English translation of a Japanese article of BIBLOBE News (Source: J-CAST News) – July 8, 2012
Small Number of Highly-Paid Employees and Large Number of Poorly-Paid Ones …. Salaried Workers’ Lifetime Earnings Down 9.6 percent Over The Past Decade
Lifetime earnings of salaried workers have drastically decreased. According to the “Wage Structure Key Statistics Survey” by the Ministry of Health, Labor and Welfare, in the case of male university graduates (average workers), if they work until retirement, their lifetime earnings stood at 275.8 million yen (excluding retirement allowance) in 2009 while 305.2 million yen in 2000 and 306.4 million yen in 1990. Namely, there is a decrease of 29.4 million yen (down 9.6 percent) over the past ten years between 2009 and 2000.
Behind such decrease in lifetime earnings is said to be the corruption of lifelong employment system, which has led to an increase in employment of non-regular workers such as part-timers and temporary workers and also employment mobility.
Difference of “One Hundred Million Yen” Between Big Companies and Small Companies
It used to be said that lifetime earnings of salaried workers were about “three hundred million yen” including monthly pay, bonuses and retirement allowance. According to the “Youthful Labor Statistics Guideline 2012”, which is edited by the Japan Institute for Labor Policy and Training (JILPT) based on the “Wage Structure Key Statistics Survey” by the Ministry of Health, Labor and Welfare, their lifetime earnings in 2009 barely reached “three hundred million yen” including retirement allowance, which dropped to less than three hundred million yen if retirement allowance is excluded.
The lower academic background (technical college graduate, junior college graduate, high school graduate, junior-high school graduate in this order) is, the lowered wage level is in spite of longer time of service. Consequently, people with higher academic background gain more lifetime earnings.
Of course, the longer the period of service as non-regular worker is, the more farther “three hundred million yen” is.
Comparing the lifelong earnings between companies with more than 1000 employees and those with less than 100 employees, bigger companies pay one hundred million yen more.
Though no changes in this tendency, Researcher Haruhiko Hori, JILPT, points out, saying “After 2000, an especially significant decrease on bonuses has been seen. A fall in lifetime earnings is caused mainly by a decrease in pay and bonus due to business downturn of companies.
“It is true that the culprit is economic downturn, but without betterment of business performance and enlargement of the whole pie, wages will never rise.”
Pay- for-Performance System Causes Lower Wages?
However, lifetime earnings have decreased by approximately 10 percent, 29.4 million yen compared to those ten years ago. A significant drop was seen especially between 2008 and 2009, that is, around Lehman’s fall: 292.9 million yen in 2008 to 275.8 million yen in 2009. It is true that this was due to the stock market plunge, sluggish consumption, and poor business performance of companies. However, there is a big amount of difference – 17.1 million yen – by just a year.
Researcher Hori, JILPT, mentioned above, explains: “a decrease in lifetime earnings is due to poor business performance of companies as well as ‘presumably globalization and introduction of pay for performance system’.”
Actually, corporate employees’ salary payments increase less often with age and the “pay scale” proceeds to flatten. Abolition of “fringe benefits” such as age allowance, long-service allowance, family allowance and housing allowance also helped curb a boost in salary.
According to Researcher Mr.Hori, “Recently, wage distribution has varied widely. Namely, pay gap has become wider and yet the gap has become wider with age.”
A company consists of a small number of highly-paid employees and a large number of poorly-paid ones. This seems to cause to lower the average lifetime earnings of all employees.