The Lower House passed a bill Thursday to cut civil servants’ salaries 7.8 percent for two years in a move expected to save taxpayers ¥580 billion.
The bill was immediately sent to the Upper House, which is expected to enact the legislation by the end of the month. The saved money will be used to finance reconstruction of the disaster-hit Tohoku region.
The bill was originally drafted by the Liberal Democratic Party and opposition ally New Komeito.
The ruling Democratic Party of Japan backed the plan because it needs their support to pass other key bills, including one to double the consumption tax and another to authorize the issuance of deficit-covering bonds.
The DPJ had been struggling to compromise with the opposition on the pay cut bill since May, when the government drew up its own legislation for paring government wages.
At the time, the DPJ agreed to give the civil servants’ labor unions, which are affiliated with the Japanese Trade Union Confederation (Rengo), the right to engage in collective bargaining in exchange for agreeing to the pay cuts.
The DPJ also decided not to implement the National Personnel Authority’s September 2011 call for a 0.23 percent wage cut in what was viewed as a concession to Rengo, a major DPJ supporter.
But the leader of the opposition, the LDP, opposed the agreement on collective bargaining and urged the DPJ to comply with the National Personnel Authority’s pay-cut recommendation.
Rengo was understandably opposed to the moves by the LDP and New Komeito, but the DPJ, which needs their support, was eventually forced to compromise. DPJ policy chief Seiji Maehara accepted the opposition’s plan on Feb. 17.
Rengo President Nobuaki Koga reconciled with the DPJ after Secretary General Azuma Koshiishi promised him the party would do its best to enact a bill granting civil servants the right to collective bargaining this year.
The DPJ then agreed with the opposition to start deliberations on the collective-bargaining bill in exchange for the pay reductions.
Although the money saved by the salary reduction will be used for rebuilding Tohoku, Prime Minister Yoshihiko Noda said the pay cuts, along with a plan to pare 80 seats from the 480-seat Lower House, are an effort to cut public expenses and gain public support for doubling the consumption tax.
According to the bill, civil servants’ salaries will be cut by average of 7.8 percent for two years starting in April 2012 to save some ¥580 billion.
As demanded by the LDP, the government will also retroactively impose a pay cut of 0.23 percent from April 2011 as recommended by the National Personnel Authority.
Meanwhile, the bill states that pay cuts for Self-Defense Forces personnel can be delayed for up to six months, given their duties related to the reconstruction of the Tohoku region.