Japan’s ruling Liberal Democratic Party has recently drafted a bill that raises salaries for public workers employed by the state. This bill also raises salaries of some politicians, the prime minister and cabinet members to be specific. The Prime Minister of Japan isn’t paid much. His annual compensation is ¥40.15 million ($270,000). The proposed bill gives him a tiny raise of ¥0.46 million to make the total compensation to ¥40.61 million. Cabinet members are also set to receive a raise in the same percentage terms as the PM, to receive ¥29.61 million. At the House of Representatives (the Lower House) Budget Committee, opposition politician Shun Otokita raised his voice on the proposed bill saying “At a time when wage hikes for ordinary people are not keeping up with the inflation and social security charges are rising even faster, higher salary for the prime minister can’t be received well by the public.” This is a typical, much anticipated response. Mr. Otokita is conservative and not left-wingers who always spray all the nonsenses. Nonetheless, he still said that. It is true that real wages fell eighteen months in a row through October due to sharp upswings in inflation amid higher commodity prices and the yen’s weakness. Wages and salaries are going up but are not keeping up with the inflation. Workers were given an average of 3.58% hike in the 2023 spring wage offensive. This was the biggest hike in 30 years. Workers tried to shoot for a 5% hike, but customarily they were not given everything they wanted. PM Kishida has been calling for higher salaries and wages since he came into the office two years ago, strongly pushing business leaders to pay their workers better. After all, workers had successful negotiations, and are looking for higher numbers next year, which Mr. Kishida supports strongly. So it’s incorrect to say that the PM and his cabinet members are getting a raise exclusively while average men and women on the street are struggling. People are not better off due to negative real wage growth but politicians are even worse off with only a 1% raise. Their obviously paltry salary like still causes indignation. After they hear so much about how carelessly politicians spend taxpayers’ money, they are unwilling to tolerate any pay hike for them. In fact, the PM and his cabinet member receive only 80% of what they are entitled to, returning ‘voluntarily’ the rest to the coffer of the state in view of the Japanese government’s woeful fiscal situation. In response to public indignation, PM Kishida announced that he and his cabinet members return the proposed 1% hike portion of their salary to the state. He should have thought about this before the bill was drafted, since the public’s reaction could have been easily anticipated. He can be blamed for a lack of political astuteness. The primary objective of the proposed bill is to raise bureaucrats’ salary. Since no public worker can be paid more than the prime minister, the PM has to be paid better for bureaucrats to be paid better. Kasumigaseki, the government buildings district, used to draw the best and the brightest from the country’s top universities since the late 19th century when Japan entered its modern age, scrapping Tokugawa shogun’s 250 year feudal rule. Bureaucrats contributed immensely to long-term planning for the country that resulted in Japan’s economic success. In the 21st century, however, Kasumigaseki has lost its luster among top talents at the University of Tokyo and other leading schools because of their long, long work hours and relatively low pay compared to top flight private corporations. While investment bankers and management consultants can rival bureaucrats in long work hours, they are handsomely compensated. Talented young men and women, therefore, tend to choose Goldman Sachs, McKinsey etc. over Kasumigaseki. The government has been pressed to do something to prevent policy-making capabilities from worsening. There is another group of public servants who need to be well-compensated. They are people in the ‘military’ which is officially called the Self Defense Force. Amid rising geopolitical tensions in the East China Sea and potential upheavals in Taiwan and the Korean Peninsula, it is essential from a national security perspective to make the SDF appealing to young men and women in their career considerations. Failing to do so would lead to erosion of the SDF’s capabilities. Maintaining the 150,000 strong men and women has not been easy for the SDF due to declining size of young population. The SDF has to be attractive to them, and compensation should be a part of its attractiveness. Prime minister’s salary has to be higher for the country to function well. Some people, however, shout that he shouldn’t be paid any higher for the job he is doing, which they disapprove vehemently. Other people advocate public servants should work honorably with low pay. These people hardly think politicians and bureaucrats can’t live off ‘honor’, or they might think that these men don’t need to be paid because they already amass wealth. Often their feelings are driven by outright jealousy. They can’t tolerate anyone who is paid significantly better than them especially when they don’t approve the job he or she is doing. Such feelings are very pervasive in post-bubble Japan since the 1990s, and have contributed to Japan’s persistent stagnation.
About the author: Mr. Suzuki is a retired investment banker based in Tokyo, Japan.