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Basic Economic Summary


Known as the “Land of the Rising Sun”, Japan’s distinction from the rest of the world is not only their strategic geographical location but also due to their rich cultural virtues. Japanese people are known to be polite, organized, and have a good work ethic. In turn, the country has many merits to its name and is considered one of the most developed countries in the world.

Japan’s economy is ranked as the third-largest in the world by nominal GDP and fourth by Purchasing Power Parity (PPP) GDP. The country is also one of the world’s leading investors, having more than $220 billion in FDI (foreign direct investments) outflows each year.

Basic Information

  • Local Languages: Japanese (Official)
  • Major Economic Hubs: Tokyo, Osaka, Kyoto
  • Currency: Japanese Yen (JPY)
  • Population: 124.86 million (2022)
  • Date Format: yyyy/mm/dd

Useful Information

  • GDP Per Capita (in USD): $43,118.83 (2022)
  • Exchange Rate (JPY/USD): 0.0088 
  • PISA Ranking: 6 *
  • Number of University Graduates (2019):567,374 *

Salary Data

Average Monthly Salary of Jobs:

Job Title Average Salary Range (JPY) Average Salary Range (USD)
Management Accounting 367,000 - 1,200,000 3226.49 - 10,549.82
Sales Manager 481,000 - 1,340,000 4,228.72 - 11,780.63
Marketing Specialist 268,000 - 957,000 2,356.13 - 8,413.48
Developer 205,000 - 708,000 1,802.26 - 6,224.39
UI/UX 172,000 - 577,000 1,512.14 - 5,072.71
Product Owner 370,000 - 1,120,000 3,252.86 - 9,846.50
Data Scientist 421,000 - 1,270,000 3,701.23 - 11,165.23

More information about average salaries in Japan can be found on Salary Explorer.

Talent Sourcing Tips

English Proficiency: Low Proficiency

Number of LinkedIn Users (2021): 2,862,000

Top Local Job Portals: GaijinPot Jobs, Daijib.com, Jobs in Japan

More information about job portals in Japan can be found here.

Top Recruitment Agencies: FAIR Inc., Robert Walters, Nippon Shigato

More information about recruitment agencies in Japan can be found here.


Employer Payroll Tax

Type of Tax Contribution (%) Maximum Monthly Premium (JPY) Notes
Pension 9.15%

On salaries: 56,730

On bonuses: 137,250

Health Insurance 4.94%-5.83%

On salaries: 68,597 – 81,037

On bonuses (annual): 282,776 – 334,059

Depending on age (<40 or ≥40)
Employment Insurance 0.60% No Limit  
Work Injury Coverage 0.25% – 8.80% No Limit Depending on type of work

*Rates differ across prefecture, contact us for more information. The general employer payroll tax can be found here.

Employee Payroll Tax

Type of Tax Contribution (%) Maximum Monthly Premium (JPY) Notes
Pension 9.15%

On salaries: 56,730

On bonuses: 137,250

Health Insurance 4.94% – 5.83%

On salaries: 68,597 – 81,037

On bonuses (annual): 282,776 – 334,059

Depending on age (<40 or ≥40)
Employment Insurance 0.30%   No Limit
Work Injury Coverage None    

*Rates differ across prefecture, contact us for more information. The general employee payroll tax can be found here.

Employee Monthly Income Tax

Income Range (¥) Tax on Excess (%) Tax Rebate (Yen)
< 162,500 5.00% 0
162,500 – 275,000 10.00% 8,125
275,000 – 579,166.67 20.00% 35,625
579,166.67 – 750,000 23.00% 53,000
750,000 – 1,500,000 33.00% 128,000
1,500,000 – 3,333,333.33 40.00% 233,000
> 3,333,333.33 45.00% 399,666.67

Japan follows a progressive income tax model. The source for the employee income tax can be found here

Minimum Wage & Payroll

Minimum Wage

On average across prefectures, ¥902 per hour.

Payroll Cycle

Paid monthly, typically by the 25th of each month.


Typically twice per year, often in the summer and winter. The amount varies, but negotiations between employer and employee determine the amounts and conditions.

Working Hours & Statutory Leave

Maximum working hours

In principle, must not exceed 40 hours per week or 8 hours per day excluding breaks. Some businesses are permitted to have their employees work up to 44 hours per week.

Maximum overtime hours

  • 5 hours per day
  • 45 hours per month
  • 360 hours per year

Overtime pay

  • If an employee exceeds 40 hours a week, the employer is obligated to pay overtime.
  • If the employee is a manager, they are expected to work overtime and the company is not obligated to pay.
  • If working overtime is expected on a regular basis, there must be a written agreement and has to be filed with the Labor Inspection Office.

Working overtime or on holiday

PeriodAdditional Payment
Overtime (typically >8 hours)25%
Night-time (22:00-05:00)25%
Weekends & Holidays35%
Night-time (continuing from overtime)50%
Holiday (continuing from night-time)60%

Work-on-rest-day pay

At employer’s request
Work HoursPay
Up to half of normal daily working hours1 day salary
More than half of normal daily working hours2 day salary
Beyond normal daily working hours2 day salary + overtime pay

At employee’s request
Work HoursPay
Up to half of normal daily working hours0.5 day salary
More than half of normal daily working hours1 day salary
Beyond normal daily working hours1 day salary + overtime pay

Public Holidays

16 public holidays can be found here.

