Four-day Work Week as a Catalyst for Economic and Social Change

IWAMOTO Masayuki
Consulting Fellow, RIETI

Following the introduction of the five-day work week for national government employees in 1992, it became the norm for Japanese workers - whether in the private or public sector - to take Saturdays and Sundays off. Japan has often been ridiculed for being a "country of worker bees." However, the number of hours worked per year per employee, which topped 2,000 hours in 1990, when Japan was at the height of the economic bubble, has since gradually declined to slightly below 1,800 hours today. Nevertheless, this is still a high number compared to other developed countries.

With more than 15 years having passed since the five-day work week was introduced in a major way, it may be about time to consider the possibility of further increasing the number of days-off per week. Based on this way of thinking, I would like to explore the possibility of introducing a four-day work week, a system that would likely bring significant changes to the Japanese economy and society.

* But before moving on, let me note that what I will discuss below is my personal view and does not represent in any way the view of any organization I belong to or associate with.

Need for demand boosting measures not reliant on public funds

Since the change of government in summer 2009, discussions have been held, under the catch phrase "from concrete to people," on measures to directly boost household disposable income levels as a means to expand domestic demand. However, all such measures considered to date - which naturally includes the child allowance for child-rearing families - are dependant on public funds, with no specific proposals made as to how to achieve a domestic demand expansion that is sustainable over time and not reliant on public funds. For Japan, a country running a massive fiscal deficit, it is imperative to consider ways to expand domestic demand without relying on public funds.

Shifting to a service-oriented economy is crucial to domestic demand expansion

What kinds of policies are needed to expand domestic demand without relying on public funds? The key phrase is a "shift to a service-oriented economy." By this, I am referring to an increase in the weight of service industries (tertiary sector) in Japan's industrial structure. During and after the postwar high growth period, Japan has pursued and established its status as a major industrial nation, thus resulting in an industrial structure in which the share of service industries is small compared to other advanced economies such as the United States and the United Kingdom. In other words, Japan is lagging behind its overseas counterparts in shifting to a service-oriented economy. On the other hand, however, this means that Japan's potential service demand is large in relative terms. Therefore, if Japan is to expand its domestic demand, the government should focus on measures designed to tap potential service demand, for instance, for personal services, rather than on measures for boosting demand for goods such as tax incentives for the purchase of environmentally friendly vehicles.

"Disposable time" is the key concept

With that in mind, is there a good way to stimulate service demand without using public funds? The key is the concept of "disposable time." Disposable time refers to the free time available after compulsory commitments such as work have been completed. Another way to describe it would be the familiar term of "leisure time." The more disposable time people have, the more time they spend on hobbies, shopping, and purchasing services, which has the knock on effect of stimulating economic and social activities. Services that target individual consumers such as restaurants, esthetic salons, and entertainment are inevitably quite time-consuming, making it imperative to increase people's disposable time in order to expand the demand of these services. This leaves Japan with no other choice but to push for more disposable time if it is to expand service demand and hence domestic demand as a whole.(note 1)

Introduce a four-day work week to increase disposable time and improve work-life balance

The most effective way to increase people's disposable time is to increase the number of days off per week. Shifting from the current five-day work week to a four-day work week would significantly increase disposable time for salaried workers. The introduction of a four-day work week would also bring various ancillary effects.(note 2)

First, it would help improve labor productivity. Under the current five-day work week system, people work five days in row and their productivity tends to decrease on Thursdays and Fridays as they become physically and mentally tired. Designating Wednesdays as the third day off each week, in addition to Saturdays and Sundays, would contribute to the improvement of labor productivity by reducing the number of consecutive days of work to only two and thus enabling people to come into work feeling refreshed both physically and mentally. Moreover, with the introduction of a four-day work week, work normally completed in five days would have to be completed in four, which might just be the catalyst that encourages Japanese companies to seriously consider drastic measures to improve productivity, such as changes in the way of using information technology and the introduction of work-sharing.

Second, the introduction of a four-day work week would give momentum to the move toward a better work-life balance. Japanese people, whose work-life balance is heavily tilted toward "work" at the moment, would then be able to shift that weight toward "life," which would bring significant changes to the public-private balance. Furthermore, this would also produce changes in the quality of people's lifestyles. The five-day work week, which was introduced about 15 years ago, has changed the way Japanese people spend their days off by enabling them to get away for the weekend, which used to be just a lofty dream. If Wednesdays were to actually become the third day off each week, how would people's lifestyles change? I will leave that to your own imagination!

A country with a four-day work week

I am not aware of any country that has formally introduced a four-day work week system but the Netherlands serves as an insightful reference in considering the pros and cons of a four-day work week. The Netherlands is often cited as the most advanced country in the world in the area of work-sharing. One of the main characteristics of the Netherlands' employment system is the presence of a large number of part-time workers. According to the Organization for Economic Cooperation and Development (OECD), approximately one third of the total workers in the Netherlands are part-timers with many of them working four days a week. Thus, a four-day work week has, at least to some extent, taken root as people's work style in the Netherlands.

Japan should seriously consider a four-day work week

The introduction of a four-day work week will require clearing a number of hurdles, which include amending the Labor Standards Act and other relevant laws and regulations, seeking people's understanding, and devising and implementing appropriate support measures for companies. However, as mentioned above, a four-day work week is not just another conventional policy that may or may not be effective. It is a robust scheme that is certain to bring about gradual but perceptible changes to the Japanese economy and society.

As an administrator working for the national government of Japan and as a citizen of the country, I earnestly hope that this policy will be put forward for serious consideration by the government and ruling parties.

January 26, 2010
  1. For an earlier study on the economic effects of longer holidays, see "Kyuka seido no arikata to keizai-shakai eno eikyo ni kansuru chosa-kenkyu-iinkai hokokusho" [Report by the research and study committee on leave systems and effects on the economy and society] (Ministry of Economy, Trade and Industry / Ministry of Land, Infrastructure, Transport and Tourism, 2002). According to the report, if Japanese workers take all of their annual holidays, it would result in an economic ripple effect of 11.8 trillion yen which would in turn generate 1.48 million jobs.
  2. An online survey of approximately 20,000 individuals on the preferred number of days off per week has found that 10,759 respondents, or roughly half of those surveyed, said that they wish to have three days off each week. This indicates that the three-day work week is widely supported by Japanese people.

January 26, 2010

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