Change and continuity in Japanese compensation practices: the case of occupational pensions since the early 2000s

Abstract

This article analyses changes in the provision of Japanese occupational pensions since the early 2000s. It shows how Japanese companies have followed strategies of cost and risk reduction by creating multi-layered benefit systems that offer a combination of defined benefit (DB) and defined contribution (DC) plans whose benefits are becoming increasingly performance-oriented. Analysing the reasons behind the resilience of DB schemes in Japan, the article concludes that enterprise union behaviour has had less influence than regulatory issues and continued corporate commitment to long-standing employment practices for regular workers. These findings highlight the embeddedness of Japanese employment practices in their institutional context.

Keywords:

• convergence
• Japan
• labour unions
• occupational pensions
• performance-related pay
• varieties of capitalism

Acknowledgements

This research was supported by funding from the Great Britain Sasakawa Foundation. I would also like to thank my informants, the reviewer and the following persons for their support and comments on earlier versions of this paper: Miki Arimori, Pauline Dibben, Hugo Dobson, Peter Matanle, Tadashi Nakada, Susumu Yamamoto and Geoffrey Wood.

Notes

1. It should be noted that there are large differences in occupational pension coverage of regular workers depending on company size. While 80.7% of companies with more than 1000 employees offer occupational pensions to those workers, this ratio drops considerably in smaller establishments: 69.3% (300–999 employees), 58.9% (100–299 employees) and 37.0% (30–99 employees) (Kōseirōdōshō 2008).