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How is it, asks the business magazine President (Feb 1), that bureaucrats’ salaries are rising while private sector wages are not?
The bureaucracy, to those not in it, can seem a cushy, protected safe haven from the cutthroat competition and economic vagaries that assail the private sector. Resentment is natural, and at Prime Minister Shinzo Abe’s December announcement of the second consecutive annual raise for national government employees, there was sardonic under-one’s-breath grumbling about “otoshidama” (a gift of New Year’s spending money usually given to children) while the rest languished.
It was the first back-to-back raise for bureaucrats in 24 years, writes economic journalist Tomoyuki Isoyama in President. The suspicion it fuels, he says, is that the government’s controversial economic reform package, dubbed Abenomics, benefits the privileged at the expense of everyone else.
Abenomics, centering on an artificially cheap yen, was supposed to initiate a “virtuous circle” of heightened corporate activity leading to higher wages generating increased consumption resulting in money percolating through and buoying up the economy. Some, before its dizzying new year plunge, cited the soaring stock market as evidence the policy had succeeded in jolting Japan’s economy out of its lingering doldrums. Others, pointing to the nearly 40% of the work force stuck in part-time jobs and to the stubborn failure of most private sector wages to rise despite improved corporate earnings, argue it has done nothing of the kind. It’s a debate with no end in sight.
Two facts, however, seem beyond question. One: the economic recovery, if such it is, is neither secure nor, so far, all-inclusive in terms of people benefiting from it. Two: Japan’s public debt is an alarming 1.057 quadrillion yen, more than double its gross domestic product.
So we return to Isoyama’s question: Why the “otoshidama” for bureaucrats? Do the bureaucrats deserve it? Can Japan afford it?
The initial justification, Isoyama explains, is a perception to the effect that bureaucrats earn on average less than private sector employees and need the boost to achieve parity. Figures presented by the National Personnel Authority seem to back that up. They show an average bureaucrat’s monthly wage of 408,996 yen, as against 410,465 yen in the private sector. Yes, but, counters Isoyama, that’s based on pay scales at age 35, when the private sector does have the advantage. It fails to take into account that bureaucrats’ pay soars at age 50, whereas private sector pay does not. So the truth of the figures, he says, is at best partial.
As for whether or not Japan can afford it, the government argues it can, owing to the increased corporate earnings, and hence the increased corporate tax revenues, for which it credits Abenomics. Here we’re into another issue that has experts on both sides, neither side convincing the other while the lay public grows more and more confused. The breathtaking stock market plunge beginning with the new year suggests, at least, unstable underpinnings.
Now we come to the heart of the matter, which in Isoyama’s view is not economic but a question of political survival. Abe’s first term as prime minister, ending in 2007 with his resignation after barely a year in office, was seen at the time as a disgraceful defeat from which he would never recover. He learned some lessons from it, however, and did recover. One lesson he learned, Isoyama says, is not to make enemies of bureaucrats, who, Abe feels, undercut him the first time round for trying to impose austerity on their wages.
Given a second chance with a dramatic election comeback in 2012, Abe is determined, Isoyama says, not to repeat that mistake. The “otoshidama,” then, is in the way of a friendly gesture.
As Isoyama sees it, it might, potentially, be a good thing. If the raise in national bureaucrats’ wages spreads to the regions, it could boost regional economies – restaurants and pubs, for example, which would benefit from more liberal wining and dining among newly flush local officials.
Well and good, but there’s a risk: If the bureaucracy outstrips the private sector in terms of remuneration, it’s on the bureaucracy, not the private sector, that energetic and talented young people will focus their ambitions. What happens then? You end up with a swollen bureaucracy and a shriveled private sector – “a Greece-ification of Japan,” Isoyama warns, and it’s a stern warning indeed. We all know the condition Greece’s economy ended up in. Is Japan heading the same way?
