Merit, not seniority, to pay at Japan Post

New regimen to widen wage gap, impact pension plan

JIJI

Japan Post Group plans to introduce performance-based pay while cutting seniority-based compensation, in a bid to improve employee morale, sources said.

Japan Post Group is expected to introduce the new salary system as early as April 2014, the sources added.

Under the new system, the amount of performance-linked pay will be decided based on five-degree performance assessments of each employee. An average postman may see his or her performance pay rise by up to 13 percent or fall by up to 6 percent.

Performance-linked compensation will be paid on top of seniority-based salaries, which will be reduced by 20 percent from present levels.

Performance assessments will also affect retirement allowances.

The Japan Postal Group Union is scheduled to discuss the proposed new salary system at a national convention set for June 13-15 in Tokyo.

Reaching an agreement on the new payment system could be a bumpy road since the new system, which includes a new performance assessment plan, may lead to wider salary gaps among employees.

A performance-linked pay system is not suitable for public services, a labor union official said, citing the recently revised Postal Privatization Law that obliges the group to offer equal postal, banking and insurance services nationwide.

Japan Post Group is led by state-owned Japan Post Holdings Co., which controls postal, banking and insurance units as well as a post office network operator.

The government has announced plans to merge the two nonfinancial units — Japan Post Network Co. and Japan Post Service Co. — on Oct. 1.

The government is seeking input from the public until June 30 and expects to decide on the two units’ integration at a July Cabinet meeting.

Japan Post Network offers over-the-counter operations on behalf of all group companies at post offices, while Japan Post Service collects and delivers mail.

The integration is stipulated in the revised law on privatizing the postal services that was enacted in April.

With the postal privatization process launched in October 2007, the national postal services were reorganized into the two postal service companies and two financial units — Japan Post Bank and Japan Post Insurance Co. — under the holding company.

The separation of the post office management and mail delivery companies has made it impossible for postmen to handle financial products such as deposits.