Low levels of digitalisation are a barrier to telework in Japan


Author: Hiroaki Richard Watanabe, University of Sheffield

Despite its ‘high-tech’ image, Japan is in many ways relatively ‘low-tech’. While companies and governments in many countries shifted to ‘telework’ or ‘work from home’ to cope with the spread of COVID-19, many Japanese companies and government offices have been unable to adapt.

A developing supercomputer 'Fugaku' is opened to the media at RIKEN Center for Computational Sciences in Kobe City, Hyogo Prefecture on 16 June 12020 (Photo: Reuters/Yomiuri Shimbun).

Japan’s low-level of digitalisation is the most significant impediment to implementing telework. According to a survey conducted by the Ministry of Health, Labour and Welfare (MHLW), only 26.83 per cent of office employees in Japan worked from home during the voluntary lockdown between 7 April and 26 May. Japanese IT research group ITR also reported that only 28 per cent of surveyed companies had an online system that allowed staff to work remotely.

Business transactions and government administration in Japan tend to be carried out through paperwork in face-to-face meetings. A survey conducted by the Japan Institute for Promotion of Digital Economy and Community showed that only just over 40 per cent of Japanese companies can cope with the digitalisation of paper documents. Moreover, a survey conducted by the Japan Association for Chief Financial Officers revealed that 77 per cent of companies did not introduce telework due to the difficulty in digitalising paper documents. Low levels of digitalisation are also a major factor contributing to Japan’s low labour productivity, the lowest among G7 countries.

Fax machines are still often used in both business and government instead of emails and PDF attachments. Until May 2020, there was a legal requirement that doctors complete paperwork on new COVID-19 cases by hand and then fax them to public health centres. Many business contracts and government documents also require a hanko — a traditional Japanese seal to be stamped on contracts — as a common custom even though it is not legally required for most transactions. Some business people and government officials have thus not been able to avoid commuting to the office as they have had to stamp a hanko on contracts.

A key reason for the low level of digitalisation is bureaucratic regulations and interests group politics.

The current Minister for Science and Technology Policy responsible for promoting the digitalisation of public administration procedures, Naokazu Takemoto, is also the chairman of the ‘group for protecting Japan’s hanko culture’ under the governing Liberal Democratic Party (LDP). Hanko companies have acted as an interest group and demanded that the government refrain from promoting digitalisation at the cost of their business. For this reason, Takemoto has been reluctant to promote digitalisation until recently when government guidelines for working from home to prevent the spread of COVID-19 forced him to change his attitude.

Online medical services provides another example of regulatory and political barriers. Due to political pressure from the Japan Medical Association — a powerful interest group and an LDP ally — MHLW has been reluctant to promote the use of online medical services. Amid the COVID-19 crisis has MHLW carefully taken limited steps to partially deregulate such services, but there is still room for further improvement.

Strong public affinity for these outdated practices continues to prevent Japanese businesses and government from promoting telework. Even after the Japanese national and local governments issued official guidelines to urge people to refrain from commuting to workplaces, many people could not avoid doing so. According to several surveys, the need to access to paper documents, use hanko and have face-to-face meetings were the most frequently cited reasons for commuting to the office instead of working from home.

The COVID-19 outbreak has made digitalisation an urgent issue for both the private and public sectors. Cabinet councils such as the Council for Regulatory Reform have recently begun discussing digitalising paper documents and abolishing hanko stamps. But previous attempts by the national government through the enactment of the ‘E-Signature Law’ in 2001 and the ‘Digital First Law’ in 2019 were ineffective because local governments were only ‘encouraged’ to promote digitalisation.

A silver lining of the COVID-19 outbreak could be that it pushes Japan towards greater flexibility in the workplace. But hurdles to a more widespread uptake of telework remain high. Until Japan’s low level of digitalisation is rectified it will remain a significant barrier to both greater productivity and to flexible working arrangements.

Hiroaki Richard Watanabe is a Lecturer in the School of East Asian Studies at The University of Sheffield.

This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.

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