How can I get good pay rise in Japanese company?
Yoshi, Japanese Career Consultant (National license)
It's important for workers to get good salary increase every year, isn't it?
I often hear that Japanese companies cannot get enough salary increases.
What about the truth?
Looking at the final results of the 2020 spring labor-management negotiations announced by Keidanren on August 3, 2020, the average salary increase rate including regular salary increases and base increases was 2.12%.
SMEs(Small and Mid-seized Enterprises) tend to have a salary increase rate of around 10% lower than that of large sized companies, and according to the federation's total, the salary increase rate for SMEs in 2020 was 1.93%.
Do you think this figure is low or high?
Is the salary increase different from that of my colleagues?
You may have a little more concern about equality of salary increase?
Is the salary increase different from that of my colleagues?
As for the tendency of Japanese companies of mid-level and above, the budget of the salary increase is decided firstly. After that, it is customary to prorate the cash resources according to the evaluation of the employees and then, pay to them.
In many cases, employee evaluations are divided into four or five assessment levels: S, A, B, and C. This is a relative evaluation rather than an absolute evaluation. There is a distribution limit rate. For example, S rank employees are distributed up to 10%.
Moreover, in reality, the salary increases for S-rank employees and C-rank employees are not so different. It is unlikely that the C-rank salary increase will be half the S-rank salary increase.
Normally, there is an idea that C-rank employees who do not improve their performance at all do not need to raise their salary (excluding the increase in price index), but in reality, it is a Japanese practice to raise their salary accordingly.
What is interesting is that many Japanese companies have the same cash distribution ratio regardless of Profit Centers like sales or Cost Centers like admin.
Therefore, even if you are working at cost center such as the general affairs department, and even if you get the highest grade in the distribution restriction rate, you can get higher pay than the employee who has the standard grade in the Profit center(like sales).
I don't know if it's good or bad, but it is the traditional Japanese salary increase method that does not make a significant difference in contribution to achievements and business performance.
Can I negotiate individually?
The answer is "Yes, but does not work well..."
Due to this salary determination method, Japanese companies rarely accept individual negotiations for salary increases. (start-up companies are excluded)
If you are dissatisfied with the amount of salary increase, and you can negotiate individually, it may lead to a very slight improvement in the amount of salary increase.
What to do then?
How to get a better salary increase
１）You must be promoted, not asking salary increase
Even if you are in the same position, your salary will not increase so much and you will not be different from your colleagues.
At this time, it is a good idea to request early promotion. If you are promoted, you will be adopted to a new salary table, and you can expect a corresponding increase in salary increase and fixed salary.
Nowadays, even Japanese companies are focusing on diversifying human resources. There is also a tendency for motivated young people to take important positions early.
Asking for a promotion rather than a raise may eventually lead to a higher salary.
２）Job change
If you are not satisfied with your salary increase, you may have the option of changing jobs or company.
If you have high professional skills, you may be able to raise your salary.
However, unfortunately, there are not many cases in Japanese companies where they change jobs and raise their salaries.
The Recruit Works Institute surveyed about 50,000 people nationwide in the "National Employment Status Panel Survey 2017" (released in June 2017), which also asked about changes in annual income before and after changing jobs. In the year following the change of job, 31.4% of the respondents increased their annual income by 10% or more, and 44.3% decreased by 10% or more.
When changing jobs, it is important to fully negotiate with employer.
Thinking about Total remuneration
That said, there is no doubt that Japan's salary increase rate is gradual one. However, you also can look at the total reward with a view to the fringe benefits to Japan.
For example, medical and health insurance are usually applicable.
In addition, retirement allowances are paid in a lump sum at the time of retirement.
Depending on the company, there may be facilities that employees can use for free and standard services.
It's been a tough time these days, but it's less likely that you'll be laid off suddenly than in other countries(Job security).
The amount of salary increase is important, but you can think of it as a total reward.
