Japan's biggest ad agency Dentsu raided by government over suspected overtime violations: NHK

The logo of Dentsu Co. is seen at the entrance of the company headquarters in Tokyo.
The logo of Dentsu Co. is seen at the entrance of the company headquarters in Tokyo.PHOTO: REUTERS

TOKYO (BLOOMBERG, REUTERS) - The headquarters of Dentsu Inc , Japan's largest advertising agency, were raided by the Labour Ministry on Monday (Nov 7) over suspicion that several workers had been forced to work long hours in violation of labour laws, public NHK broadcaster said.

The raid comes after a 24-year-old female Dentsu employee committed suicide last December. The ministry ruled her death"karoshi" - literally "death by overwork" - and conducted on-site inspections to see if overwork abuses were pervasive.

Dentsu will cooperate fully with the probe, Shusaku Kannan, a spokesman for Japan’s biggest ad agency, said by phone Monday.

The government will pursue a criminal complaint if it finds evidence the company violated laws related to overtime hours, said a labour ministry official, who asked not to be identified per internal policy.  

Chief Cabinet Secretary Yoshihide Suga highlighted the Dentsu case in a regular briefing with reporters Monday, saying the advertising agency will be dealt with appropriately and that the government is working on labor law reforms to prevent deaths from overwork.

The Christmas day 2015 suicide of Matsuri Takahashi brought renewed attention to the kind of work conditions that have been blamed previously for workers taking their own life at companies including major restaurant chains.

Dentsu said Nov. 1 it was setting up an internal committee headed by Chief Executive Officer Tadashi Ishii to eliminate death by overwork.  

“Enforcement of working hours laws is getting stricter,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “Big restaurant chains like Watami and Sukiya have been probed in the past for overwork and now the spotlight is on Dentsu.”

Limiting Overtime

Fifty firms, including Daiwa Securities Group Inc. and Seven & I Holdings Co., have signed a pact on the Cabinet’s website saying they are committed to ending excessive work hours.  

Dentsu said in October it would reduce the limit for overtime work to 65 hours a month from 70 hours starting this month, after an employee’s suicide was blamed on overwork.  

The company’s stock was little changed, gaining 0.2 per cent, compared with a 1.5 per cent gain in Nikkei 225 Stock Average, as of 1:10 p.m. local time.  

The company, which calls itself the world’s largest brand agency and third-biggest for media, controls 25 per cent of Japan’s market, and is especially dominant in controlling the flow of advertising into major domestic television networks and newspapers.

The agency’s clients have included LVMH Moet Hennessy Louis Vuitton SE, Diageo Plc, Nestle SA, SoftBank Group Corp. and Electronic Arts Inc., according to data compiled by Bloomberg. It had about 43,000 employees in 124 countries worldwide, with about 49 percent in Japan, according to its annual report.  

Nearly a quarter of Japan’s companies reported some workers logging more than 80 hours of overtime a month, according to a labour ministry survey of more than 1,700 firms last fiscal year. Almost a quarter of employees worked more than 49 hours a week, compared with 16 per cent in the US, 13 per cent in the UK and 32 per cent in South Korea, the ministry said in a paper on “karoshi,” or death from overwork