Emerging Insight: Unveiling the Japan Decent Work 8 Index

Article | 26 March 2024
Many international guidelines and standards have been proposed for “S (social)” indicators when considering environmental, social and governance (ESG) disclosure. However, international standards and indicators alone may not be sufficient when considering local social systems and employment practices.

Japan is one such example. Traditional Japanese employment practices often require regular employees (seishain) to work longer hours and be available for geographic relocations. This limits their capacity to perform household responsibilities, such as child and nursing care. Consequently, lower-paid non-regular workers tend to assume a heavier responsibility for domestic duties, leading to career disparities among workers.

Reflecting on these county-specific characteristics, the QUICK ESG Research Centre, together with the Research Institute for Advancement of Living Standards (established by the Japanese Trade Union Confederation RENGO) developed the Japan Decent Work 8 Index. This index is designed to cover companies listed on the Prime Market in Japan, with an aim to serve as a guideline to encourage dialogue between companies and investors.

Based on social issues pertinent to the Japanese working culture, the index proposes eight indicators to realize decent work.

1. Adequate working hours and wages (by employment management category)
  • Average annual total working hours by employment management category
  • Average annual income by employment management category
2. Elimination of gender gap
  • Number and percentage of employees in each position by gender
  • Average annual income by gender
3. Flexible working style
  • Percentage of employees using remote work and average weekly remote work hours by gender
  • Acquisition rate and duration of childcare leave by gender
4. Secure workplace
  • Initiatives to enhance psychological safety
5. Investment in human capital
  • Annual total training hours per person by employment management category
  • Training expenses per person by employment management category
6. Diversity and inclusion
  • Number of employees with disabilities and their average years of service
7. Working conditions in the supply chain
  • Human rights due diligence in supply chain
  • Adequate transactions with subcontractors and other supply chain companies
8. Sound labour-management relations
  • Existence of labour unions, union membership rates, and scope of union membership
  • As such, this index tries to create better integration between local specificities and global expectations of financial institutions, while at the same time growing corporate values in Japan. The index is now available in Japanese and, in summarized format, in English.