The rules are part of an initiative to set up "special economic zones," in the county, The Wall Street Journal reported.
Two of the key provisions include more relaxed rules on hiring and firing in the special zones and an allowance for temporary workers, who can now be considered temporary for 10 years before they need to be dismissed or put on permanent status.
In the past, the maximum was five years for a company to keep an employee in a temporary worker status, the Journal said. There were complaints, however, that the changes did not go far enough, especially in labor reforms.
Some were hoping the government would relax rules that limit working hours for senior positions. It has been argued that a change there would have meant higher productivity, but the labor ministry remains concerned that workers could be required to work long hours without proper compensation, the Journal said.
"We've obviously stepped back on this, otherwise the whole process of making economic zones would have been brought to a halt," said a member of the government's panel.
"We will make Japan's employment rules clear so that foreign companies won't hesitate to open offices in Japan," said Yoshitaka Shindo, the government minister who is directing the economic zone project.
The government also said it was seeking suggestions for other rule changes that might apply to the economic zones. Two cities, Tokyo and Osaka have proposed lowering the corporate tax rate in the economic zones from 38 percent to 20 percent, putting it more in line with Hong Kong and Singapore, where the tax rates are 16.5 percent and 17 percent, respectively, the Journal said.
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