Remuneration of Japanese

National Public Employees

9 September 2011

Expert Meeting on Compensation of Public Employees

Presented by: Ryo IDE

Deputy Director, Third Remuneration Division, Remuneration Bureau,

National Personnel Authority (NPA)

Akira WATANABE

Counsellor, Personnel and Pension Bureau,

Ministry of Internal Affairs and Communications (MIC)

2

Basic Facts

3

Role of the National Personnel Authority (NPA)

and its Remuneration Recommendation

The National Personnel Authority (NPA) is an independent organization headed

by three Commissioners (one of whom is designated as President), who are

appointed by the Cabinet with the consent of the Diet.

With regard to the remuneration of the non-industrial national public employees

in the regular service, the NPA annually submits a Remuneration

Recommendation to both the Cabinet and the Diet. The Remuneration Act is

revised according to this recommendation (The bill of the act is presented to the

Diet by the Ministry of Internal Affairs and Communications).

Public service employees in Japan comprise 641,000 national public employees and 2.86 million local

public employees.

Those employees subject to the NPA Remuneration Recommendation Scheme are the non-industrial

national public employees in the regular service to whom the Remuneration Act is applied. Their number

amounts to 274,000.

Employees subject to the

NPA Remuneration

Recommendation Scheme

274,000

Public Prosecutors 3,000

Employees Working in

National Forestry 5,000

Employees of Specified Incorporated

Administrative Agencies 59,000

（note）１ The number of National Public Employees is based on a fixed number budgeted at the end of FY2010

２ The number of Local Public Employees is estimated based on the “2009 Fact-finding Survey on Compensation of Local Government

Employees” (Source: Ministry of Internal Affairs and Communications).

General office workers,

Diplomats, Tax office

workers, Prison guards,

Coast guards, Doctors,

Nurses, etc.

Total 3.50 million

Local Public Employees

2.86 million

National Public

Employees

641,000

Special

Service

300,000

Personnel of Law Courts, Diet personnel,

Personnel of the Self-Defense Forces, etc.

4

Employees subject to the NPA Remuneration Recommendation Scheme

Regular

Service

341,000

Grading System (example for Administrative Service (I))

Grade 1 2 3 4 5 6 7 8 9 10

Ministry’s

HQs

Regional

Bureaus

6

Officer

Unit Chief

Assistant Director

Head of Office

Division Director

Officer

Unit Chief

Assistant Director

Division Director

Department Director

Head of Bureau

Administrative

Vice-Minister

Director-General

of Bureau

Deputy Director

-General of Bureau

(Designated Service)

Every post is classified into a certain Grade in a Salary Schedule, after being ranked based

on the hierarchy within the office.

Further job classification is not available: a detailed job classification system for white-collar

workers hasn’t taken root in Japan because of the teamwork-oriented work style.

7

Allowances assisting living expenses

Family Allowance

Housing Allowance

Commuter Allowance

Family-Unattended-Transfer Allowance

Area Allowances

Area Allowance

Wide-Area Transfer Allowance

Remote Area Allowance

Cold Area Allowance

Allowances for particular

responsibilities or duties

Managerial Allowance

Special Holiday Work Allowance

for Managerial Employees

Hardship Duty Allowance

Allowances for overtime work

Overtime Allowance

Day/Night Watch Duty Allowance

Allowances equivalent to bonuses

in the Japanese private sector

End-of-Term Allowance

Diligence Allowance

Headquarters Duties Allowance

Recruitment Incentive Allowance

Other Allowances

Research Activities Incentive Allowance

Specialized Staff Service Salary

Schedule Adjustment Allowance

Composition of Remuneration

Monthly Salary

Allowances

(Paid as a lump sum in June and December)

8

Breakdown of Remuneration (Administrative Service (I))

Monthly Remuneration: JPY395,666 (As of April 2010, before the NPA Remuneration Recommendation)

