Equal pay for equal work

Oct 29, 2018 [No.57-2018]

Dr. Hisashi YAMADA
Research Director, Chief Senior Economist
The Japan Research Institute, Limited


Equal pay for equal work is a concept that same wages are paid for same jobs. In Europe and the U.S., it basically means correcting the gap for treatment between men and women, among different ages and races. It is based on the idea of "Diversity Management" which is supported by the concept of guaranteeing human rights. However, equal pay for equal work that has been introduced in Japan differs a bit from in such context. It just tries to diminish the treatment gap between regular and non-regular employees within one company. Furthermore, Europe and the U.S. "only allow for rational gaps" while Japan "eliminates irrational gaps". It is just the "Japanese model" of equal pay for equal work.


In this background, it can be pointed out that the history of the wage payment system is largely different between Japan and Europe and the U.S. In Europe and the U.S., wages are basically decided depending on the type of job. If the job is of the same type and the same skill level in cross-sectional way within society, the basic wage price is decided systematically. For example, in Germany, employers’ organizations and labor unions in each industry negotiate, create a standard as to what skill level an employee falls under when getting a specific type of job, and decide the minimum wage level by the type of job and the skill level. Therefore, whether men or women, young or old, if the type of job and the skill level are the same, wages are basically the same.


On the other hand, in Japan, the basis of industrial relations is not by industry or by the type of job, but by individual companies. Mainly in large companies, internal qualification systems have been maintained on individual company level. However, it is basically for male regular employees whose companies have the authority to decide their type of job and work location on the premise of long-term continuous employment. Needless to say, non-regular employees who think temporary employment as a premise are not included in the scope of such internal qualification system. With regard to the type of job which many women tend to select and regular employees whose work location is limited, it is typical that a different qualification system has been established. This is how positions in companies and wages are decided according to whether he or she is a regular or non-regular employee, or degree of limitation for the type of job and work location. In Japan no system exists which realizes equal pay for equal work based on the Europe and the U.S. standard.


In Japan, specific contents of an individual employee's job are not decided in advance. Because there is flexibility in deciding job contents in the workplace, there are many cases where workers do similar jobs even if they are different types of workers. The rate of non-regular employees largely increased in the past 20 years and such a tendency has been becoming more prevalent. As mentioned in Part 1 of this series, changes to the attributes of non-regular employees also call for the necessity of improving their treatment. In addition, it should be pointed out that another Japanese government’s goal of Japanese type equal pay for equal work is increasing wages. A key to decide a final success or failure of Abenomics, an economic policy of Abe administration, is that wages increase sustainably. While the effect of a request for wage increases to companies in the spring offensive is limited, increases in wages of non-regular employees, who account for nearly 40% of employees, have now been planned.


Japanese companies have to introduce a way of thinking which has never existed before, so they seem to be confused how to deal with it specifically. Japanese government has shown guidelines with examples regarding what cases are admit or not. In the future, the guidelines will be settled based on discussions in the Labor Policy Council. Preparation for manuals that was broken down by industry has also been considered. In addition, noteworthy fact in the proposal from the Labor Policy Council is that the results of labor-management consultation based on intentions of non-regular employees are respected. It can be said that objective fairness does not exist. Of course, it is essential to reconsider whether it is a gap which can be re-explained, but the important thing is to build cooperative industrial relations talking and accepting certain concessions with each other. It is important that the introduction of equal pay for equal work this time is regarded as a chance for building such favorable industrial relations.

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