In manufacturing, the role of overtime has been even more important accounting for about half of the reduction in working time.2 This reflects both the greater incidence of overtime in manufacturing before the crisis (almost one in ten hours) and the concentration of the decline in output demand in the manufacturing sector. Hours and pay reductions in Japan reflect adjustments along many different margins (cont.) The relative importance of reductions in standard hours reflects the limits of the overtime margin in the context of a severe decline in aggregate demand.