Salary: 325,579

Family Allowance: 12,467

Area Allowances: 35,061

Managerial Allowance: 11,685

Others: 7,187

Housing Allowance: 3,687

End-of-term and Diligence Allowances (Bonuses): 3.95 months per annum (As of April 2011, to be revised by NPA Remuneration Recommendation)

Category June December Total

Managers at

Grade 7 or above

1.9 month 2.05 month 3.95 month

End-of-Term 1.025 month 1.175 month 2.2 month

Diligence 0.875 month 0.875 month 1.75 month

Others

1.9 month 2.05 month 3.95 month

End-of-Term 1.225 month 1.375 month 2.6 month

Diligence 0.675 month 0.675 month 1.35 month

(Note) The amount of Diligence Allowance varies according to the result of Performance Evaluation.

Administrative Service (Ⅰ) Salary Schedule (main steps)

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Grade Grade 1 Grade 2 Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8 Grade 9 Grade 10

monthly monthly monthly monthly monthly monthly monthly monthly monthly monthly

1 135,600 185,800 222,900 261,900 289,200 320,600 366,200 413,000 466,700 532,000

5 140,100 192,800 230,200 270,200 298,200 329,800 376,300 422,800 479,000 544,700

9 144,500 200,000 237,500 278,600 307,300 338,600 386,400 432,300 491,300 554,700

13 149,800 207,000 244,900 287,000 316,400 347,200 397,100 441,300 503,600 562,100

17 155,700 214,600 252,200 295,400 325,200 355,500 406,400 449,300 513,300 568,100

21 161,600 222,000 260,100 303,800 333,500 363,500 414,800 456,500 519,000 572,900

25 172,200 229,300 267,700 312,100 341,500 371,500 422,900 462,500 524,800

29 178,800 236,100 275,300 320,400 349,400 379,500 429,400 467,800 529,600

33 185,800 242,100 282,700 328,400 357,000 386,900 434,600 471,000 533,100

37 191,600 248,000 290,100 336,500 364,200 393,700 439,700 474,200 536,700

41 196,900 254,200 297,400 344,400 370,100 398,400 443,200 477,400 540,300

45 202,000 259,700 304,200 352,000 374,700 403,000 446,400 480,500

49 207,100 265,200 310,600 358,500 378,400 405,900 449,400

53 211,600 270,100 317,100 363,000 381,700 408,800 452,400

57 215,400 275,200 323,400 367,100 384,500 411,600 455,400

61 219,200 279,700 328,100 369,800 387,000 414,300 458,400

65 223,000 283,500 331,900 372,400 389,600 416,900

69 226,900 287,200 335,200 375,000 392,200 419,400

73 230,100 290,400 337,800 377,600 394,800 422,000

77 233,000 292,300 340,000 380,200 397,300 424,600

81 236,100 293,800 342,000 382,700 399,900

85 239,000 295,300 344,000 385,100 402,500

89 241,900 296,800 345,900 387,600

93 243,700 298,200 347,700 390,100

97 299,600 349,500

101 301,000 351,300

105 302,400 353,000

109 303,800 354,700

113 305,200 356,400

117 306,600

121 307,900

125 309,200

re-

employed186,300 214,000 258,400 278,700 294,300 320,300 363,000 397,300 449,600 532,000

Category

Step

others

(Unit: JPY)

(Note) There are 3 sub-steps between main steps: these sub-steps are utilized to reflect more closely the

performance of employees in step increases.

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Revision of Remuneration

The NPA conducts fact-finding surveys on salaries both in the public and private sectors.

Based on the results of the surveys, the NPA makes its recommendations so that the working

conditions of national public employees are equal to those in the private sector.

