TOKYO- Over the last five years Yokohama-based Lasertec Corp has delivered what much of Japan Inc hasn’t in decades: big pay rises.
The maker of chip-measuring equipment has boosted salaries by about a third overall since 2016. Employees at its main unit, many of them engineers, make on average just under 14 million yen ($121,000) – more than three times the national average of 4.3 million yen.
Lasertec is among a subset of Japanese firms, often in specialized areas such as technology, where pay is increasingly tied to employee performance and not determined by seniority or the base pay set in annual labor talks.
While “shunto” spring wage talks between big manufacturers and unions still have immense significance for the economy – especially this year – more firms are opting for performance-based pay, experts say, a change that speaks to a wider shift slowly taking hold in Japan.
“For companies like us, employees are valuable assets, not costs,” said Yutaro Misawa, a senior executive at Lasertec, whose profit has soared nearly five-fold and shares have surged more than 2,800 percent over the past five years.
Attractive pay makes it easier to retain talented engineers who specialize in research and development, especially given the labor crunch as Japan’s population shrinks, Misawa said.
But for much of the rest of the world’s no.3 economy, wages remain lacklustre. Thanks to decades of deflation, companies, like households, tend to hoard cash instead of spending.
Japanese companies now sit on a record $2.8 trillion in cash and deposits.
In dollar terms, average annual pay totaled $38,515 in Japan in 2020, well below the OECD average of $49,165 and little changed from the early 1990s.
Higher wages are critical for the government’s target of stable 2 percent inflation. Prime Minister Fumio Kishida has called on companies to boost salaries and kick-start a virtuous cycle of spending, as part of his platform of “new capitalism” to push for greater wealth distribution.
Renewable energy start-up Abalance Corporation has actively hired mid-career executives over the past three years, lifting the average salary in Japan by more than 30 percent. Its roughly 100 employees in Japan – both locals and non-Japanese – are paid on average more than 7 million yen.
