Companies grow by attracting and retaining talent. The lucrative employee benefits in Japan like insurance, leave, and increments help firms stay competitive. More and more Japanese companies now lead by blending their traditional work ethics with Western flexibility to improve work-life balance and meet local and foreign employee expectations.
This article explains employee benefits in Japan, highlighting unique and non-traditional provisions that assist long-term retention and company success.
Standard Employee Benefits in Japan
Employees in Japan receive "Fukuri Kosei" (福利厚生), or standard employee benefits, as mandated by the Japan Labor Standard Act, regardless of their wages. These benefits include:
- Health Insurance (Kenko-Hoken 健康保険)
- Welfare Pension Insurance (Kosei-Nenkin-Hoken 個性年金保険)
- Unemployment Insurance (Koyo-Hoken雇用保険)
- Worker's Accident Compensation Insurance (Rosai-Hoken 露菜保険)
- Nursing Insurance (Kaigo-Hoken 介護保険)
- Child Allowance (Kodomo Kyoshutsu-Kin 子供供出金).
Although regulations require companies to provide all statutory employee benefits, it's not surprising that some companies only offer the top three benefits mentioned above.
Recent Changes Aligning with Employee Expectations
Now, with Japan's multicultural workforce, the ‘Fukuri Kosei’ doesn’t truly align with the employee’s evolving expectations. This is where flexible working options, paid parental leaves, and similar modified benefit offerings align with employees’ expectations.
Employee Benefits in Japan: Japanese vs. Foreign Companies
Here’s a contrast of what benefits Japanese and foreign companies usually offer:
- Vacation and Leave - Foreign companies tend to offer longer paid leaves, including an increasingly popular unlimited PTO scheme.
- Housing Allowances - Japanese firms offer housing allowances or provide dormitories.
- Retirement Benefits - Foreign companies may appreciate personal savings.
- Sick Leave - More foreign companies reserve a dedicated sick leave slot.
- Cultural and Recreational Activities - Japanese firms provide structured events such as learning allowances and crash-course programs, etc.
Employee Benefits in Details
Common Benefits by Japanese Firms
Here are a few employee benefits in Japan, breakdown by details:
- Retirement Benefits - Both employers and employees contribute to support employee’s retirement.
- Medical Care Benefits - Both fund Japan’s National Health Insurance system covering 70% of ordinary medical expenses.
- Unemployment Benefits – With this, unemployed workers can receive up to 50-80% of unemployment benefits.
- Work-Injury Benefits - Employers pay full premiums for employee benefits in Japan that cover work-related injuries.
- Leave and vacation policies – These include annual leaves plus 16 annual public holidays. Standard Japanese companies starts at 10 days paid annual leave, with extra one day addition with every year of service.
- Parental Leave
- Mothers are entitled to 14 weeks of maternity leave, including 6 weeks before birth and 8 weeks after birth.
- Fathers can take up to 4 weeks of paternity leave within 8 weeks of the child's birth. While the government allowance covers two-thirds of their standard salary while on leave.
- During maternity leave, women receive about two-thirds of their average daily wage.
- During childcare leave, parents receive about 67% of their salary for the first 6 months, then 50% for the remaining period.
Health and Wellness Benefits
In Japan, the employer covers the following health insurance which is mandatory for all residents:
- Comprehensive coverage – It covers hospitalization, surgeries, and medicines.
- National Health Insurance System – It is for employees who do not fit into the company’s health insurance plans.
- Long-Term Care Insurance - It covers home care and nursing facilities for certified employees aged 40 or older
- Longevity Healthcare System - This robust insurance policy covers healthcare costs for employees aged 65 or above with certain disabilities.
Financial Incentives
The financial employee benefits in Japan serve as the firms’ backbone to retain talent. These financial incentives include:
- Non-Fixed Bonuses – Employees get a non-fixed 13th-month summer bonus and a 14th-month winter bonus.
- Stock Options and Profit Sharing - These are other lucrative incentives that many companies offer in Japan to foster a deeper employee commitment.
Professional Development Opportunities
Japanese companies assert great efforts to help their employees grow. Apart from the typical long training employees need to go through in their first year joining the company, They offer training programs to boost skills. This inclused On-the-Job Training (OJT), and Off-the-Job Training (Off-JT), Japanese language training, and role-related skills certicifations.
As a standard practice for the first two years of training, major Japanese corporations offer comprehensive rotational training programs to help new graduates understand the company's operations.
What Employees Value Most
According to the survey conducted by Gaishushukatsu, job seekers look for the following benefits from both local and foreign companies in Japan:
#1 Paid Holidays
More people are striving for a better work-life balance, leading to a trend where foreign companies often provide more holidays than Japanese firms.
#2 Rent Housing Allowance
40% of the respondents who work at Japanese companies receive a rent allowance.
#3 Company Housing System
Above 40% of Japanese firms provide a housing system.
#4 Childcare Facilities
Employees will be more focused and productive if companies offer in-house childcare facilities.
Attracting Talent via Employee Benefits in Japan
There’s a growing trend where more people are valuing job benefits over salaries. Non-traditional perks differentiate employers in Japanese competitive job market. This is why the firms providing the best perks will win the best talent.
Retaining talent via employee benefits in Japan involves the role of employee welfare outsourcing agencies. Building an in-house employee welfare system to provide benefits is crucial but costly. Therefore, it is not rare to see companies are outsourcing it to dedicated agencies offering tailored employee benefits in Japan. Employee welfare agencies take the burden of building in-house systems out of companies with a cost-effective and efficient approach.
Conclusion
Companies should align employee benefits with their long-term business goals to retain top talent. Understanding employee benefits in Japan will help companies successfully attract top talent. Attracting and retaining talent in Japan is challenging, but it doesn't have to be that way for you. At Hyre, we help top companies and startups launch and scale their business across APAC. Are you looking for a superstar talent? Let us find you one!
