Japan: Giant delivery company to pay $175 mln in unpaid overtime

7 years ago - Published in Finance, Fundamental Analysis

Japanese transportation service group Yamato said Tuesday it will pay about 47,000 employees 19 billion yen ($175 million) in unpaid overtime for the past two years.

The delivery company admitted that many of its drivers had to work long hours, including overtime without pay, a chronic situation due to a surge in parcel delivery demand in line with rapid growth in the e-commerce industry.

Citing the cost of the overtime payments, Yamato Holdings sharply revised down its consolidated earnings estimates for the latest business year ending in March. As a result, its operating profit for the year is likely to decline to 34 billion yen from 58 billion yen projected in January. Net profit is also expected to decrease to 19 billion yen from 34 billion yen.

Senior Managing Executive Officer Kenichi Shibasaki said the company became unable to properly manage work hours of its drivers in autumn last year, as online shopping demand expanded faster than expected.

A labor standards inspection office in Kanagawa Prefecture, ordered a branch of Yamato Transport last year to take corrective measures against unpaid overtime. The Labor Standards Act stipulates that employees have the right to demand unpaid wages including overtime pay, but their claim must be made within two years from the date of the violation of the law. The right to claim unpaid wages automatically expires after two years.

This led the company to have talks with labor about ways to reform work styles and investigate unpaid overtime by its group workers. “Our measures to deal with the change of the environment, such as the sharp growth of e-commerce and a shortage of manpower, were insufficient,” added Shibasaki. He said the company is now considering imposing disciplinary measures on its executives.

On March, another company, Kansai Electric Power, admitted it has not paid 12,900 employees a total of 1.7 billion yen in overtime wages for a two-year period through the end of last year.

A recent survey conducted between Japan's major corporations showed only one in four companies saying they plan to introduce a cap. Long working hours have drawn renewed attention in Japan after the suicide of an overworked employee of Dentsu Inc. in late 2015 and a consequent labor bureau crackdown on the major advertising group came as a fresh reminder of the country's notorious ethos of overwork as well as on the shrinking working population.

A government study has shown that the country's working population in the age group of between 15 and 24 years is set to drop to 4.85 million in 2030 from 9.00 million in 1994.