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Japan: Civil Servant Salaries Should Vary Based on Location, Workers’ Age
Source: the-japan-news.com
Source Date: Saturday, August 09, 2014
Focus: Institution and HR Management
Country: Japan
Created: Aug 20, 2014

The economic recovery has finally reached the salaries of national public servants. Looking ahead, it will be important to allocate salaries flexibly, taking a worker’s age and location into consideration.

The National Personnel Authority has recommended to the Cabinet and the Diet that the average monthly salary for national public servants doing regular work in fiscal 2014 be increased by 0.27 percent from fiscal 2013, and their annual bonuses by an equivalent of 0.15 month’s salary. This is the first recommendation for a pay raise in seven years.

In fiscal 2012 and 2013, the salaries of national civil servants were reduced by an average of 7.8 percent, with funds saved by the cuts diverted to finance reconstruction of areas hit hard by the Great East Japan Earthquake and tsunami in March 2011. These salaries returned to their original level in April this year. If the pay increase is implemented as recommended, the average annual pay among national government workers would rise by ¥79,000 from the current level to ¥6.618 million.

Civil servant salaries are basically kept in line with those offered in the private sector. The NPA’s latest recommendation is linked to the recent string of wage increases being offered by private companies. Chief Cabinet Secretary Yoshihide Suga indicated his support for the proposed pay increase. “It reflects rising salaries in the private sector due to Abenomics,” he said.

In its recommendation, the NPA called for a ¥2,000 raise across the board in the basic salary of civil servants who were new graduates from high school or university. In contrast to a more handsome share being distributed to younger workers, the NPA left the basic salaries of workers aged 55 and older unchanged.

The salaries of civil servants in their 20s are lower than those of their counterparts in the private sector. However, their pay steadily increases, and by the time they are 55 or older, they earn more than average private-sector workers. Given the need to attract and retain talented young and midcareer workers, we can understand the need to give them extra financial consideration.

Keep personnel costs in check

The bonus increase will come in the form of an allowance for industriousness based on a worker’s ability and performance. The more talented the worker, the higher the bonus they receive. We think expanding the performance-based bonus system, just as the private sector has done, is fair.

The NPA also called for a comprehensive review of the civil servant salary system over three years from fiscal 2015. In regions where private sector salaries are low, the basic salary of civil servants will be cut by an average of 2 percent overall in fiscal 2015 and beyond, with the reduction reaching a maximum of 4 percent for personnel 55 and older. This is to eliminate pay disparities between the private and public sectors in these regions.

Funds saved by these pay cuts will be used to boost regional allowances and bump up the salaries of civil servants in cities and areas where prices and private-sector wages are high. Allowances for workers who have to transfer far away or work away from their families will be expanded.

It is only natural that allowances be increased or cut depending on the environment and conditions in the region where one works. We think the government should steadily forge ahead on this matter.

According to a Finance Ministry calculation, fully implementing the recommended pay hikes would increase costs for national public servants by about ¥82 billion for this fiscal year.

Given the nation’s current severe fiscal situation, the government must try to keep total personnel expenses down and move ahead with reviews of the salary system, staffing levels and organization of the government.

If the salaries of local government employees nationwide are raised in line with those of national civil servants, the total costs are forecast to swell by about ¥220 billion. It is not uncommon for local government employees to earn more than private-sector workers in areas where private salaries are low. Close attention needs to be given to this point when considering any revisions of the salary system for civil servants.
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