Telecommunications mogul Nippon Telegraph and Telephone Corporation (NTT) and its group of companies will introduce a new system of wage payment that will result in curbing salary increases, especially for workers in their 40s and 50s, beginning next year in order to keep staff on payroll until they reach 65 years of age, according to sources. This is line with the country’s revised law on stabilization of employment for the elderly.
The law makes it mandatory for companies to re-employ workers who, despite reaching the mandatory retirement age of 60, still want to continue working until they reach 65. Under NTT’s new wage system, the proportion of wages will be increased depending on the performance of their individual workers. The expectant result is to control the increase of wages as the proportion of wages decided through the length of service decreases. Thus, those employees who generate positive results could increase their salaries even under the new wage system. And, by controlling the salaries of those below 60, company will be able to pay those employees who are 60 and above good wages.
Under the present system, NTT’s employees over 60 receive 2-2.5 million yen (approx. $24,000 to $30,000) annually depending on their skills. But in the new system, it hopes to give them an annual salary of 3-4 million yen ($36,000 to $47,000). Observers say that it is very likely that other companies would follow suit and adopt an identical wage system.