Takaichi Cabinet Signals Shift in Japanese Labor Policy, Eyes Constitutional Reform

TOKYO – Prime Minister Sanae Takaichi’s re-election on February 18, 2026, following a landslide victory for the Liberal Democratic Party (LDP) in the February 8 House of Representatives election, signals a potential shift in Japanese economic and constitutional policy. The newly formed “Second Takaichi Cabinet,” retaining all ministers from the previous administration, is prioritizing easing labor regulations and initiating discussions on constitutional amendment.

Relaxation of Labor Regulations

The Takaichi administration is planning a review of Japan’s “discretionary labor system,” a practice where employees are deemed to have worked a predetermined number of hours regardless of their actual working time. This system falls under Article 38 of the Labor Standards Act, which outlines “deemed working hour systems.”

While the system offers flexibility, the government believes easing regulations will revitalize economic activity. This move represents a reversal of recent trends toward tightening labor regulations under the banner of “work style reform.” The administration argues that adapting to changing times and responding to the desire for increased earnings are crucial.

Constitutional Revision on the Horizon

Prime Minister Takaichi has indicated a strong desire to amend the Japanese Constitution. Speaking to reporters after her re-election, she expressed hope to facilitate debate among lawmakers and the public toward achieving a national referendum on constitutional changes. She aims to propose amendments “at the earliest possible time,” leveraging the LDP’s two-thirds majority in the House of Representatives.

However, securing passage in the Upper House, where the coalition holds a minority, will be a significant challenge, requiring two-thirds support from lawmakers there as well.

Imperial House Law Revision

Beyond broader constitutional changes, Takaichi identified revising the Imperial House Law as a “fundamental agenda item that cannot be delayed.” The current law restricts imperial succession to male offspring in the male line, a point of contention for many advocating for a more inclusive succession process.

Economic Policy Focus

The Takaichi Cabinet also intends to pursue a “responsible, proactive fiscal policy,” aiming to restore market confidence by steadily lowering Japan’s debt-to-GDP ratio. She also expressed hope that the Bank of Japan will consider the economic situation when formulating monetary policies, with a goal of achieving a sustainable 2% inflation target accompanied by wage increases.

UK’s Employment Rights Act as a Cautionary Tale

The administration is closely watching developments in the United Kingdom, where the Employment Rights Act is set to come into force in April 2026. This legislation, championed by Labour Prime Minister Keir Starmer, strengthens worker rights but also increases obligations for employers. Key provisions include limiting dismissal rights – shortening the period of employment required for protection from dismissal from two years to six months – and increasing compensation for unfair dismissal.

The Takaichi administration views the potential negative consequences of stricter labor regulations, such as increased costs for businesses and potential hiring freezes, as a cautionary tale.

Key Takeaways

• Sanae Takaichi was re-elected as Prime Minister of Japan on February 18, 2026.
• The Second Takaichi Cabinet will prioritize easing labor regulations, including a review of the discretionary labor system.
• Constitutional revision, particularly regarding the Imperial House Law, is a key agenda item.
• The government aims for a “responsible, proactive fiscal policy” and stable 2% inflation.
• The UK’s Employment Rights Act serves as a case study for potential consequences of stricter labor laws.

The coming months will be crucial as the Takaichi administration navigates these complex policy challenges, balancing economic revitalization with social and constitutional considerations.