The government said Friday that it will not give state employees a pay raise this fiscal year, the second straight year there has been no increase, government officials said. The government instead will issue lump-sum payments to state workers to narrow the gap between public- and private-sector salaries.

But Japan's long-slumping economy has even cut the salary gap to a record low of 0.08 percent, or 310 yen, per month. State employees will receive a lump-sum payment of 3,756 yen for 12 months in March regardless of age.

Even with this payment, the state workers' income will decline for the third straight year.

Bonus payments will decrease by 0.05 of a month's wage from the previous year and the average annual income of state employees at around 40.7 years of age will also fall by about 16,000 yen to 6,376,000 yen.

However, about 90 percent of state employees, excluding those over 55, are actually expected to receive larger salaries when seniority-based pay raises are taken into account.

The government decision was based on recommendations from the National Personnel Authority, which oversees working conditions for state workers.

The Cabinet meeting and another related ministerial meeting in the morning endorsed the decision. The government is expected to submit bills related to the implementation of the plan to the ongoing extra Diet session.