'All work and no play . . . makes Japan strong'

Where do 118 million people living in a country smaller than Montana and crowded into only a tiny fraction of their mountain-ringed island go for their vacations?

The answer is that many don't. And it's not necessarily because there is too little space for too many people. The reason is that although some 4 million Japanese do travel abroad every year, many are much too industrious to take vacations at all. Instead they'll be back at their desks hard at work.

A survey just released shows Japanese workers are getting more annual holidays but using them less, still unable to remove their image as inveterate workaholics.

The survey conducted by the Labor Ministry finds that in 1981 workers used only 55 percent of their annual vacation entitlement, averaging a mere 8.3 days off. By contrast, US workers take 22 days off for their annual vacation, according to leisure industry statistics. Those Japanese who would like to take a vacation and don't are sometimes workers who wouldn't dare to do so because their commitment to their work might be questioned.

The Japanese work ethic, a variation of a better known maxim, reads: ''All work and no play makes Japan healthy, strong, and efficient.''

And work usually results in staying loyal to one company for a lifetime so that a Japanese worker will refer to his employer possessively as ''my company'' - just as he would allude to ''my family,'' which the company almost is. In a country where many marriages are still arranged, the boss with a keen eye can speed the matrimonial process for his employees. Although there are exceptions to guaranteed lifetime employment, they are rare. Job jumping is not only frowned upon, but also viewed with suspicion.

In short, Japan has a love affair with work. Stand at 8:25 a.m. at Shinjuku station on a Japanese national holiday as this writer did recently, and the station is bustling with people. Many are dressed for work and are carrying briefcases. Working on weekends and Saturdays and holidays is not uncommon in Japan. In fact, it's almost a regular practice.

The same Labor Ministry survey showed that for industry as a whole, 16.3 percent took off only one full weekend a month. That was the most common practice. Those taking two full weekends off a month amounted to 14.8 percent. The overall conclusion was that few employees in medium and small enterprises enjoyed every weekend off.

This work ethic rankles with some Japanese who are too afraid to speak up for fear of losing advancement. A European economist who lives in Japan says that more and more younger Japanese workers are beginning to rebel:

''They are tired of coming home sometimes as late as 10 p.m., never seeing their families because they are either working so late or having to play golf with working colleagues over the weekend.''

But coming home late at night may not necessarily denote late working hours. It's common for hard-working Japanese to ''let off steam'' by going to a bar with their office colleagues after work. In a country that is rigorous in its ethical standards, the Japanese show a curious acceptance of intoxication. A drunk man can say practically anything distasteful about his work and his boss and get away with it.

One Japanese woman guide told a group of visiting American men and women journalists that the reason there was so little divorce in Japan was because the head of the household could come home late from the bar after letting out his frustrations in bouts of heavy drinking. This, she argued, kept the marriage intact because the wife was saved from the unpleasantness of his bad mood. Somehow the logic escaped the group.

Yet the fact remains that many Japanese do genuinely work hard and enjoy their work. While lifetime employment is sometimes attacked in the West for being too rigid and too restrictive, it offers the Japanese considerable security.

An official at the large Mazda automobile factory near Hiroshima boasts that not a single worker has ever been laid off by the company, even in bad economic times. Japan's unemployment figures tell the story: Unemployment here is below 3 percent, while it is above 10 percent in the United States.

The contention that unions are willing to take low wages in exchange for guaranteed employment is not borne out by recent income statistics.

The figures of the Organization for Economic Cooperation and Development for the earnings and tax/benefit position of a typical worker in OECD member countries for 1980 ranked Japan fourth behind Switzerland, West Germany, and the Netherlands. Annual gross earnings for a typical worker in Japan are given as $ 16,960. Next come Belgium, Australia, and Canada, followed by the United States ($14,949), Britain ($14,866), and France ($12,106).

Even after income tax and social security were deducted, Japan remained ahead of its nearest challengers in disposable income with $15,225. The comparable figures for the US were $12,167, for Britain $11,933, and for France $11,619.

In a resource-dry country like Japan where exports are vital for its survival , the stress is always on people and on developing their skills. As a result, Japan has a preoccupation with educating and training its people to be productive. Japan leads the world, for instance, in the proportion of young people graduating from high school - above the 90 percent mark.

One of the distinguishing features about Japanese society, a byproduct of its educational system, is its egalitarian nature. When polled, some 90 percent of the population consider themselves middle class. Reinforcing that impression is the fact that Japan has one of the smallest discrepancies in the world between the highest and lowest wage scales.

This might help explain why Japanese salaries at the higher level don't compare with salaries paid to top US executives. Japanese business officials told a somewhat surprised group of American journalists recently that the top executive of a leading firm like Hitachi or Nissan or Toyota would earn only about $80,000 a year. This is a mere drop in the bucket compared to the total compensation (salaries, plus bonus, plus stock options) of American executives. Some 1981 examples of compensation of chief executives of leading American companies gleaned from Fortune magazine: General Motors $489,250; Time Inc. $633 ,367; General Electric $853,496; Sears Roebuck $1,010,137.

As for vacations, if a top Japanese executive did decide to take one, he would likely stay in the dormitory of the company's vacation retreat - somewhere in Japan.