Japan, Inc: It’s Time for a Raise!
Survey results of the top 500 companies in Tokyo with the highest average annual salaries.
What’s new: Lately the Japanese government has been putting a great deal of pressure on Japan, Inc. to increase the wages of its workers as a means to combat inflation and keep the country from falling further behind the rest of the world in terms of real wages. While it is true that Japanese wage growth has, essentially, been stagnant since the early 1990s, some Japanese employers are willing to provide competitive compensation packages. Recently Toyo Keizai Online compiled a ranking of average annual salaries among the 500 listed companies with the highest average annual pay that are headquartered in Tokyo.
Why it matters: Certain industries and companies have been paying a premium for top talent and bucking the long-term trend to hold down wages amidst the backdrop of inflationary pressures, an uncertain economic outlook, and what has been the status quo among Japanese employers for decades.
By the numbers: A quick look at the color-coded chart below certainly highlights some trends among firms involved with finance—particularly mergers & acquisitions, real estate development, general trading, and healthcare—mainly pharmaceutical manufacturers.
The top-ranked company is M&A Capital Partners (M&Aキャピタルパートナーズ), a firm that provides M&A advice. It pays an average annual salary of 26.88 million yen (approximately US $206,000), despite having a team with a relatively low average age (32.2 years old). The company has been increasing the number of employees due to the high demand for M&A for the purpose of business succession, but above all, it is attracting talented people due to its lucrative compensation packages.
In second place was Hulic (ヒューリック). The average annual salary is 18.03 million yen ($138,000). This company, which has been growing rapidly by rebuilding existing buildings and adding more modern ammenities, has expanded its property holdings to a scale second only to that of general real estate developers.
Other top-ranked companies include general trading companies like Mitsubishi Corporation (三菱商事), Mitsui & Co. (三井物産), Marubeni Corporation (丸紅), and Sumitomo Corporation (住友商事). Another M&A specialty firm, Strike (ストライク), ranked seventh.
In fifth place was Solasia Pharma (ソレイジア・ファーマ), a healthcare manufacturer that specializes in oncology pharmaceuticals. It offers an average annual salary of 14.9 million yen ($114,000). This firm has a relatively high average age of 51.4 years.
The data were compiled based on publicly available sources from securities reports. Pure holding companies were excluded in principle. Companies with fewer than 10 employees on a non-consolidated basis and companies that do not publish average wages were also excluded.
Yes, but. While wages among this relatively elite group of employers may be comparatively high in Japan, overall the country still ranks well below the rest of the members of The Organization for Economic Cooperation and Development (OECD).
According to the OECD average wage survey for 2021, Japan's average wage was $39,711, ranking 24th among OECD countries, less than half of the $74,738 average wage in the United States, which ranked first.
Even compared to its neighbor South Korea, Japan is four ranks below, with a difference of $3,036.
A trending Japanese phrase is now “ichi oku sohinkon shaka” (一億総貧困社化), which roughly translates as “developing into a 100 million poor society.” It references Japan’s overall population of approximately 125 million people. In other words, about 80% of all Japanese are struggling to make ends meet.
What to watch: Japan, Inc. is likely to face ongoing pressure from politicians to boost wages. There is, moreover, growing fear that Japan will soon face more of a widespread brain drain leading the best and the brightest to seek employment opportunities abroad. As has already been recognized for many years in Japan’s animation industry and healthcare sector, top talent is being lured outside the country by foreign firms that are willing to offer such employees more of a global standard in terms overall compensation. There are signs that the government’s intense pressure campaign to induce more firms to increase wages is starting to work, but even those gains are not likely to keep pace with inflation.
Links to Japanese Sources: https://toyokeizai.net/articles/-/660385 (includes full list of all 500 firms) and https://sdgsmagazine.jp/2022/10/13/7902
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Interesting.