Japan’s Extreme Workplace vs. Sweden’s Liberal Flexibility: How Work Culture Shapes The Future Of The Office
In Japan, there is a word for death through overwork, karōshi, given such deaths are not infrequent among workers. In Sweden on the other hand, paid parental leave is 16 months, and the idea of your boss checking on whether you were working hard enough would be severely frowned upon.
The two countries represent the two ends of the spectrum when it comes to white-collar office work. We tend to think of office and workplace culture as an inevitable natural state, but Japan and Sweden show how these distinct cultures are forged by centuries of unique cultural, political and military events.
As has almost every advanced economy across the world, both have been hit by the impact of the coronavirus, exposing these workplace cultures to the need to adapt and work remotely, and there has been a consequent knock-on effect for the office market of big cities like Tokyo and Stockholm. This is where it gets interesting for the real estate professionals of countries like the UK and U.S. The office markets of both countries have remained resilient compared to other big cities like New York and London, providing some lessons for real estate pros in those markets.
Japan: ‘Working from home makes that effort more difficult to assess.’
Japanese working culture is high-pressure. It is, of course, important not to generalise an entire nation, but statistics bear out that a culture of extremely long hours in the office remained entrenched right up to the onset of Covid-19 — and beyond.
Government statistics show that workers tend only to take about half of their allotted days off each year, with staff in surveys citing guilt at letting down colleagues if they do so. Two days of vacation a year is not uncommon.
Long hours in the office are the norm: 100-hour weeks are reportedly relatively frequent. The word karōshi was identified in the 1970s and most commonly refers to deaths from heart failure, stroke and suicide. In 2017 a 31-year-old reporter at public broadcaster NHK died of heart failure after working 159 overtime hours in a month and taking just two days off. Her mobile phone was in her hand when she died. Three years ago the government introduced a new regulation to try and force staff to take at least 70% of their leave, but workers still report that culture trumps regulation.
Academics who have studied Japanese work practices say the culture dates back to the second half of the 19th century. After centuries of isolation, Japan began to open up to the world and industrialise, and “fukoku kyōhei,” or “enrich the country, strengthen the armed forces,” became a national slogan.
As big corporations began to emerge in the 1920s, it became a life goal for Japanese residents to find jobs at a large company and devote their lives to the firms as their contribution to enriching the country. In the period after the Second World War, this feeling was strengthened, with rebuilding the shattered economy the patriotic duty of every Japanese citizen.
It was not a one-way street: In return for their devotion, workers had job security unheard of in countries like the UK and U.S., with companies all but guaranteeing jobs for life. But the result was a culture of long hours in the office, intense scrutiny and top-down management.
The coronavirus may shift that culture.
“Employers will need to offer more flexible working options going forward if they want to attract the best talent, and that will be a big change for companies. But the number of people working from home will not be larger than in the U.S. or UK,” said Cushman & Wakefield Chief Operating Officer of Occupier Services for Japan Odysseus Markezinis, Japanese born and bred despite the name of a wanderer.
Markezinis harked back to the start of his career around 20 years ago, when in some Japanese companies it would still be common for a bell to ring at the start of the day at 9am, by which time everyone had to be at their desk working, and then another to ring at 6pm, signifying that the working day was over — only people didn’t stop working.
“Companies operated like school back then,” he said. “That lasted for a long time. About 20 years ago it started to change. Before Covid, companies had working-from-home policies, especially in sectors like IT, but in reality everyone was coming into the office.”
Japan is a huge global outlier when it comes to remote work, with just 32% of companies offering a remote working policy as of 2019, compared to 80% of workers who wanted to work remotely some of the time, according to MerchantSavvy.com.
When Covid-19 hit in early 2020, the Japanese government declared a state of emergency and encouraged staff to work from home 70% of the time.
But it did not enforce lockdowns like in the UK and some U.S. states, and an academic study from Masayuki Morikawa, president of Japan’s Research Institute of Economy, Trade and Industry, showed that this target was missed by a huge amount. A survey of close to 1,600 firms showed that just 31% of firms adopted a work-from-home policy before September 2020, and even when they did, workers did not really take up the option: Just 11% of the total possible working hours of staff from the companies surveyed were spent working from home. Even in tech, where working remotely gained the most traction, just 44% of hours were spent working from home.
The continued prominence of the office in Japanese work culture is cited as one reason why Tokyo offices have remained resilient, professionals in the market said. Vacancy rates have spiked in the past year, Markezinis said, but rose from the incredibly low base of 2%-3% to 5%. That is the inflection point that sees the balance of power shift from landlords to tenants, he said, and vacancy could rise to 6% before it starts to improve. But as a comparison, Manhattan vacancy rates hit a 20-year high of 15% in 2020, Cushman data showed.
“Culture inevitably is a major consideration and pull to the office for many. The pandemic is widely considered to be a game-changer,” Nuveen Managing Director for APAC Real Estate Louise Kavanagh said. “Intuitively, cultural differences will continue to play a role in determining this pull towards the office. In some Asia-Pacific countries, e.g. Singapore, Hong Kong and Japan, an office ‘presenteeism’ culture is engrained, with visibility considered important for career progression.”
Kavanagh said it is still common in Japan for companies to hire with a lifelong job in mind.
