469 Japan seeks alternatives to its pay system

Speech Materals

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It’s a simple task, if you’re trying to spot the highest paid employee in a Japanese office. Just look for the oldest staff member. Traditionally, the longer you’ve been at a company, the more money you earn.

In Japan’s corporate culture, this is commonly referred to as the seniority wage system. It has been in place since the 1950s.

During Japan’s economic boom, the system worked well in combination with another unique aspect of its labour market – the guarantee of a job for life. And back then, companies could afford to raise salaries as a reward for the staff’s loyalty.

It is standard practice for businesses to offer a low remuneration package to fresh graduates, who are then trained on-the-job. Even today, the average starting salary in Japan is roughly 2.5 million Japanese yen or $22,000. In the UK it is £28,000 or $40,000. In America, the average starting salary is higher at $50,000.

But Japan’s seniority wage system started to crumble after the economic bubble burst in the 1990s.

I- Word Understanding
Remuneration package – employment reward including salary, commissions and other benefits
Crumble – to break or fall apart


II – Have Your Say

1. In your own words, please explain and share your opinion about the following:
– Seniority system
– Job for life or lifetime employment
– Part-time job
– Temporary workers
2. In recent years, there has been a new push from Prime Minister Shinzo Abe to shake up Japan’s labour market. Big companies have once again announced their plans to shift away from the seniority wage system. Let’s discuss the pros and cons of the following:
– Performance / skills-based pay vs. seniority wage system
– Job/career changing vs. lifetime employment

469 Japan seeks alternatives to its pay system

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