Remuneration in April （about 450,000 surveyed） Remuneration in April

（Administrative（I））

Bonuses

（actually paid amount）

Hearing of opinions of each

ministry and agency and

employee organizations

Principle of meeting changing conditions （Balancing working conditions with those

in the private sector）

Compares the multiplier of paid bonuses in the public

and private sectors by number of months

Diet Cabinet Submission of bill

(Decision on treatment of NPA Recommendation） (Revision of Remuneration Act)

Information about each staff

・exchanging views with opinion leaders

and entrepreneurs in small to medium-

sized enterprises in many regions

・hearing from various people through

monitoring surveys

※surveyed irrespective of salary revisions

Information about each office

NPA Remuneration Recommendation

Decides the revision of salary schedules and allowances

Salary revision and

employment adjustment

〈from August to July〉

Compares the remuneration of private sector employees and public employees (Administrative (I))

Compares the remunerations of employees in the public and private sectors with similar duties, job echelons, regions, academic backgrounds, age

（Laspeyres method）

The Decision Process for Remuneration Revision

Survey on remuneration in the private sector <11,100 offices with 50 employees or more of

enterprises with 50 employees or more are visited.>

（51,000 such offices exist in Japan）

Survey on remuneration of national

public employees 〈target: 260,000 employees〉

（All employees except newly-recruited employees

are covered.）

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(educational

background） (age)

Private remuneration

× number of public

employees

………

Computing the remunerations of the private sector and the public

sector using data on positions, working area, educational background and age

Total remuneration

of the private sector

÷ total number of

public employees

= JPY394,909 (a)

Total remuneration

of the public sector

÷ total number of

public employees

= JPY395,666 (b)

2010 Differential: minus JPY757 (-0.19%) （method of

computing）

(a) － (b)

Public remuneration

× number of public

employees

(position) (working area) （Total remuneration of

the private sector (A)

（Total remuneration of

the public sector (B)

………

Public Sector

Administrative service (Ⅰ)

Private Sector

(white-collar employees, engineers)

University

graduates

Area Allowance

18%

Special wards

in Tokyo

Grade3

Unit Chief

Age 26/27

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The method for the Comparison of Remuneration between the Private and Public Sectors

In comparing monthly remuneration between the private and public sectors (Laspeyres method), the hypothetical

average remuneration in case national public employees are paid the remuneration of those in the private sector (A)

and the actual average remuneration of national public employees (B) are compared.

Concretely, this means calculating the average remuneration in the private sector within a category divided by the

factors of individual positions, working areas, educational backgrounds and ages, multiplying the number of public

employee’s in each category by their hypothetical remuneration in the private sector, adding up all the results and

then dividing that figure by the total number of public employees to get private sector remuneration average level

data, following a similar process using public sector remuneration to get public sector remuneration average level

data, and comparing the two.

The NPA Remuneration Recommendation directly reflects the situation of remuneration in the private

sector, but it does not take into account the budgetary situation. Annual remuneration has been reduced

by the reduction of monthly remuneration and/or bonuses, or kept unchanged since FY1999 (except in FY

2007).

Monthly Salary

Ratio of RevisionNumber of months

per annum

Change from the

previous year

1999 0.28% 4.95 -0.30 -96,000 -1.5%

2000 0.12% 4.75 -0.20 -70,000 -1.1%

2001 0.08% 4.70 -0.05 -160,000 -0.2%

2002 -2.03% 4.65 -0.05 -152,000 -2.3%

2003 -1.07% 4.40 -0.25 -165,000 -2.6%

2004 - 4.40 - - -

2005 -0.36% 4.45 0.05 -4,000 -0.1%

2006 - 4.45 - - -

2007 0.35% 4.50 0.05 42,000 0.7%

2008 - 4.50 - - -

2009 -0.22% 4.15 -0.35 -154,000 -2.4%

2010 -0.19% 3.95 -0.20 -94,000 -1.5%

Average Annual Remuneration

(Administrative Service (I))

End-of-term and Diligence

Allowance (Bonus)

Change from the previous year

Recent Revisions of Remuneration

JPY 6,339,000 (average age: 41.9) 13

Bill of Temporary Special Provisions concerning Remuneration of National Public Service

11/3/2011

13/5/2011～

3/6/2011

Cabinet Decision made by the Government of Japan (GOJ) - To eventually submit necessary bills to the Diet in order to introduce autonomous labour-

management relations and pay revision based on labour-management negotiations.

