To see how workaholism saps productivity and rarely leads to better results, look at Japan. Overtime is sacrosanct in Japan, at the company I worked at previously it was a badge of honor that the average amount of overtime was 60 hours a month. Japan has the lowest per-hour output in the G7, and it's a small wonder why. Managers will often times not buy hardware that can increase productivity because hey, you can simply make the workers work longer hours for free, whereas hardware costs money. The result is a populace that is unhappy, unhealthy, and well dying. The low birth rate is well known, what is less well known is that the Japanese have the least amount of sex in the developed world. The technology industry that everyone once thought would rule the world has come to be dominated by the west because managers have very little incentive to innovate, to increase productivity. And as the cherry on the shit sundae, the low productivity means that wages in Japan are lower, i.e. longer hours for less money. Trust me, you don't want to go down this route.
You've got the overall picture, but this isn't pushed down by the companies. It's the unions. There are numerous unions, including for things which are not unionized in other countries, like Engineers. Everybody could work 8 hours a day if they wanted, but there is pressure to stretch out the work. If you aren't booking a similar level of overtime as the other workers, you might get a visit from the union guy. Companies are hesitant to increase wages to eliminate the need for overtime, because there is no guarantee that employees wouldn't just soak up as much overtime as before.
One other odd thing about Japan is that in many professions, the salary curve is an upside down "U" shape. Straight out of college they pay low salaries, mid-career the employee has received salary increases and promotions and so are making a lot more. But as the employees career peaks, so too does their salary. The salary eventually decreases every year until the employee retires. Some companies even have a special "Retiree Consulting Company" where employees work when they reach a certain age (55, 60, etc). The employee takes a big pay cut, is taken off the company payroll, and is then a contractor/consultant, but doing the same job. Usually their hours are ramped down to 3 days/week, 2 days/week, 1 day/week etc until they actually retire from working.
It has benefits in that a person retiring has had a LONG time to prepare, pass on their knowledge, and train the next worker. But it definitely adds perverse incentives to milking the salary when you can because after a certain point, the employee is just making less and less every year.