The salaries of Japanese technology workers have not risen with the explosive growth of the information age, and many foreign companies are poaching Japanese technology talent. The dream land of former tech workers is now eclipsed. In the spring of 2018, Yang Yinyue, who lives in Hong Kong, China, joined a Japanese-listed software developer. She remembers the anxious expression on her parents’ faces when she said she was going to work in Japan.
“Isn’t wages low in Japan?” They asked. Yang’s brother is a systems engineer working in the United States and earns four times as much as she does.
Mr Yang pays little attention to these issues. “Things in Japan are cheaper. What’s more, I can learn a lot as a web designer,” she says.
But conversations between Mr Yang and his parents show that Japan’s status as a dream destination for skilled workers is a thing of the past.
“After 30 years of loss, Japan has become a low-paying country,” says Masato Shirai, partner and head of management consulting at Mercer Consulting Japan, a human resources management consultancy. ”
The annual EarningS Survey, conducted by Mercer Consulting, focuses on pay levels in 129 countries and 19 Chinese cities. Japanese workers’ incomes in the modern information economy have stagnated, according to the survey.
Take the annual salary of a system development manager in the survey. Japan’s pay index has been falling since 2007 as a benchmark year, when annual salaries were 100 points, falling to 99 in 2017. Over the same period, Vietnam’s pay index jumped to 145, Shanghai’s to 176 and Thailand’s to 210.
Strong growth in emerging countries is no excuse, but other developed countries have outperformed Japan. The u.S. pay index rose to 119 and Germany rose to 107.
In 2017, the median pay for Japanese skilled employees was about $100,000, below the level of salaries of relevant technical staff in Singapore or Beijing. Even in Thailand, where wages are significantly lower, the median pay for skilled workers is close to 70 per cent in Japan.
Yang Yinyue, who lives in Hong Kong, China, has joined a Japanese-listed software developer. She says wages in Hong Kong are higher.
Now, companies around the world are looking for cheap labor in the Japanese market. The head of a California-based technology start-up says it is hiring more Japanese engineers who are skilled and able to get things done on time, but are paid half as much as Silicon Valley employees.
But the trend could lead to a steady loss of Japan’s human resources in areas such as autonomous driving and artificial intelligence. High-skilled people in these areas are critical.
According to the Japanese subsidiary of Hanex, a British human resources firm, the annual salary of cyber security advisers in the Japanese market is about $120,000, compared with $228,000 in Hong Kong and $181,000 in Singapore.
In San Francisco, in the heart of Silicon Valley, the local government has identified a family of four with an annual income of $129,000 as “low-income.” However, the average household income in 2017 was 5.51 million yen ($507,000), with only about 12 percent of Japanese households earning more than 10 million yen ($92,000) that year, the ministry said.
Michael Craven, regional head of Hannas’ Japanese subsidiary, said: “Overall, what I am doing in Japan … is not going to be a good step. Raising the pay levels of top tech talent… Take a positive attitude. ”
“But if we don’t move fast enough, I think we’re going to see a growing talent mismatch, so it’s going to be harder for companies to find the right people.” Craven added that this means that highly skilled people could be lost from Japan.
The pay structure is showing signs of shifting as Japanese companies are generally worried about a brain drain to higher-paying overseas markets. Fujitsu and NTT Data have begun offering six-figure salaries to highly skilled workers in the high-tech sector.
But overall progress has been slow. The seniority-based pay system is deeply rooted in many Japanese companies, and unions continue to insist on a unified and comprehensive pay rise for employees.
“The perception of employment itself has to change, ” says Shirai of Mercer Consulting. “Japan’s employment model is that employees are deeply in a company and have a career that continues to improve. This model prospered in the manufacturing-driven 20th century. But without a change of mindset, Japan could be abandoned by the digital revolution of the 21st century.