How do employees in Japanese companies obtain promotions and pay increases?
Lifetime employment and promotion by length of service are the main features of the Japanese employment structure.
Once someone has been employed, it is normal for their wages to rise in accordance with qualifications and length of service in the company.
However, because there are differences in the level of ability of employees, even among those of the same age or length of service, differences in wage levels do arise.
With the Japanese economy in a structural depression, the pressure is on companies to become more efficient, and some are unable to keep operating under the system whereby wages rise with leneth of service.
Consequently, a small but increasing number of companies are introducing an annual salary system based on performance to replace the uniformity of wage structures based on length of employment.
At present, only 10% of companies are using the annual salary system, but there is no doubt that the percentage will increase over time.