- To consider measures for cutting the personnel costs of government employees and submit necessary bills to the Diet even prior to the introduction of autonomous labour-management relations.

1/11/2010

The Great East Japan Earthquake

Negotiation between GOJ and Employee Organization on the reduction of the salaries of government employees

GOJ submitted the “Bill of Temporary Special Provisions concerning Remuneration of National Public Service” to the Diet, to implement the extraordinary reduction of the salaries of government employees until March 31, 2014

Name of Employee Organizations Negotiation Date Result

Civil Servants' Liaison (Koumuin-Renrakukai) 13, 17, 19 and 23/5 Accept

National Public Service Employees’ Unions (Kokko-Roren) 13, 17, 20, 25, 27/5 and 2/6 Not Accept

Regular Service

Personnel

Rate of Reduction

monthly salary bonus

Executives and

Managers 10% 10%

Mid-level 8% 10%

Junior Officers 5% 10%

Special Service Rate of Reduction

monthly salary bonus

Prime Minister 30% 30%

Minister of State

Senior Vice-Minister 20% 20%

Parliamentary Vice-Minister 10% 10%

Summary of the Bill

14

15

Reform of the Remuneration Structure

(2006 ~ 2010)

Considering that the wage level in the private sector differs between areas, the remuneration level of public employees should more closely reflect the wage level in the private sector of the area where they work.

Seniority-based remuneration increases should be controlled, and the salary structure should be changed to a new one corresponding more to the duties and responsibilities.

The performance of employees should be reflected more appropriately in the remuneration of employees, through step increases in grades and diligence allowances.

The Main Purposes of the Reform

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The following measures were introduced so that the remuneration of public employees would reflect the wage

level differences between areas in the private sector.

(a) The level of the entire Salary Schedule was lowered by 4.8% on average.

(b) Establishment of an Area Allowance of 3% to 18% (12% before revision) for employees working in areas

where private sector wages are high.

(c) Establishment of a Wide-area Transfer Allowance of 3% or 6%.

Before

Former

remuneration

level of

public

employees △4.8％

After

△4.8％ New

remuneration

level of

public

employees

地域手当

18％

private private public public

〈Remuneration level

in Tokyo〉 〈Remuneration level in

Hokkaido, Tohoku Area〉

18％

private private public public

〈Remuneration level

in Tokyo〉

〈Remuneration level in

Hokkaido, Tohoku Area〉

12％

Criticism; ”The remuneration

of public employees is high

compared with the wage

level in the area.” Area

Allowance

Revision of Pay Distribution among Areas so that the Remuneration of Public

Employees More Closely Reflects the Wage Level in the Private Sector of

Each Area.

City Allowance

Former

remuneration

level of public

employees

17

The salary curve was flattened so that increases in

remuneration based on seniority would be reduced. The salary

level of middle and upper age groups was lowered by 7%,

without any reduction for young employees of officer level. The

level of the entire Salary Schedule was lowered by 4.8% on

average.

Lowered by

7%

Mo

nth

ly s

ala

ry

age

Lowered by 4.8%

on average

［before］ ［after］

Salary curve for directors

curve for deputy directors

curve for unit chiefs

curve for officers Mo

nth

ly s

ala

ry

age

Salary curve for

directors

curve for deputy

directors

curve for unit chiefs

curve for officers

Ensuring appropriate salary levels in accordance

with each official’s duties and responsibilities reducing

duplications between salary curves for different

grades of the salary schedule).

age

Restraining Seniority-based Remuneration Increases, and Changing the

Remuneration Structure in Accordance with Each Official’s Duties and

Responsibilities.

