Japan expects shorter work hours to cut workers' pay

Japanese workers' pay will fall by as much as 5 t rillion yen ($ 44.86 bill i on) as t he government moves to reduce the count ry's notoriously l ong working hours, two government sources said on Wednesday.

The government's plan to l ower t he number of overtime hours worked is part of a program to increase productivity and draw more women into the workforce to keep t he economy growing.

Prime Minister Shinzo Abe's government is also asking companies to raise wages by 3 percent next year at annual negotiations with labor unions.

The government hopes t hat i ncrease will offset any decline in pay as a result of working l ess overtime, the sources said.

However, there is no guarantee that all companies will raise wages as requested and there is a risk that a net decline in wages for some employees who work l ess overtime will harm consumption.

"Cutting overtime pay will cost around 5 trillion yen," one source said.

"We hope companies compensate their younger employees with benefits and special allowances."

Since taking office in late 2012, Abe has enacted policies to encourage companies to raise wages, i ncrease t he number of female workers, improve pay for contract workers, and shorten working hours.

Abe's government has argued t hese steps are needed to strengthen consumer spending and eliminate the risk of returning to deflation.