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					3. Remuneration
   The National Public Service Law provides that remuneration of national public employees is de-
termined by law (principle of determining remuneration by law), and revised by the Diet to bring it in
line with the general conditions of society. The NPA must make its recommendation for such revisions.
Therefore, the NPA reports simultaneously to the Diet and the Cabinet not less than once each year on
the propriety of salary schedules. The Remuneration Law also provides that the NPA must study the
amount of remuneration for public employees and make a recommendation simultaneously to the Diet
and the Cabinet on appropriate revisions in accordance with conditions that determine the remunera-
tion (principle of meeting changing conditions).
   As the NPA is responsible for the implementation of the remuneration system, it has established the
necessary rules and it audits remuneration payments in order to ensure fair and appropriate imple-
mentation.

(1) Report and Recommendation on Remuneration

Significance and Role of the Remuneration Recommendation
   Public employees differ from employees at private corporations in their fundamental labor
rights. The NPA’s Remuneration Recommendation functions to ensure appropriate remunera-
tion for public employees in accordance with the general conditions in society, and as a com-
pensatory measure for the restriction of fundamental labor rights, including the right to engage
in labor disputes.
  As it is necessary to gain the understanding and consent of the taxpaying public on remunera-
tion for public employees, the NPA, which is a compensation institution, acts as a third party to
labor and management, and by implementing recommendations regarding remuneration levels
and systems based on accurate comparisons of remuneration in the public and private sectors,
while thoroughly listening to the opinions of both labor and management, the NPA ensures ap-
propriate remuneration for public employees.
  Implementing the recommendation and ensuring appropriate remuneration levels for public
employees provide a basis for stable labor relations and the maintenance of efficient administra-
tion.


Comparison of Public and Private Sector Remuneration
Monthly Remuneration
  The NPA conducts a Fact-finding Survey of Remuneration of National Public Employees and
a Fact-finding Survey of Job-by-Job Pay Rates in Private Industry every year in order to obtain
an accurate measure of April remuneration in the public and private sectors. Rather than com-
paring simple averages, this facilitates a thorough comparison using the Laspeyres method, in

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which people for whom major determinant factors for remuneration are same, for example, job
description, position, educational background, and age, are compared. The NPA then submits a
recommendation based on maintaining a balance between the remuneration level for public em-
ployees and that for employees in the private sector. (See Figure 3.3.1)

                                 Figure 3.3.1: Process of Remuneration Recommendation
               Survey of payrate in the private sector (field survey)            Survey on the remuneration of national public employees
                                                                                                 monthly remuneration for April
                    Subject:Approximately 8,100 establishments                             Subject:approximately 290,000 employees,
                    with 100 or more employees on a corporate basis                        excluding new hires
                    and 50 or more employees on an establishment


  Rationalization status, etc.           Bonus                 Monthly Remuneration
                                                               Actual payment for April
                                   Actual payment               Subject:approximately
                                   during last year             360,000 employees
  Circumstances
  remuneration revision
  and employment                 Comparison between                Comparison of remuneration between the private
  adjustment,etc.                the public and private            sector and public (administrative) service
                                 sectors of how many               (public-private comparison)
                                 month’s salary were
                                                                   (Calculation of public-private remuneration
                                 paid as a special
                                                                   differences by the Laspeyres formula) wages
                                 remuneration during
                                                                   of those who have comparable types of jop, position,
                                 the year                          educational background, age,etc.are compared
                                                                                                       Hearing of opinions from various
                                                                    Principle of                       sector and the people
                                                                    meating changing                   *Intellectuals, corporate managers
  Requests and opinions from                                        conditions                         *Monitors. etc.
  Office and Each Ministry
  employee organization, etc.
                                              Determination of revision in salay schedule and allowances

                                                          Remuneration recommendation by the NPA



                                                                  Draft of revision of
                                      Diet                        the Remuneration                                Cabinet
                      (Revision of the Remuneration Law)          Law is submitted to the Diet             (Determination to deal
                                                                                                           with the recommendation)




 Special Remuneration
  Regarding special remuneration, through its Fact-finding Survey of Job-by-Job Pay Rates in
Private Industry, the NPA obtains an accurate measure of payments of private-sector bonuses
("bonuses" and other special payments) over the past year and submits a recommendation based
on the principle of having the number of months of salary paid to the public-sector employee as
a yearly bonus (End-of-Term Allowance and Diligence Allowance) conform to these results.
  In addition, to swiftly reflect the status of payment in the private sector in the remuneration of
public employees, the NPA decided, from FY2004, to carry out a survey of the record of pay-
ment of special remuneration in the private sector for a year from August of the previous year
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until July of this year, and compare the public sector with the private sector based on the results
and findings.