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reduced Good

(average)

Enlarged from 1% to 5% or more

Excellent

Enlarging the number distributed to higher echelons

in awarding bonuses

In the case that the result of performance

evaluation is not good, disciplinary action

is taken, etc. (no set distribution ratio)

In order to promote a subtle reflection of performance in pay step increases, each existing pay step was divided into four smaller steps: a New Pay Step Increase System was introduced by integrating the Regular Step Increase, which had become an quasi-automatic increase, and the Special Step Increase, which might be distributed by merit/performance.

In order that the Diligence Allowance better reflect employee performance, the source of funds for high-performers was increased using a potion of the 2005 bonuses raise, in order to accommodate the enlargement of the number of employees evaluated “excellent” and above.

0

1

2

3

4

5

6

7

8

職員Ａ(良好)

職員Ｂ（特に良好）

職員１（良好でない）

職員２（一部良好でない）

職員３（良好）

職員４（特に良好）

職員５（極めて良好）

（現行） （新制度）

現行１号俸を４号俸に細分化

普通昇給

特別昇給

　勤務成績に基づく新たな昇給制度の導入　　勤務実績を昇給により反映させやすくするため、現行の号俸を４分割し、特別　昇給と普通昇給を一本化した新たな昇給制度を導入するNew Pay Step Increase System

［before］ ［after］

Not Good

(below average)

Enlarged from 20% to 25% or more

Not good Not very

good

Good Very

Good

Extremely

Good

Good Especially

Good ［within 15% of employees］

each existing pay step

was divided into four Special Step

Increase

Regular Step

Increase

1 step

1 step 1 step

Reflecting Performance in Remuneration

Outstanding

19

20

Introduction of a New Personnel Evaluation

System and its Utilization in the Remuneration

System (2009~)

Competency Evaluation Performance Evaluation

Evaluates… Ability demonstrated in performing duties Performance

Through reviewing…

The extent to which the employee behaves

in line with a list of actions that represent

required competencies

The extent to which the employee plays the

expected roles specified in advance through the

setting objectives

During the period of… October – September (1 year) October – March, April – September

(6 months)

Assigning grades of… S, A, B (middle), C, or D S, A, B (middle), C, or D

Basic framework and work flow of the evaluation

Competency

Evaluation

Performance

Evaluation

1 year 6 months

Interview at the

beginning of the

evaluation period

(setting objectives)

Self

evaluation

Evaluation,

Adjustment,

Confirmation

Feedback

of results

Interview at the end of

the evaluation period

(advice and suggestions)

6 months

Self

evaluation

Evaluation,

Adjustment,

Confirmation Feedback

of results

Interview at the end of

the evaluation period

(advice and suggestions)

Performance of duties

Performance

of duties

21

Performance

of duties

Utilization of evaluation results

• Step Increases: Competency Evaluation (x1) + Performance Evaluation (x 2) in the previous year

• Grade Increases (unaccompanied by promotion):

Competency Evaluation (x 2) + Performance Evaluation (x 4) in the past 2 years

• Diligence Allowance: Performance Evaluation in the immediately pervious period

S or A

B

C or D

Diligence Allowance Performance Ratio (multiplier applied to monthly remuneration)

Outstanding 135/100 – 83.5/100 (5% or more of staff)

Excellent 83.5/100 - 74/100 (25% or more of staff)

Good 64.5/100

Not Good below 64.5/100

Decision made

with priority for

those assessed

higher

Performance

Evaluation

S,S S, A S, B A, A A, B B, B

S No. 1 Group No. 2 Group

A No. 2 Group No. 3 Group

B No. 2 No. 3 Group

C + above C x 3 Include a D

A

Extremely Good

B

Very Good

C

Good

D

Not Very Good

E

Not Good

8 steps or more 6 steps 4 steps 2 steps No increase

(5% of staff) (20% of staff)

Performance Evaluations

Competency

Evaluation

Competency and Performance Evaluations

Decision made with priority for higher group

22