“Looking at Japan specifically, job descriptions have been all but nonexistent for companies, which traditionally do minimal external hiring beyond recruiting graduates at the start of their careers,” she said. ”Once hired, managers value not only the outcome of employees' work but also the effort they put in. Working from home makes that more difficult to assess. Japan's typical lifetime employment model creates strong loyalty to companies. A feasible solution may lie in a hybrid of both systems, which values both efficiency and communication.”
Markezinis said the idea of working remotely will be adopted more widely after the pandemic, but that is more likely to be in satellite offices than at home — with 37.4 million people packed into an area smaller than New York City, the greater Tokyo metro is densely populated, and homes are small.
“It would be difficult to work at home with two kids,” he said. “Most people live in suburbs connected to the centre by train stations, so we would expect more people to work in offices in those hubs.”
An example is tech and telecommunications firm Nippon Telegraph and Telephone Corporation, which earlier this month signed a deal with flexible office provider IWG that allows its 300,000 staff to work from any of IWG’s 3,000 global locations. Given the centralised work culture of the country, it looks a truly radical move.
Kavanagh said that in the long term, Japanese work culture had to change; while it may have come about as a means of patriotically boosting the country’s economy, it now risked doing the opposite.
“Japan’s ageing population is projected to reduce its labour force by 5% by 2030, meaning that Japan, like Germany, may have more jobs than workers. The country faces one of the most acute demographic challenges — a situation that some think a more flexible work environment could help to address. Attracting and retaining young talent by offering a choice of work style is vital as the workforce shrinks.”
Office occupiers will be forced by circumstances to offer staff the chance to work from home once or twice a week, Markezinis said. Whether staff feel able to take up that option is a different question. And that is providing something of a floor for the office market.
Sweden: ‘The role of the leader is to support people to do their best work.’
If Japanese offices resembled schools at the start of the 21st century, in Sweden, even schools don’t resemble schools in countries like the U.S. and UK.
“When we first moved here, we went to look around a school with our 13-year-old and were told that next year they would start to have to take tests that will actually be marked,” Global Business Leaders co-founder Anne Stenbom said. Stenbom is a Brit who moved to Sweden 30 years ago and is a leadership coach who helps incoming business leaders acclimatise to Swedish work culture. “Our kids in the UK had been doing tests from age 4. The philosophy in Sweden is that if you have kids that are motivated, you don’t need to be breathing down their neck.”
Stenbom said that feeds into a democratic business culture.
“If you took that UK or U.S. command-and-control management style into a Swedish company, you wouldn’t get very far: People here hate being micro-managed,” she said. “The role of the leader is to support people to do their best work.”
Stenbom said this culture is summed up in the Swedish word lagom, meaning just the right amount: not too little, not too much. The word sums up the idea of egalitarianism that is deeply entrenched in Swedish culture, with high taxes and a strong social safety net, partly epitomised by world-leading parental leave.
Combined with a culture of trusting staff to get the job done without constantly checking on them, it means there are lots of options for flexible working and strong manager support to take advantage of them, Stenbom said. Working from home has been more prevalent in Sweden than in most countries around the world: Gallup data showed that 27% of Swedes worked from home sometimes in 2018, higher than any other country in the European Union.
“If you look at the statistics, Sweden and the rest of the Nordic countries are very high in the rankings,” said Amanda Welander, CBRE head of research for Sweden and the Nordics. “The Nordics has a larger share of women in the workforce, and that could partly explain why it was common to work from home even before the pandemic.”
Or indeed, in a chicken-or-the-egg situation, the ability to work flexibly explains the high level of female participation. Japan has a female workforce participation rate of 53% and Sweden 61%, according to the OECD.
Sweden is something of an outlier among western economies in that it did not have a government-imposed lockdown in order to fight the impact of Covid-19; in line with the ethos cited by Stenbom, it suggested social distancing rules and trusted its citizens to adhere to them. People were encouraged to work from home, and unlike in Japan, they did. It is not a perfect like-for-like comparison, but data cited by Cushman in November pegged office occupancy in Stockholm at between 15% and 30%.
While working remotely may have been an option before, it will be even more so now. A CBRE survey also from November found that among Nordic occupiers surveyed, 46% had a work-from-home policy before the pandemic, and that figure has risen to 76%.
Welander pointed to two statistics in the survey that appear to offer contradictory prospects for offices: 45% of occupiers said they would shrink their office space, but 42% said they would be de-densifying, which would mean that on a net basis the amount of space remains the same.
“The jury is still out on where it goes,” she said.
As is the case in Tokyo, the office vacancy rate in Stockholm has risen but from a low base, from 4% to 6.6%, CBRE data showed. But there could be a particularly strong recovery.
“Employment growth in Stockholm has been strong in recent years and is predicted to be higher than in other EU countries.”
Savills predicted rental growth will be flat in the city this year, but it had been predicting a tail-off from strong rises in recent years even before the pandemic.
Sweden and Japan are two very different countries with two very different working cultures that reacted to the pandemic in very different ways, but they saw very similar performance in terms of office vacancy rates and rents. Their fortunes could diverge, of course, but perhaps this points to the fact that factors such as office supply and economic growth will have more of a bearing long-term than working from home when it comes to the fate of the office market. And perhaps where work cultures are already very entrenched, at either end of the spectrum, the changes brought about by Covid-19 in the way we work, so fretted about in the U.S. and UK, will not be quite so seismic as feared.