© Japan Today
47 Comments
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Yubaru
Abe's counter-argument; "Hey I am just following up on my urges to have people's pay go up"
Scrote
The article is misleading. You cannot say bureaucrat's salaries "keep rising" when this year was the first year for 24 years when salaries have risen in two consecutive years. I think the rise this year is a whopping 0.27%; why this makes the author seethe with resentment is not clear.
In fact, salaries, bonuses and other allowances have been cut again and again in recent years and are generally set in line with private sector salaries. At the university our pay closely follows civil servant salaries and it's lower now than it was ten years ago. I very much doubt that my pay will "soar" when I reach 50 either.
samwatters
"The bureaucracy, to those not in it, can seem a cushy, protected safe haven from the cutthroat competition and economic vagaries that assail the private sector."
It IS a cushy, protected safe haven from the cutthroat competition and economic vagaries that assail the private sector. At best these people are paid for tasks that are unwanted and unneeded and would never survive an election, god forbid the people should have a chance to make their views known. At worst, they are evil, entitled people who have no qualms about destroying peoples' lives should it get in the way of their promotion. Check out the Japan Times July 23, 2015 article titled "Unforgiving system leaves family mired in debt (written by Louise George Kittaka) if you doubt my evil claim.
Think about it; we can do business with people all over the world, 24/7 with the phones in our pocket and we still pay armies of people to process documents with a @#$! hanko or stamp on them!? You could remove half of all personnel from every government office building in Japan, local through national, and it wouldn't hurt production one jot.
And now they have to raise our taxes.....
Akula
People from the public sector very seldom apply for jobs in my organisation, or at least very seldom make the shortlist for vacancies. For the most part the best and brightest opt for the private sector.
sfjp330
ScroteJAN. 23, 2016 - 09:22AM JST In fact, salaries, bonuses and other allowances have been cut again and again in recent years and are generally set in line with private sector salaries.
Increase in salaries are not the problem for government workers. The real problem is the skyrocketing bill for pensions for cities across the Japan. It's a long term problem. Rising pension costs are eating up money needed for things such as taking care of the increase in elderly health care, and basic needs for the citizens.
John-San
Because it really hard for Politicians to train new recruit,s to excepting bribes. Sometime it takes Politicians 40 years to turn a good bureaucrate into a bad one.
GW
Earth to Isoyama, the bureaucracy has been severely bloated since the 80s with no signs of improving efficiency in sight
sangetsu03
I recently paid a visit to the city office to get new stamp certificates (something I have to do several times a year). The office had about 20 city residents waiting in line, and about 40 city employees processing the paperwork.
The simple fact that Japan still relies on personal stamps and seals is amazing. No other developed country in the world still relies on this old-fashioned and completely unnecessary way of authorizing documents. The amount of money spent on seals, certificates, and bureaucrats is incredible, and all the more so because it is not necessary. It is far easier to forge a seal than it is to forge a signature. And what is the point of getting a certificate to verify something which can be easily forged?
And there are endless other things, such as changing residency from one city to another. In other countries you simply get notify the license bureau of your new address, and information is transferred automatically from your old city to the new one. Here in Japan you have to personally visit your old city office to get a certificate saying you are moving, then you have to go to your new city office and register there. This is absurdly stupid and time consuming, and completely unnecessary, and requires a small army of bureaucrats to do the unnecessary work.
Renewing a drivers license? In other countries you receive a post card, you return the post card with the fee, and your license is renewed. Here in Japan? You receive the post card, go to the license center, spend a few thousand yen, and three or four hours of your time listening to a safety lecture (most people simply play games on their phones, or sleep in their chairs). A hugely unnecessary expense and waste of time. But it keeps yet another army of bureaucrats employed.
trouble
Yes, but private sector 30 somethings don't have paid taxi fare home every night, don't have the bonus structure of the old days, don't have government owned resorts and even exotic restaurants that the public is unaware of. I've eaten at the unbelievable private restaurant in Roppongi owned by the Bank of Japan. It's a five star manor with tuxedoed waiters.
