Salary bar in merit pay plan to be raised to ¥10.75 million


The labor ministry plans to extend the planned “white-collar exemption” system to highly skilled workers who make at least ¥10.75 million a year, informed sources said Wednesday.

The system will allow employers to pay workers based on the merit of their achievements, rather than working hours. It is viewed as a key labor goal sought by Prime Minister Shinzo Abe.

The ministry plans to introduce related legislation to revise the labor standards law when the Diet opens later this month. It is expected to present a draft for revising the law to a meeting of an advisory panel to the labor minister next week, the sources said.

The government has said those subject to the new system will be specialists with salaries of ¥10 million or higher, but the ministry is expected to set the minimum at a slightly higher level of ¥10.75 million.

While the new system is expected to allow more flexible work arrangements, highly skilled workers with salaries of a certain level will not be paid overtime and be exempt from the national work hour limit of eight hours per day.

The ministry aims to keep it consistent with a similar system introduced in 2003 to lift working limits on employees who earn ¥10.75 million or higher a year, the sources said.

Discussions are under way as to what kind of jobs would fall under the new system, but some of the examples presented at the panel meeting in November included those in pharmaceuticals and securities industry, the sources said.

Under the system, the ministry plans to bolster steps to ensure those employed by firms adopting the merit-based pay system stay in good health, such as by requiring them to take off 104 days a year and to undergo medical checks.

Abe pushed the system when he was prime minister in September 2007, but abandoned it due to criticism that it would lead to more “karoshi,” or death from overwork.