The Journal The Authority on Global Business in Japan

Thank God it’s Friday—now leave the office early. That is the message of the Japanese government’s Premium Friday campaign, which encourages the nation’s overworked employees to take a few extra hours to relax on the last Friday of the month.

Launched in February, the public-private initiative aims to spur a consumption boost—and potentially boost the birth rate—as Mr. and Mrs. Watanabe get to spend a few more precious hours together. While the retail and travel sectors are seen as the main beneficiaries, there could be longer-lasting productivity benefits—particularly if the campaign builds momentum.

The economic impact of a single Premium Friday could be as much as ¥124 billion (around $1 billion), assuming all Japanese workers clock out at 3:00 p.m., according to Dai-ichi Life Research Institute Inc.

Mizuho Research Institute Ltd. (MRI) has predicted a boost to travel consumption of ¥200–300 billion, with surveys showing increased demand for weekend trips—although both forecasts noted the need for broader implementation.

The initiative, which was among the 10 strategic projects the Ministry of Economy, Trade and Industry (METI) listed in its 2016 Japan Revitalization Strategy, follows public outcry over the death of a 24-year-old advertising agency employee from karoshi (death from overwork), amid official estimates that a quarter of all companies have employees working more than 80 hours of overtime per month.

Another government study found that Japanese employees use only 8.8 days of annual leave—less than half the allocated amount—compared with the 100 percent take-up by workers in Hong Kong and 78 percent in Singapore. If all Japanese workers took their allocated leave, it could boost the economy by ¥16 trillion per year, according to one estimate.

“There is still a strong cultural norm in Japan that sees long working hours as a good thing,” said Keidanren Chairman Sadayuki Sakakibara. “We must somehow put an end to this.”

A chance to relax can boost worker productivity. Better work–life balance helps strengthen families.

LIFE-ENRICHING
On the first Premium Friday, February 24, Prime Minister Shinzo Abe led from the front by reportedly leaving his office around 3:00 p.m. to visit a temple. This was followed by a brief concert, an experience he described as “life-enriching.”

Hiroshige Seko, minister of Economy, Trade and Industry, also urged ministry staff to “leave the office early today . . . as long as doing so does not affect your operations.”

However, the Nikkei newspaper noted that lights were still burning brightly late at night in Tokyo’s Kasumigaseki administrative district.

“With the exception of the Ministry of Economy, Trade and Industry, which is the champion of the Premium Friday campaign, government ministries and agencies are not taking part in it seriously,” a senior official told the financial daily.

The private sector has also seen mixed results, despite more than 4,200 companies signing on to the campaign. Participants span many industries and include home builder Daiwa House Industry Co. Ltd., confectionary maker Morinaga & Company, Ltd., and telecommunications group SoftBank Corp.

Retailers have held a range of promotions coinciding with Premium Friday, from makeup seminars at the Takashimaya Shinjuku store to half-price beers at Sapporo Lion beer halls.

Travel companies have also tapped into the campaign, with special promotions by All Nippon Airways Co. Ltd., East Japan Railway Company, and others. The results have been positive. JTB Corporation, Japan’s largest travel agency, cited a 20 percent increase in domestic hotel bookings on February 24, and Hankyu Travel International Co. Ltd. tripled its bookings for departures on the day to nearby countries such as South Korea and Thailand.

Yet, a survey by marketing firm Intage Inc. found less than 4 percent of Tokyo employees left work early on February 24, despite about 10 percent being encouraged by their companies to do so.

Among those who managed to leave the office early, around half said they just went home, while a third said they went out to eat. The survey also found that companies with more than 1,000 staff were the biggest participants, with some 6 percent having an official Premium Friday policy, compared with just 2 percent of those with less than 100 employees.

An informal survey by The Journal found little take-up of the campaign among Tokyo workers.

“We’ve discussed it every week at our marketing meeting since it started, but we are still only monitoring it, as we don’t think it’s penetrated society yet,” said Kanna Iizuka, communications director at Shangri-La Hotel, Tokyo. “Among our friends and families who work in Tokyo, no one is able to leave work at 3:00 p.m. on a Friday; and we haven’t seen any guests taking advantage [of the opportunity]. However, we may introduce offers targeted toward Premium Friday when the time is right.”

