Image credit:over sixty
Japan’s largest banks are dismantling their traditional seniority-based systems for salaries and promotions, marking a significant departure from decades-old corporate practices. The shift comes as banks face growing competition for talent and seek to modernize their operations in a rapidly digitalizing world.
Mizuho Financial Group, one of Japan’s top banks, led the charge in July 2024 by introducing a “role-based pay” system. This new structure ties compensation and promotions to the specific responsibilities and performance of employees, moving away from the longstanding model where salaries rose with tenure. Mizuho’s overhaul also aims to break down pay disparities between its banking and securities divisions, allowing staff to pursue diverse career paths within the company.
Mitsui Banking Corporation is following suit with plans to abolish its seniority-based pay system by 2026. With around 30,000 employees, the bank is moving towards a performance-based model that rewards workers for their contributions, regardless of age. Under this new system, younger employees in their 20s could earn substantial salaries—potentially up to 20 million yen annually—based solely on their achievements.
This reform is expected to ripple across Japan’s broader corporate landscape, signalling the end of an era. However, experts suggest that this shift is necessary to keep pace with global competition and attract top talent, especially as smaller companies struggle to secure skilled employees.
Despite the promise of greater opportunities, some employees express concerns about the transition. The move towards performance-based evaluations could introduce uncertainties regarding job security, with older and younger workers alike adjusting to a system that places results above seniority. As Japan’s corporate culture evolves, the impact of these changes will likely reshape not only the banking sector but also the broader employment landscape