Recent Changes and Characteristics of the Wage System in Japan

Prof. Sam Soo Kim1

1Seoul National University of Science and Technology, Seoul, South Korea

The seniority wage is a pivotal personnel system in the Japanese employment system, alongside long-term employment and enterprise unionism. In the early 1990s, after the collapse of the bubble economy and as the recession lengthened, Japanese companies adopted performance-based personnel systems. Changes in the wage system under the slogan of “transition from seniority to performance” created a wage system for “work” (shigoto), a role-based or job-based rather than “job competence” wage. The purpose of this paper is to investigate the changes and characteristics of the wage system caused by the introduction of an American-style performance-based personnel and wage system. To this end, I examine the background of its introduction and aspects of development of the performance-based personnel and wage system, and show how they have formed a new internal rank system based on results. The establishment and characteristics of pay for accountability (role-based pay) as a new wage system to replace the job competence wage are discussed, giving special attention to the Japanese-style division of labor within the workplace.


Professor Kim Sam Soo is Professor in the Department of Business Administration, Seoul National University of Science and Technology where he has been a Professor of Industrial Relations and Economics for 26 years. He was previously the Dean, College of Business and Technology (2012-2014), and the President, The Korean-Japanese Economics and Management Association(2010-2012). He has published extensively on labour and industrial relations in East Asia.


The Asian Studies Association of Australia (ASAA) is the peak body of university experts and educators on Asia in Australia. Established in 1976, we promote and support the study of Asia in Australian universities and knowledge of Asia among the broader community. Our membership is drawn mainly from academics and students, but also includes industry and government Asia experts. We take a strong interest in promoting knowledge about Asia in schools and in contributing to state and Commonwealth government policies related to Asia. We provide informed comment on Asia to a broad public through our bulletin, Asian Currents, and specialist research articles in our journal, Asian Studies Review. Four book series published under our auspices cover Southeast Asia, South Asia, East Asia and Women in Asia.

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