How A Ban On Late Night Work At Office By A Japanese Company Reportedly Led To A Spike In Birth Rate

It was more than a decade ago when a Japanese company¡¯s CEO took the decision of banning late night work shifts.

When Masahiro Okafuji became the CEO of Japanese general trading company Itochu Corp. in 2010, improving productivity was a top priority for the company to compete against bigger rivals in Japan. It was to achieve that goal he took this key decision, one which we seldom hear of in any country or company.

No Overtime Or Late Night Work After 8 pm

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The CEO decided that working in the office after 8 pm should be banned, and there would be no more overtime pay for working late ¡ªwith rare exceptions. Security guards and human resources staff would scout Itochu¡¯s office building in Tokyo, telling people to go home.

Those still sitting at their desks were told to come in early the next day to get their work done¡ªand get paid extra, as per Bloomberg.

The Baby Boom After The Decision

And yes, the tough love worked.

Now a decade later, the company¡ªwhose businesses range from the convenience store chain to metals trading¡ªreported a more than fivefold jump in profit per employee from 2010 to 2021.

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.

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¡°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 that ended March 31, 2022¡ªfar exceeding Japan¡¯s current national rate of about 1.3, the report mentioned.

The spike in birth rate 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 also 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 didn't have to come at each other¡¯s expense. Mixed reactions followed. Some criticised Itochu for meddling in employees¡¯ lives and being insensitive to those with reproductive challenges.

Not The Only Pro-Employee Decision By The Company

After the Covid-19 pandemic, the company¡¯s employees were also 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 could punch out as early as 3 pm.

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 daycare centre the company set up near its office, making it easier to juggle jobs and care for kids.

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How The Company's Decision Offers Important Lessons

Itochu¡¯s experience can indeed offer some particularly important lessons for Japan and its neighbours in East Asia who are battling falling fertility rates.

Japanese Prime Minister Fumio Kishida to is reportedly 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 healthcare 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.

Even outside Japan, falling fertility rates risk taking the steam out of Asia¡¯s economic powerhouses. South Korea has had the world¡¯s lowest birth rate 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¡ªanother driver of low fertility.

Growing financial strain and lack of child support have also forced China¡¯s population to shrink for the first time in six decades, handing the crown of the world¡¯s most populous country to India this year.

(h/t: Bloomberg)

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