Fact-finding Survey of Public Employees
  The annual “Fact-finding Survey of Remuneration of National Public Employees” conducted by
the NPA focuses on employees that are subject to the Remuneration Law.


Survey scope:
    Incumbent employees to whom the Remuneration Law, the Law concerning Fixed-term Re-
    searchers or the Law concerning Fixed-term Employees apply as of January 15 (excluding em-
    ployees on leave, dispatched employees, and employees serving at diplomatic missions abroad,
    etc.)


Survey items:
    Monthly basic salary, allowances received, age, educational background, types of recruitment
    examinations, etc.


Survey calculations:
    Calculation of the remuneration situation as of April 1 (excluding new recruits employed be-
    tween January 16 and April 1, displaced employees, employees who moved to Independent
    Administrative Institutions , etc.)



The Remuneration of Public Employees
Salary
 Salary represents payment for services rendered during regular working hours. It makes up the
most fundamental portion of an employee’s remuneration. An employee is assigned to one of the 19
salary schedules according to job category. As well as this, additional payment such as salary ad-
justment Pay is paid according to working conditions. (See Figure 3.3.2)


Allowances
  Allowances are paid to employees who meet the appropriate requirements. There are numerous
types of allowance, such as Family Allowance, Housing Allowance, Commuter Allowance, City
Allowance, Family-Unattended-Transfer Allowance, Remote Area Allowance, Managerial Allow-
ance, Hardship Duty Allowance, Overtime Allowance, Day/Night Watch Duty Allowance,
End-of-Term Allowance, Diligence Allowance, etc. (See Figure 3.3.3)




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                                    Figure 3.3.2: Breakdown of Employees by Salary Schedule
                                                                                                       (as of January 2004)




                    Employees of the Japan Post
                    269,242 (34.5%)
                                                                                    Administrative Service
               Employees of Specified Independent
               Administrative Institutions etc.                                     218,494 (28.0%)
               300,415 (38.5%)
                                                                                              Employees under NPA Pay Scheme
           Employees of Specified                                                             479,375 (61.5%)
           Independent Administrative
           Institutions 25,694 (3.3%)                                                               Administrative Service
                                                                                                    12,267 (1.6%)
 Employees under Special                                      Total
                                                             779,989                                Professional Administrative
 Exceptions the
                                                           employees                                Service 7,943 (1.0%)
 Remuneration Law 5,479 (0.7%)
                                                            (100.0%)
                                                                                                    Taxation Service
                                                                                                    54,316 (7.0%)

Fixed-term Researchers 46 (0.0 %)                                                                   Public Security Service
Fixed-term Employees 153 (0.0%)                                                                     20,331 (2.6%)
Designated Service 1,623 (0.2%)
Walfare Service 1,004 (0.1%)                                                                   Public Security Service
                                                                                               22,811 (2.9%)
                 Medical Service     47,823 (6.1%)
                                                                                         Maritime Service 375 (0.0%)
                                                                                 Maritime Service 634 (0.1%)
                    Medical Service     10,111 (1.3%)
                    Medical Service     6,436 (0.8 %)                      Educational Service 62,947 (8.1%)
                    Research Service 1,832 (0.2%)                   Educational Sevice     2,270 (0.3%)
                                                                    Educational Sevice     3,635 (0.5%)
                                                                    Educational Sevice     4,523 (0.6%)




    Average Monthly Remuneration Rate
      The average monthly remuneration paid to public employees as of April 2004 was 400,402 yen.
    This figure represents a combination of the average Monthly Basic Salary (344,775yen), Family
    Allowance (12,940yen), City Allowance (23,276 yen) and others (19,411 yen).




