Electronics makers are revising pay scales to attract competent engineers, including by throwing salaries of more than ¥10 million per year at recruits fresh out of college.

The shift is being spurred by intensifying global competition for top information technology engineers and the race to develop artificial intelligence.

NEC Corp. introduced a new personnel system in October that hiked base salaries and removed the cap on Japan’s semiannual bonuses. First-year employees can earn more than ¥10 million a year straight out of school if they wrote highly rated research papers while in university.

Fujitsu Ltd. will introduce a system by the end of the business year to March that gives preferential treatment to employees of any age who have advanced expertise mainly in AI, including salaries that pay several tens of millions of yen even to new graduates. It will also adopt a new mechanism to compensate employees purely on the basis of their work assignments and roles without regard to seniority, beginning with managers.

The reforms are being pushed by Fujitsu President Takahito Tokita, who took the helm in June. During his assignment in London for two years, Tokita strongly felt the need to adopt a merit-based pay system.

The reforms will “increase opportunities to recruit diverse human resources,” he said.

Among its rivals, Sony Corp. has raised basic annual pay to as high as ¥7.3 million, effective in July, for new employees with advanced skills in AI and other fields.

Competition for talented engineers is growing across the world.

American tech giants Google LLC, Apple Inc., Facebook Inc. and Amazon.com Inc., collectively known as GAFA, are racing against Chinese and South Korean companies to “corral” top engineers with high pay.

While Japan’s companies are going overseas to directly recruit talent at top-notch universities, an industry official said the competition was rough.

“It’s tough to compete with GAFA and the others,” the official said.

Many Japanese firms have lifetime employment and seniority-based pay systems. Although they are shifting to systems that better reflect employees’ work assignments — a result of globalization and mobilization of manpower — the change remains incomplete.

As these reforms emerge, Japan’s leading electronics companies hope to attract excellent students from abroad by changing the image of Japan Inc. rewarding new hires with nothing but equal pay. But it is uncertain whether they can hire and retain talent merely by shifting to merit-based pay.

Though pay reform is indispensable to attracting people who can innovate, it may trigger a backlash from seniority-based hires. The success or failure of pay reform in the electronics industry will likely affect other sectors as well.

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