Aika Momma is a financial adviser at Nikko Cordial Securities Inc. with a renewable one-year contract and he — along with a growing number of young professionals — is happy with his situation.
The 24-year-old Momma had a chance to become a permanent employee at a housing company after graduating from university two years ago, but chose the job of financial adviser at the Yokohama branch. He did not have to relocate, but his salary is based on job performance.
If his performance does not measure up to company expectations, his contract will not be renewed.
“I hate to be ordered around and told what to do without any explanation by senior workers,” Momma said. “So, even if I have to start job-hunting again, I will definitely choose to be an FA.”
The company introduced the FA program in 2001 when the stock market was in the doldrums. FAs get minimum base salaries but otherwise makes most of their money from commissions.
Some high-performing financial advisers out-earn branch managers by a large margin.
Of some 1,100 FAs at Nikko Cordial, only about 80 are university graduates, because universities have traditionally recommended that graduates seek career-track employment and not contract jobs.
But, the company’s recruitment seminars are attracting a growing number of students in their senior year, as finding good permanent jobs gets tougher.
The collapse of the asset-inflated bubble economy has not only forced businesses to review employment conditions but has also drastically changed the consciousness of job seekers, business analysts said.
“For FAs, evaluation from the company is meaningless,” said Naofumi Fuke, executive director in charge of employment at Nikko Cordial. “The key is how to increase their clients. They are supposed to stick to the regional community, and there is a possibility that they will change the securities (sales) culture.”
In addition to wages based on performance and total company profits, businesses are making other structural changes.
Sanyo Electric Co. will introduce a system in the spring to provide company shares as part of its retirement package for about 27,000 employees, including those employed by group companies.
If the company performs well and it pushes up the stock price, workers’ retirement money will increase.
“We would like (employees) to have management consciousness and become stable shareholders after retirement,” said a company public relations official.
According to a survey by the Japan Institute for Labor Policy and Training, about 60 percent of businesses have introduced a performance-based pay system, although around 30 percent of workers were opposed to the system.
Companies’ labor-cost share, which has been high at about 70 percent in the last two or three years, slipped to the lower half of 60 percent this year, indicating that personnel costs are decreasing.
Akira Yamashita, an economist at Dai-Ichi Life Research Institute Inc., said: “New initiatives by businesses should be welcome. But as a whole, the performance-based pay system is used as a means to cut personnel expenses.
“Unless income distribution to workers based on profits is done, no full-scale recovery in individual consumption can be expected. This eventually holds back business performances.”
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