Japanese government employees set for a 3.6% raise in their monthly salaries
Japan's Government Employees to Receive Largest Salary Increase in 34 Years
The National Personnel Authority of Japan has recommended a significant increase in salaries for government employees, marking the first time in 34 years that the increase exceeds 3%. This move is aimed at addressing the wage gap between government and private-sector employees, responding to inflationary pressures, labor market conditions, and policy goals for sustained wage growth.
The proposed average increase in monthly salaries for fiscal 2025 stands at 3.62%. This follows a four-year trend of consecutive increases in government salaries and bonuses, reinforcing a virtuous wage-price inflation cycle sought by policymakers, including the Bank of Japan.
One of the key reasons for this recommendation is the findings of the agency's survey, which revealed that government employees earn on average 15,014 yen less per month and receive 0.05 months less in bonuses compared to private-sector workers. The raise is intended to reduce this disparity.
Another factor contributing to the recommended increase is the change in the benchmark for comparison. In fiscal 2025, the benchmark has shifted from companies with 500+ employees to those with 1,000+, reflecting higher private-sector wage growth especially among larger firms. This, in turn, has pushed the recommended government pay increases higher.
The pay hike is also intended to help curb civil servant turnover and attract new talent by offering more competitive salaries. Starting salaries for career-track university graduates and high school graduates are being raised to reflect these changes. The starting salary for career-track university graduates is recommended to be increased by 12,000 yen to 242,000 yen, while that for career-track high school graduates is suggested to be increased by 12,300 yen to 200,300 yen.
The starting pay of career-track university graduates who work at central government agencies will total 301,200 yen, including allowances. The agency also suggested raising bonuses to an equivalent of 4.65 months' salary.
The National Personnel Authority's recommendations are still subject to approval by the Diet and the cabinet. If approved, the raises would mark the fifth consecutive year of increases in starting salaries for government employees in Japan.
Companies across Japan have also been raising pay to respond to higher prices and labor shortages. The proposed increases in starting salaries for government employees are aimed at addressing the wage gap between government and private-sector employees.
This news comes at a time when Japan is grappling with inflation and labor shortages, making it crucial for the government to align its wages with those in the private sector to attract and retain talent. The proposed salary increases, if approved, are expected to have a positive impact on the economy and the labor market.
References:
- Nikkei Asia
- Bloomberg
- Kyodo News
- The Japan Times
The suggested salary increases for government employees could potentially close the wage gap with private-sector employees, as shown by the agency's survey revealing disparities in monthly salaries and bonuses. To attract new talent and curb turnover, starting salaries for career-track university and high school graduates are being considered for an increase, including for those working at central government agencies.
In an effort to keep up with private-sector wages, especially amongst larger firms, the benchmark for salary comparisons has been raised to companies with 1,000+ employees in fiscal 2025. This decision may lead to a higher recommended increase in government pay.
[References: Nikkei Asia, Bloomberg, Kyodo News, The Japan Times]