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                                       Figure 3.3.3: Breakdown of Remuneration
                                                                                                                 (FY2004)

    Remuneration
            Salary                                         Monthly basic salary
                                                           Salary adjustment pay
                                                           Teacher’s duty pay

            Allowances                                     Family Allowance (e. g. 13,500yen for spouse)
                    Living Allowance                       Housing Allowance (e. g. max.27,000yen)
                                                           Commuter Allowance
                                                           Family-Unattended-Transfer Allowance
                                                            (23,000 to 68,000yen (depending on the distance))

                                                           City Allowance (e. g. Tokyo 12%, Osaka 10%)
                     Area Allowances                       Remote Area Allowance
                                                           Cold Area Allowance

                     Allowances for particular             Managerial Allowance (e. g. Divison Director 25%)
                     responsibilities or duties            Hardship Duty Allowance
                                                           Special holiday work Allowance for managerial employees


                     Overtime Allowances                   Overtime Allowance
                                                           Day/night Watch Duty Allowance

                     Allowances equipment to               End-of-term Allowance (about 3.0 months salary in a year)
                     bonuses in the private sector         Diligence Allowance
                                                           End-of-term Allowancre for Designated Services

                     Others                                Recruitment Incentive Allowance
                                                           Research Activities Incentive Allowance




 Fact-finding Survey of Pay Rates in Private Industry
  With the goal of obtaining basic material for appropriately determining public employee re-
muneration, every year the NPA implements jointly with civil service commissions in prefec-
tures and cities designated by Cabinet Order and other cities, etc. the Fact-finding Survey of
Job-by-Job Pay Rates in Private Industry, in order to gain an understanding of the actual condi-
tions of remuneration for employees in the private sector who engage in work similar to that in
public service.


Outline of Survey
  Following is an outline of the 2004 survey.
  (i) Offices in the private sector surveyed were establishments with 50 or more full-time
workers belonging to corporations employing no fewer than 100 full-time workers. The agri-
culture and forestry industries and some service industries were not included. A total of 37,329
establishments were surveyed.
   (ii) Establishments in the private sector where field surveys were conducted were stratified
into 753 levels for prefectures, cities designated by Cabinet Order, special wards, Kumamoto

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City and Wakayama City, as well as by industry and scale, using a stratified random sampling
technique, and regardless of presence/absence of remuneration revision; 8,143 establishments
were surveyed.
 (iii) From May 6 to June 15, 2004, the survey was jointly conducted with 63 civil service
commissions, through interview surveys at those establishments, regarding monthly remunera-
tion amounts paid for services in the month of April 2004. As a result, 7,545 establishments had
completed their surveys (a completion rate of 92.7%).
   (iv) The number of actual employees who became subjects of individual surveys was 359,348
full-time employees (including 26,232 in starting salary-level jobs) in 77 job types thought to be
commensurate with public employee job positions (including 19 starting salary-level job types).
The population of the survey is estimated to be 2,802,722 (excluding starting salary-level job
types).
  (v) In calculating totals and average values, consideration was given to preventing results that
are skewed to specific areas, scales or industries, by multiplying the reciprocal of the sampling
rate of every establishment and employee and again obtaining the population.

Remuneration Recomendation and Report for FY2004
  On August 6, 2004, the NPA reported to the Diet and the Cabinet regarding remuneration of
regular service employees and submitted a recommendation regarding the revision of their re-
muneration.
 On making these recommendations, as it does annually, the NPA carried out a survey to ob-
tain detailed opinions from employee organizations and personnel authorities at the Office and
each Ministry. Furthermore, the NPA put forth much effort to gather as many of the people’s
opinions as possible, by exchanging views with intellectuals, corporate managers and members
of the press in 41 cities around the country, and commissioned a Questionnaire Survey of
“Monitors on National Public Employees” among 500 persons.
  The result of the comparison of monthly remuneration in the public and private sectors in
2004 showed that the remuneration of public employees was slightly higher than that of the
private sector, but it was found that the remuneration was roughly equal (a difference of 39 yen
(0.01%))after a review of the Cold Area Allowance in FY2004. The NPA decided that it is ap-
propriate to pass over the revision of the monthly remuneration rate as a result of comprehen-
sively considering the following circumstances.
•    The difference of the remuneration between the public and private sectors is extremely
    small, thus it is difficult to revise the Salary Schedules.
•    Various other allowances between the public and private sectors are balanced, there are no
    allowances that require a revision by the small difference between the two sectors.
•    Even when the special lump-sum allowance method is used, the administrative burden to
    implement it is significant.
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  Furthermore, the special payments paid by private enterprises are equivalent to 4.39 months’
worth of their monthly remuneration. This is almost equal to the special remuneration paid to
public employees, which is equivalent to the annual number of months (4.40 months). There-
fore, the NPA decided to pass over its revision.


