Shokumukyu pays for the job rather than the person. The employer writes a description for each role, evaluates its size, places it in a grade, and attaches a pay range to each grade, usually benchmarked against the market. Someone who moves to a bigger job is paid more; someone who moves to a smaller one can be paid less. A softer variant, role-based pay (yakuwarikyu), grades broader roles rather than individual jobs and is common for managers.
Japan tried job-based pay before, in the 1950s and 1960s, and again with the "performance-based" reforms of the 1990s, with limited lasting take-up. The current shift may prove more durable because the pressure is different: competition for digital and specialist talent, global integration of HR systems, and the government's labour market reform agenda. The Cabinet Secretariat's August 2024 guidelines describe how 20 companies introduced job-based systems. Equal pay rules also push in the same direction, because a pay gap is easier to justify when it rests on documented differences in the job.
Adoption is uneven. Many companies have introduced job-based pay for managers only, or run it alongside the old ability grades. Japanese law makes it hard to cut pay or to move people out of roles, so a job-based system in Japan still sits inside strong employment protection.
What it means for a foreign employer
- It narrows your pay advantage. When a large Japanese company pays market rates for a defined job, it competes with foreign companies for specialists on more equal terms.
- Ask how far the candidate's employer has really moved. A "job-based" company may apply it only to managers, or only to new hires. Check whether the candidate's pay reflects the job or the old grade.
- Your system is legible to more candidates. People from job-based Japanese employers already think in grades, ranges and job descriptions, and are more used to being assessed on skills and output than on tenure. They tend to interview and adjust more easily.
- Downgrading still needs justification. Even under job-based pay, moving someone to a smaller job and cutting pay can be challenged as an unreasonable disadvantageous change.
Sources
- Cabinet Secretariat, Ministry of Economy, Trade and Industry and Ministry of Health, Labour and Welfare, Job-Based HR Guidelines (August 2024).
- Labour Contract Act, Articles 8 to 10; Part-Time and Fixed-Term Employment Act, Article 8.