Removing Work Hour Restrictions Boosts Birth Rate... Japan, 'Korea's Lookalike,' Highlights Companies as Key [K Population Strategy]

(38) Japan Facing Low Birthrate Concerns, Corporate Movements
Itochu Corporation Sees Female Employee Birthrate Near 2 After Workstyle Reform
NTT Reduces Short-Time Work with Full Remote Work Adoption
Hitachi Doubles 'Dad Parental Leave' Rate After Expectant Parent Education
'Nunchi' Issue Resolved by Paying Allowances to Colleagues

Editor's NoteThe key to solving South Korea's population problem lies within companies. A workplace culture that evaluates employees based on their work regardless of gender and a family-friendly environment are crucial to addressing the K-population issue. While low birth rates result from complex factors, it is important to ensure that workplace burdens do not become obstacles that make people hesitate to have children. Asia Economy plans to visit companies leading family-friendly policies to identify the factors that helped these systems settle firmly, and to explore multifaceted solutions with companies facing practical challenges. Through this, we aim to encourage change starting from companies and analyze the government's role in enabling this. We listen closely to voices emphasizing that company culture and atmosphere that reduce psychological burdens are more critical than financial support, and propose alternatives from various perspectives.

"No one expected that reforming the entire staff's working style through 'morning-type work' would ultimately support the active participation of female employees. As the way of working changed, female employees were able to continue their careers after childbirth without giving up."

This is a public confession posted on the website of Itochu Corporation, one of Japan's three major general trading companies. After drawing global attention by significantly increasing the birth rate of female employees over the past decade, the company made this statement last year while explaining the reform process. Itochu's total fertility rate among female employees rose sharply from 0.6 in 2012 to 1.97 in 2021. The unexpected result of this increase in birth rate was linked to the abolition of unnecessary overtime after 8 p.m. and the introduction of a morning-type work system in 2013 to improve labor productivity. During the same period, Itochu's labor productivity also increased more than fivefold.

Removing Work Hour Restrictions Boosts Birth Rate... Japan, 'Korea's Lookalike,' Highlights Companies as Key [K Population Strategy]

Japan, like South Korea, is deeply concerned about solving the low birth rate problem. Japan recognized the seriousness of low birth rates through the '1.57 shock' in 1989, when the total fertility rate of women of childbearing age was 1.57, and has been working for over 30 years to address population decline. Nevertheless, Japan's total fertility rate in 2022 was still low at 1.26, with significant concerns about labor shortages. The pain of working mothers and fathers in Japan closely resembles that in Korea, including long working hours, childcare and housework burdens falling disproportionately on women, and negative workplace attitudes toward pregnancy, childbirth, and childcare.

In this context, the achievements of Itochu Corporation are regarded as nothing short of a 'miracle.' Not only Itochu but also major Japanese companies prioritize work-family balance as a core issue. In response to societal changes such as the increase in female workforce participation and dual-income couples, they have introduced flexible working hours and expanded paternity leave, aiming to boost productivity and secure talent.

Itochu Breaks the 'Framework' of Working Hours Over 10 Years

The change in working style promoted by Itochu began by shaking up the framework of working hours. According to Itochu, as part of labor productivity reform 11 years ago, the company abolished overtime after 8 p.m. Instead, employees were required to start work between 5 a.m. and 8 a.m. The morning-type work system eliminated the culture of staying late unnecessarily out of concern for appearances. In the early days of the system, the HR department would walk around the office at 8 p.m. to turn off lights and often faced protests like "Will you take responsibility if work isn't finished?" After several months of this process, a change in employee awareness was achieved after 10 years.

Ten years after the system's introduction, in 2022, Itochu introduced the 'morning flex time system,' allowing employees to flexibly decide their commuting hours and work from home during early morning hours. Early morning work was compensated with a 25% premium, the same as overtime pay. Early afternoon leave (between 3 p.m. and 6 p.m.), which was initially difficult, also became possible. This created an environment where working parents could avoid core working hours to drop off and pick up their children.

According to a survey conducted by Itochu in September 2021 targeting employees who returned to work after childbirth, the most common reason cited for believing they could balance work and childcare was 'the working style of all employees.' The company explained that by introducing morning-type work regardless of gender, they prevented career breaks among female employees who gave birth and enabled their return to work.

Currently, Itochu is focusing on expanding paternity leave. While the Kishida Fumio Cabinet is making policy efforts to expand it, the main reason is the increase in dual-income couples, including couples within the company. The proportion of male employees in dual-income households at Itochu rose sharply from 10% in 2000 to 43% in 2021. Notably, in 2021, 90% of male employees in their 20s were in dual-income households. Although this rate dropped to 24% among those in their 50s, the change is inevitable from a mid- to long-term perspective. This is why Itochu, where male employees constitute over 75%, has embarked on another initiative.

