Google and Apple are upending Japan’s salary traditions

Sony chairman Kazuo Hirai with entertainment robots.
Sony chairman Kazuo Hirai with entertainment robots.
Image: Reuters/Kim Kyung-Hoon
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American individualism is infecting Japan, it seems.

Japanese tech companies are having trouble competing with companies like Apple and Google for talent, and they are being forced to rethink traditional approaches to corporate pay by offering more money, faster promotions, and merit-based raises to entice new employees tempted by the money and benefits offered by American competitors. Sony for instance is boosting rookie pay by up to 20% for new recruits in fields like artificial intelligence, reports the Nikkei Asian Review (paywall).

Like most Japanese companies, Sony has traditionally emphasized seniority over individual abilities when it comes to salaries. But this year’s class of new graduates joining the company can expect to make more money than their colleagues if they show exceptional abilities. Sony expects that about 5% of its 400 new hires will see their pay quickly rise above average salaries in 2019.

The baseline annual salary for an incoming employee joining Sony’s technology divisions after graduate school is about 6 million yen, or $55,000, with a standard raise to 6.3 million in year two. Under the company’s new pay structure, exceptional employees will earn 7.3 million yen, or about $67,000 within the first year. The Nikkei Asian Review predicts that Sony’s announcement will influence other employers, saying, “The change is likely to make waves in Japan’s labor market.”

While the starting salaries Sony is promising may still seem paltry compared to the pay at US competitors, the Japanese company is getting much closer to offering similar compensation with these changes. According to Glassdoor, where users anonymously disclose pay and employment information online, the base pay for a software engineer at Google in the US ranges from $70,000 to more than $130,000. Similarly, the data from engineers at Apple shows a starting range from $70,000 to $140,000, with an average base pay of about $100,000.

Sony is also making sure foreign hires feel comfortable working in Japan. According to its website, workers from abroad can interview and work for the company entirely in English, rather than Japanese. The company has been recruiting engineers internationally, focusing on India in particular since 2009. With its new pay structure and openness to non-Japanese-speaking workers, Sony may indeed find it easier than ever to compete with American tech giants in attracting the best and brightest workers.