A nation with a declining population should have a declining bureaucracy.
Laguna
Fully agree, sangetsu. I'm quite for fair pay for bureaucrats - there's just too damn many!
Hellokitty123
Surely the only reason why the stock market rose in the first place was due to the government pouring in money from the pension fund.
nath
Everyone in the pay of the central govt, including those at national uni's, took a 10% cut in salary for three years following the tsunami in Fukushima, during which time pay rises were suspended.
shonanbb
Bureaucrats are nice to me. Took four of them to explain to me that I did not have to put anything in a space on the MyCard form with the picture attached. They then said everything is ok. I handed them the application. They handed it back. They told me I had to mail it to them. I asked why. All four got together. 7 minute talk. They went to another person. That woman came over and said they cannot accept it this way and it had t be mailed. I asked why not. Two more got involved. 7 people...why could they just not take it? There were a whole bunch of them on a desk that were just delivered by the post office while I was there. hmmmm
samwatters
"Everyone in the pay of the central govt, including those at national uni's, took a 10% cut in salary for three years following the tsunami in Fukushima, during which time pay rises were suspended."
And that very nice gesture does not change the facts that 1) there are too many bureaucrats, 2) they get paid too much money for 3) doing tasks that are not wanted nor needed and 4) they are going to raise our taxes again that will result in 5) the system bloating even more.
kohakuebisu
I guess this is talking about the employees of the national government.
At local governments, the big trend is toward casualization, the practice of employing new recruits on temporary contracts. The Japanese word generally used is "hiseiki". So in local government offices, libraries, daycare facilities etc. you have older workers with full worker status, full salary, and full benefits and temp staff doing the same work on maybe 40-60% of the salary, none of the job security, and none of the benefits. In some municipalities, half their staff are directly employed temps. Some nursery school teachers have been working as temps at the same public daycare center for over ten years. They're doing a forty plus hour week for 170,000 a month with no health care or pension. I hear you have the same in public system schools, with both full status and "temporary" status teachers being given the same responsibilities in spite of a huge difference in pay.
This has been featured numerous times on Japanese tv, including a whole show of Close Up Gendai, so Japanese people who hear the word "komuin" and instantly assume it means a stable job should really know better. Some komuin are treated like second-class citizens.
nath
The my card application has to be mailed in the enclosed return envelope to the central location where they are processed.
Local governments no longer handle those cards or issue them.
gogogo
Japan's been called on this several times. One thing the TPP is suppose to remove, artificially propping up your currency.
Serrano
I think I'll apply for a bureaucrat job.
JeffLee
Ah yes, Investment bankers. The narrative that bureaucrats are lazy and corrupt while the private sector is virtuous is utter fantasy.
samwatters
@JeffLee. Couldn't agree with you more about investment bankers--did you hear about Jamie Dimons huge raise after laying off huge numbers of workers; would love to see him and many other bank CEO's shot---but if you cannot intelligently deny that the reason those banks do these things and get away with them is because of government intervention. Without the intervention of politicians and government bureaucrats alike, many of these businesses would have been shuttered years ago. Sure, there is corruption in the private sector but---unlike the public sector---there are usually consequences for it.
danalawton1@yahoo.com
Look at Singapore.... the average politician makes around $300,000, with some top members making over $1 million. The idea is to pay them so much that they don't need to use the office for other financial gain. However that said, Singapore's court system, in my opinion, weighs heavily in favor of the govt., and its media can barely print anything without govt. approval, so what would stop a politician from becoming corrupt, especially if it is totally on the honor system with almost no one looking. In Japan the media is much more a part of policing the government.
gogogo
It is called living in a bubble.
tinawatanabe
policing? According to Abe, NHK's mission is to destroy the Abe administration.
danalawton1@yahoo.com
In the USA... the media is all over the govt., to the point where things are quite messy... its like living in a storm of chaos. But I'd rather live in this chaos and know we're forcing transparency on our officials than hope I could trust them. Japan is somewhere in between Singapore and the USA.
stormcrow
Bureaucrats' salaries & taxes just keep going up, up, up. Why not drastically cut the number of bureaucrats and taxes at the same time? This is nuts.