Itochu stated, "Last year, we focused on expanding male participation in childcare. Most employees in their 20s and 30s are from dual-income families, and their use of time for work and life differs significantly from that of male employees in their late 40s and 50s. We will create an environment where each employee, regardless of gender, can maximize their abilities."

Already, Itochu's male paternity leave usage rate increased from 44% in 2015 to 52% in 2020. The average number of days taken for male paternity leave rose dramatically from 2 days in 2015 to 36 days in 2022. Considering that about half of male paternity leave users in Japan took less than two weeks off according to a 2021 government survey, Itochu's average usage period is relatively long.

NTT Enhances Talent Utilization and Productivity Through Work Flexibility

NTT, Japan's largest telecommunications company, introduced a full remote work system in 2022 for its 190,000 employees in Japan. This was to support employees' work-family balance by adopting remote work as a basic working method. Since 2003, remote work was allowed about twice a week for childcare or family nursing, but expanding it to all employees eased the burden on working mothers and fathers. Previously, employees had to live within a two-hour one-way commute to the office, but this condition was removed, and commuting to the office was considered a business trip with expenses reimbursed.

NTT Group believes this measure allows employees to continue their careers without spatial constraints and enables the company to utilize talent efficiently. After introducing this system, the proportion of employees choosing the 'short-time work system,' working 4 to 6 hours a day due to childcare, halved. The increased flexibility of location and the ability to use time without commuting allowed more employees to work full-time. The number of employees living near the office and thus separated from their families decreased by 10% as of January last year compared to before the system's introduction.

Japanese companies, including NTT, introduced telecommuting triggered by COVID-19. Working parents solved childcare issues through this. Observing this, the Japanese government has been preparing legislation since last year to mandate companies to allow employees with children under three years old to work from home. Currently, Japanese workers can use a short-time work system limiting daily working hours to six hours until their child turns three.

Hitachi Manufacturing Sees Surge in Male Parental Leave Usage... What Happened?

In Japan, where male participation in childcare is relatively low, active efforts are underway to expand paternity leave.

Hitachi Manufacturing, a Japanese electronics company, saw a sudden increase in male employees taking childbirth and childcare leave over the past year. According to the company's sustainability report, the male childbirth leave usage rate was 32.9% in fiscal year 2021 (April 2021 to March 2022) and rose by 11 percentage points to 43.9% in fiscal year 2022. Usage of childcare leave (not childbirth leave) nearly doubled from 9.9% in fiscal year 2021 to 18.4% in fiscal year 2022. The average duration of male childcare leave remained at 34 days. Hitachi Manufacturing explained to Asia Economy that encouraging employees to use childcare leave and increasing understanding of related systems among managers and key personnel led to the surge in users.

Hitachi Manufacturing emphasized that the 'Pre-Papa and Pre-Mama Seminars' held last year were effective. These events provide childcare information to male employees whose spouses are pregnant and female employees expecting childbirth, and were held seven times last year alone. About 250 male employees participated, and 98% of them said they would consider taking childcare leave. A survey conducted before the seminar showed that 29% who initially had no intention of taking childcare leave changed their minds afterward. By directly hosting seminars and actively introducing in-house systems such as childbirth leave and childcare leave, the company conveyed a message that employees can use these systems without worrying about their careers.

These movements by Hitachi Manufacturing and other Japanese companies are expected to help dismantle the social norm that 'childcare is the mother's responsibility.' According to the Basic Survey on Birth Trends conducted in 2021 by the National Institute of Population and Social Security Research, targeting about 8,000 unmarried men and women aged 18 to 55, the 'ideal life course for women' as perceived by unmarried women ranked 'combining work and childbirth' first for the first time since the survey began. This surpassed 're-employment after childbirth' and 'transition to full-time housewife.' At the same time, the number of men who value 'women's economic power' as a condition for marriage increased, and the proportion of women who emphasize 'men's ability or attitude toward housework and childcare' also rose significantly.

"Feeling Pressured by Colleagues"... Japanese Insurance Company Solves It with Allowances

As in South Korea, one reason why taking childcare leave is difficult in Japan is the 'pressure' issue. It is often hard to find replacement personnel, so colleagues have to take on the workload. According to Japan's Ministry of Health, Labour and Welfare, the response that 'no replacement personnel were provided and other employees in the same department handled the work' increased from 52.3% in 2019 to 79.9% in 2021 when employees took childcare leave. The increase in male childcare leave has further exacerbated this problem, according to local assessments.

To address this issue, Mitsui Sumitomo Insurance, a major Japanese insurance company, introduced the 'Childcare Leave Workplace Support Allowance (Congratulatory Money)' in July last year. When an employee takes childcare leave, the company pays a lump sum of up to 100,000 yen (about 910,000 KRW) to the team members. Initially, the company considered giving childbirth congratulatory money to the employee taking childcare leave but revised the system to provide financial compensation to colleagues to prevent division among employees. Based on this, Mitsui Sumitomo Insurance raised the male employee childcare leave usage rate to 86% by the end of 2021.