Although it is not mandatory to pay for public holidays, it is common to count these days as paid days off.

If a national holiday falls on a Sunday, the next working day is counted as a public holiday.

Annual Leave

Years of EmploymentNumber of Annual Leave
≥ 6.520

Employees may accumulate up to 2 years of unused paid leave.

Sick Leave

No mandatory sick leave. Paid annual leave is used to take leave of absence.

Parental Leave

Maternity Leave

14 weeks maternity leave, divided into 6 weeks before birth and 8 weeks after birth.

Woman receives 2/3 of their base salary (covered by social insurance)

Paternity Leave

Male employees would be able to take four weeks of leave within eight weeks from the birth of their child.

Childcare Leave

Can be taken after the maternity leave ends up till the day before the child turns 1 year old. If both parents take child care leave, the leave is extended to when the child is 1 year and 2 months old. The cost is covered by the labor insurance.

Other Leave

Family Care Leave

Unpaid leave to care for direct family members for up to 93 days per family member. However, this does not include employees under fixed-term employment arrangements or within 6months and 93 days of the start of the family care leave.

Bereavement Leave
  • Death of a father, mother, spouse, or child: up to 5 days
  • Death of a grandparent, grandchild, sibling, child’s spouse, or spouse’s parent: up to 3 days

If the employee is in charge of arranging the funeral service, up to two 2 days of additional leave is added.

Offboarding & Termination

Termination Process

Termination of regular employees is tricky and may risk having the employee’s contract reinstated by the courts.

3 available employee termination methods:

  • Resignation
  1. Based on mutual agreement between employer and employee. Can be proposed by the company to employees, but cannot be forced. Compensatory amount paid in return for voluntary resignation is based on negotiation.
  2. Voluntary resignation is effectively agreeing not to exercise their right to claim wrongful termination.

  • Normal/ Ordinary Dismissal
  1. Employer is free to terminate an employment agreement if it satisfies the Labor Standards Law in addition to the employment contract condition.
  2. Employer must have a ‘justifiable reason’ for dismissing an employee on a non-fixed term employee
  3. Justifiable reason (1 to 3 is required to be quite serious in practice for it to satisfy the requirement)
  4. Workers cannot work, lack the ability to perform work properly, or are ineligible for the subject work. However, employees on leave due to work-related injury or illness cannot be dismissed during medical treatment and 30 days after the treatment;
  5. Workers violate the employer’s rules of employment;
  6. Necessary* to dismiss workers from the viewpoint of operating the business of the employer; and
  7. Labor unions request that an employer dismiss an employee based on an applicable union agreement.

  • Disciplinary Dismissal
  1. Requires 30 days prior notice or payment in lieu thereof, and is considered extremely severe, and justified if an employee has:
  2. Committed crimes under the Penal Code
  3. Very serious ethical breaches
  4. Made a false statement on their resume at time of application for employment
  5. Unreasonable absence (e.g. >2 weeks without reasonable justification)


  1. A ‘valid need’ such as due to a business slump, recession or situation which makes dismissal ‘unavoidable’ must be present
  2. Employee should only be dismissed as a ‘last resort’ after efforts to utilize employee in alternative manner (e.g transfer or offer of early retirement package)
  3. Use of reasonable and objective standards in determining which employees are dismissed
  4. Engage in good faith discussions with employees who are to be dismissed to explain the basis for dismissal, the manner that the dismissal will be implemented, etc.

Termination Process

Employee resigns and serves the notice period:On the last day of employment
Resignation without notice & no notice period servedWithin 7 days of the last day of employment
Termination due to misconductOn the last day of employment if possible,
else within 3 business days
Employer terminates the employment contractOn the last day of employment if possible,
else within 3 business days

Notice Period

30 days’ notice before termination or payment of wages in lieu of notice.

Severance Pay

Severance pay is not mandatory, unless specified in employment contract.

Probation period

Not mandatory. Common practice is 3 to 6 months.

Employee Benefits


Japan has two systems that deal with social security for their employees, both of which are governed and mandated by their government: the social insurance scheme and the labour insurance scheme. The former covers the pension and health benefits and pension for employees while the latter covers accident compensation and unemployment insurance. Below is a summary for the insurances that Japan offers to their workers:

Insurance Type Benefit Insurance Provider Payment schedule
Social insurance 1) Employee’s Pension Insurance Retirement Pension, Disability Pension, Survivor’s Pension Japan Pension office Once a Month
2) Health Insurance 70% of Medical expense, Sick pay, Maternity Allowance
3) LT Nursing Care Insurance Nursing care expenses (for employees age 40 and over)
4) Child Benefits Contribution Contribution to a social welfare system for child benefit
Labor insurance 5) Workers’ Accident Illness or accident incurred by employees during work Labor Bureau Once a year
6) Unemployment Insurance Financial aid in case of unemployment Employment Security Bureau Once a year

Employee Stock Ownership Plan (ESOP)

Japanese companies whose shares are listed in the country’s stock exchange may offer share option plans to their employees. Most companies follow the ESOP guidelines set by the Japan Securities Dealers Association (JSDA). To learn more about this employee benefit, you may click through this link.


The general consumption tax in Japan is 10%, with the exemption of food which is 8%.

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