GW
I realize this is compared to Singapore, but that the above doesn't mean much of anything policing wise, virtually non-existent unless a story breaks even though it was never supposed to break out....
JeffLee
Wall st.'s dealings with the lightly regulated subprime sector -- and the credit rating agencies' collaboration -- causing the global meltdown, were done behind closed doors and without regulators' knowledge.
The govt did intervene afterward....in order to fix the disaster.
samwatters
"Wall st.'s dealings with the lightly regulated subprime sector -- and the credit rating agencies' collaboration -- causing the global meltdown, were done behind closed doors and without regulators' knowledge."
Well, who then did the Wall St. negotiate with? The answer is higher-up bureaucrats. It's easy (and lazy) to paint the bankers as evil people who acted alone but it's not true. A certain number of bankers were evil people who acted with government bureaucrats to enrich themselves. Again, we agree; there is corruption in the private sector but---unlike the public sector---there are usually consequences for it.
"The govt did intervene afterward....in order to fix the disaster."
Did the government fix the problem? With the exception of professional athletes, government workers/bureaucrats and politicians, the economy never recovered. But we can go back-and-forth on that and we would both have legitimate points. What cannot be intelligently denied however is that this is going to happen again because government and the bureaucrats empowered the banks to do so.
Todd Topolski
Bureaucrats, the political or government class are parasites. Everywhere in the world it is the same type of greedy parasites who live off the backs of everyone else and in their minds any amount if money they can get away,with taking, is what they will do. Notice as well the perpetual income increases they always do aswell. The real amusement though is government parasites never reduce their cut from the pillaging, ecen during recessions, even though the government class is the cause of those recessions. the government parasites also grant themself perpetual cost of living increases to cover the inflation they cause and after the government class greed for money, comes their greed for power over others.
sighclops
sangetsu03 nailed it. Bloated government departments everywhere. In fact, most Japan Inc. companies are bloated. I'm not sure why a lot of these companies still engage in their 'mass hiring rituals' for the sake of hiring new people? If younger staff were given more responsibility, the same going for junior managers, then you wouldn't need this inefficient, unproductive, 'monotasking' workforce that you see in most traditional corporations here.
It will be centuries before this post-war mentality dies out, I'm afraid. Old boys' club is too large & mentality too engrained. Just look at the education system...
JeffLee
They negotiated with the subprime cowboys and credit rating agencies....all private sector. They deliberately kept the SEC and others in the dark. Those mortgage backed securities were very opaque by nature. Indeed the whole derivative industry, invented by the banks, is shrouded in secrecy.
If the govt didnt hand Wall St. nearly a trillion dollars bailout, all its major firms would have gone bankrupt, and the wealth destruction would have put us all back in the stone age.
Nessie
Paying bureaucrats well cuts down on corruption, in theory. But if they're getting amakudari jobs anyway, it seems like it doesn't work in practice.
theeastisred
Slightly wrong. According to Abe, the Abe administration's mission is to destroy NHK.
fxgai
Full-time bureaucrats should accept less than full-time private sector workers, because in return they don't have to produce anything of value and are pretty much set for life, unlike a lot of private sector workers who will face the chop sooner or later if they don't perform (even with Japan's rigid labour laws). Although committing one's life to such boring, unproductive activity as that undertaken in the public sector could be thought of as a huge personal sacrifice. I would need to be paid handsomely indeed to ever consider taking it up.
But the people behind Abenomics seem to me to genuinely believe that everyone will get richer if only people have more money to spend, and since they don't have a clue about what makes the economy work, they start by hiking wages of bureaucrats first, which are the only wages they can actually control.
