HR Management

What is the standard position of the Japanese-working style of "equal work, equal pay"?

(Shawn Hempel/Shutterstock.com)
(Shawn Hempel/Shutterstock.com)

“Equal work, equal pay” was included in “Law on the Development of Related Laws in order to Promote Work Style Reform (Proposed Labor Reform Bill)” issued on 6th July, 2018. However, we will explain this Japanese-working style of “equal work, equal pay” by comparing it with the world’s working-style of “equal work, equal pay” and study the issues that should be considered in the future.

Equal work, equal pay promoted and lead by the government

The “equal work, equal pay” is being promoted by the government leadership to reduce the unreasonable differences that exist between the treatment of regular workers and non-regular workers. Simply put, if regular employees, contract employees, and temporary employees are doing the same job, the system should pay them the same salary.

On 19th July, 2018, Taiwan's Department of Labor (Ministry of Labor) announced the Three Principles of Administrative Guidance on Labor. They are “making the wages of temporary workers and regular employees the same”, “recruitment agencies and employers bearing joint responsibility for workers’ compensation insurance and wage supplementation”, and “prohibiting the binding of short-term contracts between recruitment agencies and workers”.

China has already enforced the “Provisional Regulations regarding Temporary Workers” law in 2014. Under this law, on top of “equal work, equal pay”, the regulations also demand the same welfare programs for all staff, ensuring the total number of temporary workers do not exceed 10% of all workers. Compared with China’s law, Japan is clearly lagging behind.

Issues in order to realize “equal work, equal pay

Though the Japanese economy is improving under Prime Minister Abe’s Abe-nomics as of 2018, it is difficult for there to be great growth in the future. Because of that, if we forcibly implement “equal work, equal pay” and pull up the wages of temporary workers, there is a risk of negatively affecting business performance. If we reduce the wages of regular workers to an amount that is comparable to temporary workers, the motivation of the regular workers will fall, and the performance of the whole organizations may decrease.

One solution to such a dilemma is to smoothly switch from the conventional style of hiring rigidly to being flexible in utilizing human resources. This can be done by involving external professionals in businesses that are expected to grow, withdrawing from unprofitable businesses, or involving exceptional staff in businesses with high profits.

Is the western-style of equal work, equal pay what HR should focus on?

Japan’s “equal work, equal pay” is something that is only applied to regular workers and non-regular workers who belong to the same company or organization, but the Western-style of  “equal work, equal pay” is a way of thinking that is applicable to the entire market. So if eployees have the same job scope despite being from different companies, the same salary will be paid regardless of the scales of the companies.

As such, one can consider the “equal work, equal pay” promoted by East Asian countries, including Japan, as something different from the Western-style. Although the global standard is the Western-style, what each company consider to be “equal work, equal pay” depends on the company’s overseas strategy.

The government-led “equal work, equal pay is too late

The Western-style’s “equal work, equal pay” is established as a global standard that draws a line between itself and the Japanese-style. Therefore, if global expansion is the aim, on top of realizing Japanese style of “equal work, equal pay”, companies should work towards implementing the Western-style of “equal work, equal pay” as fast as possible. Do consider measures that can be taken to match the strategies of the company to the trends in the world.

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