Japan's civil servant wages to be cut by 7.8 per cent

The policy chiefs of the ruling Democratic Party of Japan and the opposition Liberal Democratic Party and New Komeito have agreed to cut the salaries of national government employees by an average of 7.8 per cent for two years beginning in fiscal 2012.

The cuts will include a retroactive 0.23 per cent cut extending back to April 2011, in line with a figure proposed by the National Personnel Authority. Funds saved through the salary cuts--totaling about 588 billion yen--will be used for the reconstruction of areas devastated by the Great East Japan Earthquake.

According to the agreement the chairmen of the parties' policy research councils reached Friday, a bill cosponsored by the two opposition parties will be modified so that it can be passed in the Diet by the end of this month with an eye toward implementing the cuts in April.

In exchange for the pay cuts, the DPJ had sought LDP and Komeito agreement to start deliberations on a bill to grant public servants basic labor rights. The main ruling party, however, made a concession to the opposition parties on this issue.

The consensus statement made at Friday's meeting merely states that the three parties will "work toward an environment conducive to holding Diet deliberations and reaching an agreement."

The three parties are still negotiating on whether salaries of local government employees should also be cut in line with those of national government workers, a demand the LDP has made. At issue is whether the bill would be accompanied by a resolution stating it as a nonbinding target, saying, "Agreements should be reached through Diet deliberations," according to party sources.

The three parties initially agreed to cut wages for central government workers in late January by a total of 8.03 per cent--which would include the 0.23 per cent cut from March as recommended by the NPA in addition to the 7.8 per cent cut for two years from fiscal 2012.