her life as a working mother. Furuya sometimes starts her day in the office at about 6:30 a.m. and leaves around 4 p.m. She can then watch her 9-year-old son do his homework while cooking dinner. “For people like me who are raising kids, it’s really necessary to shift your life to earlier in the morning to be efficient,” she says.

Other Japanese enterprises have taken note. Mitsui Sumitomo Insurance Co. said earlier this year that starting this month it would give as much as 100,000 yen ($700) to employees who assume some of the workload from colleagues on child-care leave. And Recruit Holdings Co., the Japanese parent of job search and review sites Indeed.com and Glassdoor, allows employees to work from home most of the time and offers extra days off on top of statutory holidays.

Big companies are generally more active in introducing work flexibility than smaller ones. Almost a third of large companies in Japan with more than 1,000 employees offer flexible work hours, compared with fewer than 10% of those with no more than 100 people, government data show.

Yet some question whether Itochu’s success can be replicated more broadly. Child-rearing requires both money and time. Trading houses offer some of Japan’s most well-paid jobs. The average annual income for someone working at Itochu in 2023, 17.3 million yen, is about four times the national average.

“The biggest reason for the birthrate drop is that people with low economic status don’t have financial means to have a family or children,” says Yasuko Hassall Kobayashi, an associate professor of Asian studies at Ritsumeikan University. “Itochu represents wealthy people in Japan. Employees and their partners are most likely to be high earners who can afford it.”

Still, the so-called shosha man stereotype of male corporate elites no longer fits Itochu’s workforce. The company says the flexibility and support it offers have attracted more women to join and fill mission-critical positions. Male employees also appear to be more involved with their families-half of them have taken paternity leave, compared with 14% of male workers nationwide.

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“I don’t feel guilty about leaving early anymore,” says Furuya, the working mom at Itochu, “because it applies to everyone, not just mothers.”

 

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