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There are some things you are missing about Japanese society and culture that will allow this to work. It will probably give a lot of Japanese workers more quality of life than less.
First, the Japanese are not typically obese. In spite of many "bad" habits health-wise, such as smoking and drinking to excess on a regular basis, being fat isn't such a big problem. But it could be, and that's what the government aims to head off at the pass. By raising awareness to the possibility of the problems and burdens related to being overweight, they are promoting a more fit society. "Metabo bad, fit good". The social pressure here will give this program a high chance at success.
Second, business is one of the reasons that there is any problem with weight. Employees often work from 8AM to 10PM or more. Regular employees feel a high sense of guilt if they leave before the boss, therefore they don't. They will wile away several hours with "busy" work until the boss calls it a night. There is a term here that roughly translates to "death by overwork," and there are more than 4000 claims made against companies yearly for this. These employees often eat at their desk, get food from vending machines or convenience stores, or at the fast food places. They are sedentary, with little time to spend at the gym. By putting a financial incentive on the companies, the government will improve the quality of life of employees because companies will make sure that they have the chance to eat healthier food, and get away form their desk for an hour a day or more to exercise.
Third, this is not a culture of conformity. It is a culture of shame. People don't conform because they want to, but rather because they don't want to risk embarrassing their family or company by bad behavior. No-one wants to be the one who cost the company money, or lowered their co-workers bonuses. It would be shameful, and would result in the end of promotions and advancement for the worker in question, not to mention the shunning of said employee within the company. Every year we are required to take two health check-ups courtesy of the company and the health system. Hospitals have special buses that they drive to the company that are fully equipped to perform these checks. After age 35, this check includes a yearly cancer screening. It also includes chest x-rays, blood analysis and urine analysis to turn up health problems associated with smoking and drinking in their earliest stages, when they are more likely to be treated quickly and successfully, and most of all, more cheaply than if they were discovered in a more progressed stage.
There is some truth to the idea that no-one wants to be a burden to society and all the others paying into the system, but that is a rather minor consideration in the big picture, which is why the Gov't took the approach they did instead of exhorting those that are sick to suicide to relieve the burden.
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The difference between theory and reality is that in theory there is no difference.
"God made man, but he used the monkey to do it." DEVO
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