The government decided Wednesday to cut the annual salary of civil servants by an average of 4,000 yen, or 0.1 percent, in the current fiscal year through next March, Chief Cabinet Secretary Hiroyuki Hosoda said.
The decision was made in line with the recommendations for fiscal 2005 made by the National Personnel Authority in August, Hosoda said.
It also endorsed a plan to reform the pay system over five years from fiscal 2006 to differentiate pay levels between urban and rural areas as in the private sector. Under the current system, national government workers assigned to local posts enjoy higher pay than their local equivalents in the private sector.
It plans to submit related bills to the Diet, which will be in session through Nov. 1.
The margin of the reduction was based on a formula described by Hosoda as a 0.36 percent reduction of monthly pay for the first cut in two years combined with a 0.05 month hike in annual bonuses to 4.45 months' worth for the first rise in eight years.
The five-year pay system reform is designed to cut the base salary of all government workers by an average of 4.8 percent and reallocate the resources as special allowances for civil servants working in urban areas, where private workers receive relatively high salaries.
This will have little impact on the gross personnel costs of the government but is likely to result in slashing the costs faced by local governments as the pay of local public servants is set in line with those of their national counterparts.
The government also decided to introduce a performance-based pay system in place of the conventional seniority-based format, and to submit a bill to revise its employees' retirement allowances to reflect their performance in office, Hosoda said.