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The Bank of Japan will reduce the salaries of all its employees by an average of 4 percent, effective Oct. 31, bank officials announced Monday.

The bank is instituting the wage cut to comply with article 31 of the new Bank of Japan Law, which requires the central bank to set a wage level for its executives and employees in accordance with social conditions at the time of the revisions.

The new BOJ law was enacted in April amid harsh criticism toward the central bank over the high salaries of its employees and its unclear wage system. “The new wage structure is based on a concept that BOJ employees should be paid in accordance with their abilities, positions and achievements,” said Shigeru Hikuma, a BOJ executive director in charge of personnel affairs.

. “It also aims to achieve a wage level that is competitive enough to attract able workers at other financial institutions.”

The 4 percent cut on average was agreed upon Monday at the central bank’s executive meeting, after pay scales at major financial institutions and firms in other industries were considered, Hikuma said.

According to the current wage table, a department director, the highest position among employees, earns 22.99 million yen a year. After Oct. 1, the amount will be down to 21.95 million yen. A division chief, the next position down from department director, now earns 18.55 million yen a year. That position’s annual salary will be 17.78 million yen under the new system.

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