Ultimately this plan probably won't work, and with luck, the voters will realise that reflationist economic policies are not what Japan's economy actually needs, and vote for something else. But meanwhile the LDP is bribing voters with other people's money, so the chances of that happening are not good.
samwatters
"They negotiated with the subprime cowboys and credit rating agencies....all private sector. They deliberately kept the SEC and others in the dark."
Oh, c'mon now! It's the SEC's job to know these things---and they did! The FBI knew about the mortgage fraud, the SEC knew, etc. And assuming the impossible for a second and believing that they didn't then they are incompetent and should be shut down anyway. Private sector entities don't have the moxie or the muscle to bend government to that extent. The only time government gets hurt by the private sector is when someone inside of the government is getting paid off. But you will say that's not so and so I would ask why have these bureaucrats in the first place if they are not capable of doing jobs that are paid oh-so-handsomly to perform?
fxgai
Some other guy was also complaining about the global derivatives market the other day. "Hundreds of trillions worth of evil derivatives are out there", just waiting to bite everyone on the backside or something.
"Derivatives" is just a fancy sounding name for agreements between people who want to reduce their risks to gain certainty in whatever it is they are doing (like running a farming or airline business), and people who want to take those risks in order to hopefully make some money. Both sides get what they agreed to, so long as they properly understand what they are agreeing to (e.g. taking self-responsibility).
Most of the derivatives out there are people wanting to get rid of their interest rate risks. No big evil in that. Personally I don't care if people are doing this all in "secret", but the regulators seem to think they dropped the ball here in 2008 and have added lots of disclosure rules in recent years.
fds
the problem with paying bueaucrats is that they are parasites, they have to raise taxes to pay them and don't actually produce anything.
Utrack
Diet lawmakers make way more than some 400,000 Yen a month. Try 4 million Yen a month salary as a Minister than you would be closer.
https://sg.news.yahoo.com/japan-minister-gives-pay-over-fukushima-soil-dump-071941785.html
Black Sabbath
“The bureaucracy is expanding to meet the needs of the expanding bureaucracy.”
Oscar Wildenath
The article you linked showed Hoshino as making 2 million/month, not 4 million, and he was the environment minister - I'm pretty sure he will be making more than lawmakers who don't have cabinet positions.
Utrack
Strangerland
Hosino was making 2.8 million Yen a month in 2011.... His Minister title allotted him 1.5 million Yen and being a lawmaker 1.3 million Yen monthly salary With all the raises the Diet gives themselves ..... PM Abe just ave the Diet it's second pay raise ( two back to back raises) their monthly salary is higher now 5 years ago which is when the article I posted a link to was written.
nath
Then why does that article say 2 million/month?
Utrack
At the end of the article Hosino states he will retain the 1.3 million Yen a month salary he gets just by being a Diet member.
nath
Ok, so 1.5 million for being environment minister + 1.3 million yen for being a Diet member = 2.8 million yen. Still shy of 4 million yen.
And you said lawmakers are making 4 million yen/month, not ministers. So if we are looking at purely lawmakers, then it would be 1.3 million yen, which is well short of 4 million yen.
Utrack
Each title gives a Diet Member a salary but their base salary in 2011 was 1.3 million Yen....
nath
Ok...?
You posted a number of 4 million/month for all lawmakers, but the article you linked to in support of that number doesn't support that number.
Triring
First off the figure of wage for private sector only takes in consideration of top 225 corporation enlisted in the Tosho 1 bu. Second they only take into consideration of Seishain for wages for private sector while taking an average of all personnel at government office which also includes the 3rd grade employees the lowest within the hierarchy of government employees. Last and most important government employees can't be fired under normal conditions so all bureaus are overstaffed doing overlapping jobs with local government. If we are able to slash the number of staff the HR cost would be reduced to 2/3 the present amount.