Japan's largest companies, long known for lifetime employment and seniority-based pay, are reworking their compensation and hiring systems as the global fight for talent intensifies.
In fields facing shortages of skilled workers — such as artificial intelligence, cybersecurity and financial markets — firms are rolling out separate pay schemes that tie salaries to a worker's market value rather than to age or years of service.
Talent Costs Surge in AI and Security, With Six-Figure Pay for Workers in Their 30s
Japanese financial group SOMPO Holdings introduced a dedicated hiring program called the "SOMPO Professional Pool" in June, the Nihon Keizai Shimbun (Nikkei) reported on the 24th. Under the program, the holding company directly hires specialists that are hard to secure even within the group — in areas such as AI, cybersecurity, legal affairs and compliance — as permanent employees, manages them and then dispatches them to affiliates as needed.
Workers hired through the program can earn high salaries of more than 15 million yen (about 130 million to 150 million won), even young talent in their early 30s.
SOMPO switched its employment rules to a job-based system in 2020, but seniority-based and job-based systems remained mixed across affiliates. This made it difficult for individual affiliates to offer exceptional salaries to specific workers, a constraint the holding company resolved by hiring directly.
Exceptional treatment for specialists is spreading across Japan's financial sector. MUFG Bank is working to secure talent in areas such as system development, financial markets and cybersecurity through its "Ex (Expert) system," introduced in 2024.
The system keeps the existing membership-based employment rules while applying separate pay regulations to specialists. As a result, an employee in their mid-30s can receive treatment comparable to that of a branch manager or a head-office general manager. About 800 of the bank's 22,000 domestic employees, including some 40 mid-career hires, are covered by the system.
Batch Hiring of New Graduates Scrapped, With a Full Overhaul of Recruitment
IT and tech companies are going a step further. Fujitsu sorts experts in AI, data science and cybersecurity, along with in-house lawyers, into four grades — S, A, B and C — based on scarcity and contribution to the business, and pays them separately.
Top-grade S talent is offered an annual salary of 25 million to 35 million yen (about 230 million to 320 million won) through individual negotiations. A- to C-grade talent also receives a monthly allowance of 50,000 to 300,000 yen on top of base pay.
The hiring system is also breaking from past practice. After adopting job-based employment in 2020, Fujitsu abolished batch hiring of new graduates starting in 2025 and shifted to year-round recruitment that does not distinguish between new and mid-career hires. The aim is to select candidates who have the skills the company needs, regardless of their career background or the timing of their hire.
Scarcity Over Seniority: Japan's Pay Formula Shifts
Behind these overhauls of personnel systems is a shortage of talent in core fields such as AI and cybersecurity. As not only Japanese firms but also foreign companies compete for workers with specialized skills, a "market price" for individual talent is effectively taking shape.
Hiring costs are also considerable. When companies recruit talent through specialized headhunting firms, the referral fees they pay have risen to about 35% of the recruited worker's annual salary on average.
For companies, the reasoning appears to be that bearing high hiring costs is better than losing business competitiveness by failing to secure key personnel.
Another driver of the change is the difficulty of paying high salaries to only some employees within the existing seniority-based pay structure. Meeting a high salary by adding various allowances on top of base pay could, over the long term, lead the allowances to be treated legally as similar to base pay. In that case, the costs a company must bear — including overtime pay, bonuses and severance — could also rise.
As a result, Japanese firms are moving toward creating systems that apply separate pay and working conditions to specialists, rather than making exceptions within the existing wage structure.
Still, it is hard to say that Japanese firms as a whole are abandoning seniority-based pay right away. According to a survey by the Japan Business Federation (Keidanren), only 26% of the 337 responding companies had already adopted job-based employment or were planning or considering it.
Nikkei analyzed that as a talent ecosystem takes shape in which the value of key workers such as those in AI moves in real time according to market value, companies that cannot quickly break away from traditional employment methods risk falling behind in global industry competition.