While welcoming the campaign, Hilton Tokyo General Manager Michael Williamson said he had yet to see any results.

“The hotel is already busy on Friday afternoons, and weekends in Tokyo are busy,” he explained. “However, if [the campaign] gets the message across about limiting overtime, that in itself is a worthy cause.”

GO BIG OR GO HOME
Both hotel managers suggested greater effort is needed to ensure Premium Friday delivers on its goals, amid a traditional corporate culture of long hours in the office.

“The government obviously has influence over its own people, with campaigns like Cool Biz being followed very quickly. But people in their forties and fifties need to lead by example, because if the head of department is not doing it then nobody else is going to do it—and that’s absolutely key,” Williamson said.

Paul Kraft, chair of the Food and Agriculture Committee at the American Chamber of Commerce in Japan (ACCJ), said the campaign had been “a bigger news story than its initial results.”

“Hats off to the organizers; however, the execution has been a little lacking,” he said. “As we say in the States, the government has to either go big or go home—put in tax breaks, put in an official government recommendation so the large labor unions can use it as a negotiating point in their annual negotiations. Something like that would be far more effective than a policy where only a small number of companies are able or willing to take part.”

Kraft pointed to companies that have flexible working policies in place, such as allowing staff to go home by 7:00 p.m.

“It’s that thing where everyone does it or no one does it, and if not every company can do Premium Friday, then I don’t see it taking hold. But in a company where everyone has permission to leave by 7:00 p.m.—no matter who your boss is—it works.”

Kraft suggested an initiative of greater potential benefit could be the introduction of daylight saving time—“a far-reaching effect that would benefit everyone, and not just a few.”

Extra shopping hours could boost the economy.

PRODUCTIVITY BOOST?
Naoki Kamiyama, chief strategist at Nikko Asset Management Co. Ltd., has described Premium Friday as being among a range of government measures to lift consumption, including offering shopping coupons and travel vouchers, as well as delaying the planned consumption tax hike until 2019.

“I don’t see a GDP impact from Premium Friday, but more people are taking holidays by using this excuse or eating out, so I think this is positive,” he said.

“Another effect may be as a talking point between labor unions and management . . . so the effects will be coming quite gradually.”

Should Premium Friday take hold, there could be even bigger benefits for a nation with a declining labor force and an urgent need to boost productivity—particularly in the service sector.

But CEO Jesper Koll of exchange-traded product sponsor and asset manager WisdomTree Japan K.K. pointed out the realities for small businesses: “For a mom-and-pop shop to implement it, it’s always going to be tricky, as there’s always that customer who turns up at 4:30 p.m. on a Friday who makes the difference. But for companies that employ 200 staff or more, having this order from the government forces them to rethink the way they’ve always done things.

“Forcing change in the way people do things is exactly the right signal in boosting service sector productivity, which typically in Japan is one-third to one-quarter the level of other advanced economies.”

As well as benefiting the retail and travel industries, Koll said it could aid Japan’s nonprofit sector.

“Japan’s nonprofit sector is surging, and now accounts for almost 10 percent of GDP. So, if people don’t have to work until 7:00 p.m. on a Friday, this could definitely allow for some more volunteer activities.”

The shift toward an improved work–life balance could help reduce excess industrial capacity in an age of increasing automation and growing debate over the proper balance between leisure and office time, Koll added.

“Right now, Premium Friday is a gimmick, but I haven’t yet met a Japanese manager or executive who isn’t intrigued or annoyed by it. Is it going to turn into a monthly mini-Golden Week? Probably not, but it is a step in the right direction for a government that’s willing to think outside the box to boost productivity.”

For Japan’s retail and travel sector, Premium Friday could deliver a longer-lasting boost than the Tokyo 2020 Olympic and Paralympic Games. And, if managers are forced to rethink traditional work practices, the Abe administration might just get that structural change it has been searching for.

Anthony Fensom is a communication consultant/writer with experience in Australian/Asian financial and media industries, including six years in Tokyo.
It is a step in the right direction for a government that’s willing to think outside the box to boost productivity.