HUMAN RESOURCES MANAGEMENT
Vol.33-No.09 September 1,1994
Starting Pay Freeze
Japanese businesses have customarily reflected the outcome of spring wage negotiations and the rate of regular wage increase in the starting pay of new hires for that year. But this year, the situation has taken a new turn. President Takeshi Nagano of Nikkeiren (Japan Federation of Employers Associations) announced the change. He touched on the starting pay in a statement referring to "the issue of new school graduates' job hunting" on June 8. Nagano's statement, which announces measures to cope with the issue of new school graduates expected to be recruited for 1995, calls for the following. First, "not giving unfavorable treatment to female students in accordance with the Equal Employment Opportunity Law:" Second, "tackling the issue of former graduates like new ones". Third, "reducing starting pay to expand the quota of new recruits but keeping it within a range so as not to increase overall personnel expenses."
Major firms in the auto, life insurance and banking businesses responded to Nagano's statement by announcing that they will set starting pay for new recruits for 1994 at the same level as 1993. Toyota Motor Corp. kept the initial pay for 1,920 new recruits with university degrees at 196,000 yen. Such a freeze has never been done at Toyota since 1982. Nissan Motor Co. has also frozen the starting pay for 170 university graduates who joined the company in April at 197,000 yen Mazda Motor Corp. followed suit and held starting salary for 66 university graduates on the managerial track at 196,000, yen the same amount as last year. In the distribution industry, the Daiei lnc., a major supermarket, decided to peg the starting pay at 193,000 yen and Uni Co. at 192,000 yen (both for university graduates). The starting pay freeze was also decided upon at such department stores as Mitsukoshi, Daimaru, Takashimaya and Hankyu (193,000 yen for university graduates). In addition, major life-insurance companies decided to curb the initial pay for university graduates for the first time since the end of World War II. Nippon Life Insurance, Daiichi Life Insurance, Meiji Life Insurance and Asahi Life Insurance all froze the starting salary for university graduates at 145,000 yen. What is more, 11 city banks decided not to increase the initial pay of new hires for the first time in 16 years, since 1978.
The starting pay for new recruits normally is the initial salary level of the preceding year plus an extra pay raise. This year's decision, however, lowered wage levels for the specific year, which will likely alter the wage scale overall for employees. Nikkeiren's stance is believed to take into consideration for college students who will graduate in March 1995 and who are scrambling to find jobs in the midst of the prolonged economic slump. On the other hand, it could prompt a wage-hike freeze to be extended to the whole employees.
previous page next page MENU
Human Resources Management Index