Update: the importance of social values within productivity

A month ago I made a post commenting on the interesting contribution that social values - such as long weekends, family time, etc  - made to productivity. Specifically, the relatively short and flexible working hours associated with the labour market in France and Germany seemed to be a significant boost to the productivity of the labour force.

Then today I read about the extreme, strenuous Japanese work culture, which is apparently contributing to the suicides of 2,000 people a year due to work - related stress. There are certain  highly - publicised cases where employees  have worked up to 100 hours of overtime in the months preceding their deaths.

 From the Guardian:

In its first white paper on karoshi in October, Japan’s government said one in five workers were at risk of death from overwork. The paper found that despite attempts by some companies to establish a better work-life balance, Japanese workers still spend much longer hours in the office than their peers in other countries.

According to the paper, 22.7% of companies polled between December 2015 and January 2016 said some of their employees logged more than 80 hours of overtime each month – the official threshold at which the prospect of death from work becomes serious.

With the apparently significantly longer and more intensive nature of the Japanese workforce - which arguably lacks so much social work - life balance that is has contributed to a decline in the sexual activity of Japanese citizens - it got me thinking whether the supposedly huge number of hours worked by Japanese employees was a strain on productivity.  In light of the apparent boost in productivity associated with the shorter - hour, socialist, employee - centric Franco - German model, this hypothesis could give significant merit to the importance of social values within productivity.


Average annual hours worked

Here is a 2014 chart from OECD data on the average annual hours worked. Average annual hours worked is defined as the total number of hours actually worked per year divided by the average number of people in employment per year. Overtime is included.

The chart shows that Japan is actually in the middle of the pack in terms of hours worked. The chart doesn't suggest that Japan's average annual hours worked is an extremity - far from it. Interestingly, Japan is closest to Italy in terms of average annual hours worked. Below are exact figures for hours worked for each country in the G8, organised in ascending order:

Germany: 1366.4
France: 1473.5
U.K: 1677.0
Canada: 1703.0
Italy: 1718.8
Japan: 1729.0
U.S: 1789.0
Russia: 1985.8

The plot thickens. Among developed, wealthy nations, Japan's annual average number of hours worked is relatively high, but still not the highest. Yet in the U.S and probably Russia (my knowledge about Russian society, and by extension Russian work life, is pretty limited) there are less cases of work - related suicide. So why are concerns especially prevalent in Japan, if there seems to be no extremities in work hours?

I think it is partly explained by the (unmeasurable) nature of the Japanese workplace/ work culture.

"The nature of the American employment system makes a difference for minimizing the risk of overwork suicide. American workers can switch jobs when they are under excessive pressure, unlike their Japanese counterparts who have often been bound to their companies via lifetime employment, which can be either bliss or a curse.

Moreover, Japanese companies emphasises the value of the company vs. the individual: employees are pressured to express their loyalty for their company. The influence of a highly traditionalist, 'honourable' Japanese culture can be observed, even in the operation of the workplace.


Are higher hours worked a lag on productivity?
Also,  there is still the question of whether this work culture is a lag on productivity.
There is still a fairly large difference of 300-400 hours between annual average hours worked in Germany and France and average hours worked in Japan.

Below are OECD data charts measuring GDP/ hour worked, a measure of labour productivity. However, labour productivity only partially reflects the productivity of labour in terms of the personal capacities of workers or the intensity of their effort. I have yet to find a better economic indicator. (Ideally, I would calculate labour productivity by dividing GDP by total number of hours worked. Unfortunately I haven't been able to find these stats online.)

G8: GDP per hour worked 

There is a trend amongst G8 countries - countries that have lower annual average hours worked per year generally have high GDP/hour worked - perhaps indicating that these countries are more productive.

For a more visual comparison:

Annual average number of hours worked:                        GDP/Hour, ascending:

Germany: 1366.4                                                                       Germany: 106

France: 1473.5                                                                           Canada: 105.1
U.K: 1677.0                                                                                France: 104.3
Canada: 1703.0                                                                           Russia: 102.4
Italy: 1718.8                                                                                Japan: 102
Japan: 1729.0                                                                              U.S: 101.6
U.S: 1789.0                                                                                 U.K:101.4
Russia: 1985.8                                                                             Italy: 101.1

There is a pretty general trend here. Lower average number of hours worked can correlate to higher GDP/hour, but the data doesn't indicate that it is causal.

Some countries, specifically Germany and France, have lower average number of hours worked and higher GDP/hour. As the data shows, Germany and France both have the highest and third highest GDP/ hour. France is also the country with the second least number of average hours worked - after France, there the general trend of number of hours worked/ year is significantly higher (France and Germany remain close at 1300-1400 hours worked, whereas the rest of the G8 have a range of generally 1600-1700, with Russia as the outlier.) This is reflected in GDP/hour - the GDP per hour of the countries with a range of 1600-1700, such as Japan, the U.S, the U.K and Italy (with the exception of Russia and Canada) are generally similar and range from $102-101. It almost seems as if the data can be separated into two groups: the 1300-1400 hours group with higher GDP/hour of approx. $104-106; and the 1600-1700 group with lower GDP/hour  of $101-102.

However, the data set does not follow this clear trend -  it contains several outliers that disprove this theory.

 Canada has the second highest avg. number of hours worked, yet has the second highest GDP/hour of $105.1 (which would place it in the same GDP/hour group as France and Germany, countries that have average annual work hours of approximately 300 hours less). Furthermore, Russia works approximately 200 hours more in a year, yet its GDP/hour is not significantly lower than the rest of the G8, and remains in the $101-$102 range.


Conclusion

So in conclusion, this analysis shows that hours worked do not openly influence the productivity. Instead, the unclear trend of the data indicates that it is the specific work cultures of each country that primarily impact productivity, proving that there is some importance in social values within productivity.