In a traditional Japanese pay system, a salary table sets the pay for each grade and step, and every April most employees move up a step. That movement is teiki shokyu. It reflects the seniority logic of nenko joretsu: pay rises each year because the employee is a year more experienced, not because the market moved. Appraisal results usually decide whether someone moves one step, two, or none, but the expectation is that most people rise every year.
Because older employees leave and younger ones join, the step increase does not on its own raise a company's total pay bill much. That is why unions treat it as maintaining the wage curve and push separately for a base-up. In spring wage reporting, the headline rise combines the two; the step portion is conventionally treated as about 2% of pay. Rengo's 2026 demand, for example, was at least 5% in total, of which at least 3% base-up. The real figure varies by company and is not always reported separately.
Companies moving to job-based pay are weakening or removing automatic steps, tying increases to the job's market rate and performance instead.
What it means for a foreign employer
- Candidates expect pay to rise every year. A merit-only system where a solid performer can get zero looks harsh to people used to automatic steps. Explain the review system at offer stage.
- The increment is in their counter-offer. A candidate who has not yet had April's step may ask you to account for it in the offer.
- Do not double count. When comparing a domestic company's "5%" with your merit budget, remember the domestic figure includes the steps.
- It makes long-tenure pay sticky. Senior people in a step system may be paid well above market for their current role, which complicates both hiring them and hiring against them.
Sources
- Rengo, spring wage negotiation tallies (which report the step increase and base-up portions).
- Japan Institute for Labour Policy and Training, surveys of pay systems.