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Tokyo (AFP)

Japan's lower house on Thursday approved controversial labour reforms that the government has defended as necessary to boost the economy but critics warn could result in more death by overwork.

The legislation would scrap hourly overtime pay for some employees while setting overtime caps for others for the first time.

The government says the measures will boost efficiency and equality, and they form a key plank of Prime Minister Shinzo Abe's "Abenomics" policy to kickstart the country's sluggish economy.

But critics argue that loosening hourly overtime pay will only encourage overwork in a country that is infamous for the phenomenon of "karoshi", or death by overwork, and some opposition members booed loudly as the bill was approved.

The legislation must still pass the upper house, though local media said approval there was likely.

The reform's key feature is letting Japan's corporate sector hire select, highly paid professionals, such as currency traders and consultants, on contracts which include no overtime pay.

The category only applies to those who earn at least 10.75 million yen ($97,800) annually, with employers required to seek the consent of professionals involved.

Financial analysts and stockbrokers are expected to be among the likely targets of the new contracts, while professionals like doctors whose case load can vary by the hour will be exempt.

The law contains the first legal caps on overtime, setting an annual limit of 360 hours for normal cases, and up to 720 hours for "temporary" and "special" cases.

It also promotes flexible work schedules including telecommuting, allows office workers to develop side businesses, and encourages equal pay for workers on different contracts doing the same job.

Abe's government argues the reforms are necessary to respond to the challenge of an ageing and shrinking population.

But sceptics say they will endanger workers by allowing contracts that could include almost unlimited overtime with no extra pay, and setting overtime caps for other professions that are still too high to prevent overwork.

"This is a type of system that could result in long work hours and increases the risk of 'karoshi'," said Emiko Teranishi, whose husband killed himself due to depression linked to overwork, in recent testimony to parliament.

The bill has also been controversial because key data cited by Abe's government to back it turned out to be incorrect, forcing an embarrassing U-turn on one part of the planned reforms.

Shortly before the legislation passed, Chief Cabinet Secretary Yoshihide Suga said it would help "bring about a society which makes it possible for every worker to choose work styles that suit their individual conditions."

"We think it will contribute greatly to (welfare of) workers and the development of the Japanese economy," Suga told a regular briefing.

© 2018 AFP