Hi! I’m not a historian, but I have insight into Japanese economic history. This is a very complicated question. I’ll try my best to condense everything for a comprehensive overview, but it might leave out a lot. It is also predicated on different changes in time. So the three points I will summarize are the law, the management institutions, and the social institutions pushed by the state.

What led to the development of Japanese work culture consisting of very long hours and unpaid overtime?

Part 1. So first of all, the standard work hours in 1947 was 48 hours per week or 6 regular working days. This was written in secondary enactments by the Japanese to the Japanese Constitution written and guided by the American occupation (Caprio, Sugita, 2007). The law before the Occupation allowed 9 day workweeks and around 12 hours per day for factory industrial labor. So there was a high previous average to begin like many industrializing economies. So this has to be considered into the definition of “very long hours and unpaid overtime” for the respective era. See Fair Labor Standards Act of 1938 for US labor laws. In 1938, the modern workweek of 40 hours was more or less nationalized in the US. Why the American Occupation didn’t allow a 40 hour workweek in Japan is not known to me, but perhaps the Americans had trade in mind.

During the 1950s, because of the law, companies found that dismissing workers was more complicated than expected. Essentially if workers had reasonable effort and maintained a decent reputation (nothing criminal or very damaging to the employer) there was little ‘just-cause’ for termination. This essentially made hiring tighter (adjusted lower hiring equilibrium in economic terms). So this obviously is a basis for more burden on workers. Companies could then ‘saddle’ workers with more work due to limited resources by design and then add even more work through new activities such as quality circles (Gordon, 1998). Managers might also use corporate policy such as ‘service overtime’ or gratis overtime requirements that if resisted could be ‘just-cause’ for dismissal. This was a continuity in the law from pre-war. This would corner workers into working overtime or getting dismissed (DN, 1992).

In 1987 the Labor Standards Law of 1947 was revised. The law brought down work hours gradually to the standard 40 work hours per week by 1994. So it went from 48 to 44, then 40 in 1994. The Reform Law included overtime standardization, but it wasn’t enforced legally by the state. This means the state didn’t prosecute violators as the law didn’t have accountability mechanisms. (The civil code of Japan is different and laws could be written without ‘teeth’). Employees could sue for overtime compensation, but the law still supported the notion of overtime and thus overtime was not necessarily changing the quantity of work hours. However, now workers get paid less due to lower standard working hours. So this is a reason why the practice of overtime hasn’t relented very much and in many ways it has just reconfigured a continuity of the status quo (Kuroda, 2009). In addition, the temporary part-time worker laws were loosened causing increases of that employment. This consequently reduced work-hours on average, but might have reduced the actual average of ‘regular’ employments. (More below). This also created a sense of job insecurity and the stagnant economic conditions (of the 1990s) made stability more uncertain.

So these are the legal foundations of work in Japan. But in addition to the legal, the reaction of management is another major factor. Companies will always try to find ways of adapting to economic conditions and the new confines of the law. So next is displaying management and employment institutions.