Ask a Japanese candidate what they earn and the answer is their nenshu: everything they were paid in cash in a year, before tax. That normally includes base salary, the summer and winter bonuses, and for non-managers, overtime. Allowances for housing, family or commuting may or may not be counted, depending on who you ask.
Bonuses are a large share of it. Japanese companies typically pay seasonal bonuses twice a year, in summer and winter, worth two to six months of base salary in total, so base is often only half to two-thirds of nenshu. At foreign companies the shape is inverted: base is usually 75% to 80% of annual pay, with a performance bonus and, increasingly, equity on top.
What it means for a foreign employer
- Always ask what is in the number. Base, bonus, overtime, allowances. Two candidates who both say "12 million yen" can have very different base salaries.
- Compare like with like. Most foreign companies set budgets in base salary, or base plus a target bonus. Convert the candidate's nenshu to the same basis before you judge whether the role is affordable.
- Watch the overtime. A non-manager who works heavy overtime may lose a large part of their pay if they move into a management role that is exempt from overtime pay.
- Bonuses are part of the deal, not a perk. Candidates often see a guaranteed twice-yearly bonus as fixed pay. A purely discretionary bonus at your company is a cut in their eyes.
- Same number, different shape. A VP at a Japanese company and a VP at a foreign one can have the same nenshu and almost nothing else in common: fixed versus variable, retirement allowance versus none, no equity versus vesting stock. Treating Japan as one pay market is one of the most common errors in cross-border hiring.
Sources
- Pay convention; how bonuses are calculated is set by each employer's work rules or employment contract.