Bank's Decision to Scrap Seniority System Marks Shift in Japan's Corporate Culture

Jun 22, 2024 | News On Japan

TOKYO - The long-standing seniority-based system in Japanese companies is being phased out. Many have considered it natural to rise with age, but there have been times when people desired recognition based on ability. With this deeply ingrained system now under review, will the decision by a major bank change Japan's corporate culture?

It has been revealed that Sumitomo Mitsui Banking Corporation, one of Japan's three mega-banks, is planning a major overhaul of its personnel system. One of the significant changes is the abolition of the seniority-based system. Currently, salaries and positions increase with years of service. Sumitomo Mitsui, with approximately 30,000 employees, plans to abolish this system within two years. The bank aims to shift to a performance-based system.

The seniority system was introduced during Japan's post-war economic boom to ensure long-term employment. Mega-banks, which have historically hired large numbers of new graduates, have adhered strongly to this system. What is Sumitomo Mitsui's main goal? The bank wants to attract and retain talented individuals. Recognizing and rewarding young professionals for their contributions, regardless of age, is expected to strengthen their appeal to the younger generation. It will also ensure that even older employees who deliver results receive appropriate compensation. The key point is that under the new system, even a 20-something could earn an annual salary of 20 million yen based on performance.

This move also abolishes the automatic reduction of salaries for middle-aged and older employees. How do people on the streets perceive this change? Opinions are mixed. One man in his 40s welcomes the end of the seniority system, believing it to be beneficial for the younger generation. Another 40-something appreciates the predictability of the old system for financial planning. A pair of 20-somethings expressed divided opinions; one felt motivated by the change, while the other worried about the risk of salary decreases.

Business leaders also have varied views. One executive supports the idea, emphasizing the desire to reward high performers regardless of age. However, evaluating abilities remains challenging.

Experts believe that the abolition of the seniority system by a major bank signals a significant shift. They expect this change to influence smaller companies as well. Small and medium-sized enterprises (SMEs), which struggle to secure talent, are likely to follow suit in adjusting their wage structures. The collapse of the seniority system is expected to accelerate rapidly.

From the workers' perspective, it's challenging to determine which system is better. The current pressure on Japanese companies to attract top talent to remain competitive internationally highlights the urgency of such reforms.

Source: ANN

Toyota to Launch Self-Driving Taxis in 2027

Toyota Motor will begin operating fully autonomous taxis in 2027 through a partnership with U.S. self-driving technology company Waymo, marking a major step in the Japanese automaker's efforts to expand driverless transportation services.

Mount Fuji Puts on First Snowcap

Mount Fuji has received its first snowcap of the season, the Japan Meteorological Agency announced on October 30, after temperatures at the summit plunged to minus 9.4 degrees Celsius, marking the arrival of winter conditions on Japan's highest mountain.

Chinese Female Spy Suspected of Targeting Nvidia Chief

U.S. intelligence agencies suspect that a Chinese female intelligence operative developed a close relationship with Nvidia CEO Jensen Huang in an attempt to obtain confidential corporate and U.S. government information, according to a report published by The New York Times on October 29th.

Japan Blocks Websites Leaking GMO Personal Data

The Japanese government has asked major telecommunications operators to forcibly block access to websites believed to contain personal information stolen in a cyberattack on GMO, it emerged on October 29th, as authorities moved to prevent further exposure of sensitive data online.

Typhoon No. 31 Heads Toward Japan's Remote Islands

Typhoon No. 31 was located near Minamitorishima Island in the Pacific Ocean, as of 3 a.m. on October 30, and was expected to approach the Ogasawara Islands south of Tokyo over the October 31-November 1 weekend while maintaining very strong intensity, bringing a growing risk of dangerously high waves, powerful swells and extremely rough seas.

MEDIA CHANNELS

MORE Business NEWS

Cyberattacks Hit Muji, Matsuya, ANA and Foreign Ministry

A series of cyberattacks has exposed millions of personal records belonging to customers of major Japanese companies, including Muji, Matsuya and All Nippon Airways, as well as individuals connected to the Foreign Ministry, while cybersecurity experts investigating a separate attack involving GMO say a serious mistake by the hackers may provide crucial clues to their identities.

World's Largest Nitori Store Opens in Osaka

Japan's furniture and home goods retailer Nitori opened what it describes as its largest store in the world on October 30th in Osaka's Chayamachi district, bringing a major new retail destination to an area east of Hankyu Osaka-Umeda Station known for its youth culture, fashion boutiques, and specialty shops.

Japan Stocks Plunge 1,369 Points as AI Selloff Hits Tokyo

Japan's Nikkei 225 Stock Average plunged 1,369.36 points, or 2.12%, to close at 63,290.11 at 3:30 p.m. on Friday, October 30, ending a three-day winning streak as a sharp selloff in semiconductor and artificial intelligence-related shares swept through the Tokyo market, while the Bank of Japan's decision to leave interest rates unchanged failed to restore investor confidence.

BOJ Says Underlying Inflation Has Effectively Reached 2% Target for First Time

The Bank of Japan announced on October 30th that underlying inflation has effectively reached its 2% target for the first time since the goal was introduced in 2013, marking a major milestone in the country's efforts to achieve sustained price growth, while keeping its benchmark interest rate unchanged at 1.25% as policymakers assess the impact of last month's rate increase.

Halloween Costume Prices Double in Five Years

Halloween celebrations across Japan are becoming increasingly expensive as October 31 approaches, with costume prices nearly doubling over the past five years and the average spending budget rising to 8,148 yen, prompting more people to find creative ways to enjoy the annual event without stretching their finances.

Hands Shibuya to Close After 48 Years

Hands Shibuya, one of Tokyo's best-known variety stores, will close on November 15 after 48 years in business, bringing an end to a shopping destination famous for its enormous selection of innovative household goods, stationery and unusual gadgets, with around 100,000 products still filling its shelves in the final weeks before closure.

Japan Stocks Rise for Third Day as Nikkei Reclaims 64,000

Tokyo stocks extended their recovery on Thursday, October 29, with the Nikkei 225 closing at 64,659.47 points at 3:30 p.m., up 705.28 points, or 1.10%, from the previous session, as renewed buying of semiconductor and artificial intelligence-related shares helped the benchmark record its third consecutive daily gain ahead of the Bank of Japan's monetary policy decision.

GMO Offers 150 Million Yen Reward to Identify Cyberattackers

GMO has announced a reward totaling approximately 150 million yen for information leading to the identification of hackers responsible for a cyberattack on its systems, while also pledging compensation to customers whose personal information has been exposed, as Japan faces a growing wave of cyberattacks targeting major companies.

< 2 3 4 5 >