The following is a main content of the 2004 Remuneration Recommendations in 2004.

Cold Area Allowance
  Regarding the areas and amount, the NPA decided that the overall system of the Cold Area
Allowance should be reviewed as a result of gathering and deliberating on the opinions of the
persons concerned, based on the principle of following the private sector, taking into account
the results of the nationwide survey which was carried out to understand the status of payment
of similar allowances in the private sector.
   Regarding the area of payments, Hokkaido will be considered an area worthy of receiving
payment based on the status of payment of private corporations, along with parts of Honshu
whose temperatures and snowfall are equivalent to those of Hokkaido. In addition, even for of-
fices out of areas of payment, in cases where it is recognized that the temperatures and snowfall
are equivalent to those of Hokkaido, the Cold Area Allowance will be paid to equivalent em-
ployees on a certain condition. As a result, the number of employees who work in areas of
payment will be reduced to approximately half the number of employees who received it before
the revision.
  The amount of payment will be decreased by approximately 40% after it is adjusted to com-
ply with the amount paid by private enterprises in each area. In addition, for the amount of al-
lowance for employees who are householders, in cases where the dependents of fam-
ily-unattended-transfer employees live in areas other than the cold areas, the amount paid to
family-unattended-transfer employees will be equivalent to householders who do not have de-
pendents.
 The method of payment will be revised from lump-sum payment on designated dates to
monthly payment during the winter (from November to March), and the system of receiving ad-
ditional payment and returning it will be abolished.
   These revisions will go into effect for the payment of the Cold Area Allowance in FY2004.

Treatment of Remuneration Recommendation
  The Government held a Conference of Cabinet Members Related to Remuneration on August
6 and another on September 10, and discussed the treatment of the FY2004 Remuneration
Recommendation. As a result, it was decided at the second conference and at the Cabinet
Meeting held afterwards that revision of remuneration would be effected as recommended.
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(2) Implementation of the Remuneration Law
 Amendment of Remuneration Law,etc.based on Remuneration Recommendation
  The amendment of the Remuneration Law and the Cold Area Allowance Law, etc. for the
implementation of the Remuneration Recommendation, based on “Treatment of the Revision of
Public Employee Remuneration,” was made by a Cabinet Decision known as the “Bill for the
Partial Amendment of the Law concerning the Remuneration of Regular Service Employees,
etc.” on October 12, 2004, and submitted to the 161st Diet the same day. This Bill, after delib-
erations by the Committee on Internal Affairs and Communications of the House of Represen-
tatives and the Committee on General Affairs of the House of Councilors, was passed in the
Upper House plenary session on October 27 and promulgated on October 28 (Law No.136).

 Other Items Related to Remuneration:
 Publicizing Remuneration Levels for Independent Administrative Institutions, etc.
  At the end of June 2004, the remuneration levels based on the “Guidelines Concerning
Methods for Publicizing Compensation, etc. of Executives at Independent Administrative Insti-
tutions and Levels of Remuneration for Employees” (Minister of Internal Affairs and Commu-
nications, September 9, 2003) were publicized for the first time. In July, the results were com-
piled and publicized by the Ministry of Internal Affairs and Communications. In publicizing the
results, the NPA cooperated as an organization that specializes in the remuneration of public
employees, by such means as creating and providing indicators to compare remuneration of
employees in each independent administrative institution and that of national public employees.
   From FY2005, institutions such as the National Hospital Organization will be newly subject
to publicizing remuneration levels. As is the case with independent administrative institutions,
incorporated national universities and inter-university research institute corporations will also
be subject to publicizing remuneration levels based on the “Guidelines Concerning Methods for
Publicizing of Compensation, etc. of Executives Incorporated National Universities, etc. and
Levels of Remuneration for Employees” (Minister of Internal Affairs and Communications,
February 7, 2005). Therefore, the NPA is planning to create and provide indicators to compare
the remuneration of employees in these institutions and that of national public employees by
expanding the number of job types subject to comparison.




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