- November 22, 2023
- Posted by: legaleseblogger
- Category: Related News
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AI Legalese Decoder: A Valuable Tool for Understanding Salary Calculations in Japan
The Role of Purchasing Power Parity in Determining Salary Expectations
The concept of purchasing power parity is crucial in understanding the appropriate salary expectations when moving to a different country.
According to the Purchasing Power Parity calculator, based on my current local salary, my salary in Japan should be around 15M yen annually to be able to maintain the same standard of living.
Understanding Salary Expectations and Market Conditions in Japan
Despite this, my conversations with recruiters in Japan have led to a discrepancy in salary expectations. They have stated that 15M yen is an excessively high salary for Japan, and instead, they convert my current salary through direct currency conversion to arrive at a significantly lower figure of 6M-7M yen.
AI Legalese Decoder’s Role in Clarifying Salary Discrepancies
In this scenario, AI Legalese Decoder can provide valuable insight and assistance. By analyzing the market conditions and legal frameworks in Japan, AI Legalese Decoder can offer a comprehensive understanding of the factors that may be influencing these salary calculations. Furthermore, AI Legalese Decoder can also provide guidance on how to effectively negotiate with potential employers in Japan, ensuring that the purchasing power and cost of living are considered during the hiring process.
Uncovering the Motivations Behind Salary Discrepancies
AI Legalese Decoder can assist in uncovering whether the recruiters’ approach is an attempt at lowballing or if there are indeed market conditions or legal constraints that are impacting the salary calculations. By shedding light on these motivations, AI Legalese Decoder can empower individuals to make informed decisions and advocate for fair compensation when seeking employment in Japan.
Empowering Individuals to Navigate International Employment Opportunities
In conclusion, AI Legalese Decoder serves as a valuable tool for individuals seeking employment opportunities in foreign countries, such as Japan. By providing a comprehensive understanding of market conditions, legal frameworks, and salary expectations, AI Legalese Decoder can empower individuals to navigate international job offers with confidence and clarity.
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Introduction
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Different markets value talent differently. Your value in the Japanese market may be different than your local one.
Some companies that operate in multiple markets may factor PPP when setting salaries for their local offices. Others set it by paying salaries that are in the xth percentile.
But thatÔÇÖs an individual companyÔÇÖs policy. Overall the Japanese market will set pay differently than your local one.
Unless you are a lawyer, incredibly niche position they absolutely need now, or C-level then generally no, they don’t.
Depending on what country you are coming from (cough cough America) the cost of things is lower, especially housing and healthcare. But probably not enough to make up for that disparity.
If you are from the USA, itÔÇÖs good to keep in mind that the USA has by far the highest salaries in the world and that you will be taking a step down no matter what country you move to.
The counter to that is healthcare here isnÔÇÖt going to bankrupt you if you happen to be unlucky medically and tue cost of living here is well below pretty much anywhere in the USA as long as you live outside of Tokyo.
How are you defining the same standard of living?
The issue with calculations like that is housing is by far the biggest cost in most major metropolitan cities. If you have a 2,000 sqft apartment, thatÔÇÖs going to be astronomically more expensive in Tokyo then it would be in, say, a small midwestern city in the US. Even a 1,000sqft apartment in the trendy neighborhoods of Tokyo is going to cost the equivalent of $4,000-5,000 a month if you want to live in a newer building.
So it really depends on what youÔÇÖre considering ÔÇ£same standard of living.ÔÇØ For example eating out is a lot cheaper in Japan, so if thatÔÇÖs important to you your equivalent purchasing power may be a lot higher in fact then it would be in the US.
But back to raw salaries: yes, for Japanese native company salaries, ¥15mil is a very, very large salary. For example, a senior software engineer at most Japanese software companies makes ¥8-10mil a year. Whereas an _entry level_ software engineer at Google Japan makes ¥13-15mil, because they have to compete for talent with Google (and other FAANG companies) in the US for talent, even Japanese talent.
The average annual salary in Tokyo is around ┬Ñ6mil/year, and has been for the last 20 years. Wages are relatively static in Japan because there has been functionally 0% inflation for the last 40 years. ItÔÇÖs why the inflation of the last two years has been so impactful on the average Japanese; annual raises are not the norm in Japan outside of promotion, so inflation has an even more immediate impact then it does in the US where a 3% annual raise is the norm.
Japan salaries are really low and havenÔÇÖt changed much for over a decade. What is your industry?
You mentioned in another comment you’re in finance IT, do you mean financial services or the finance department of a company in another industry? If the former then yes 6-7M is low, in most foreign securities companies or banks, IT should be starting around 10-12 for production support avp level.
For other industries working in the finance department, you’re unlikely to be able to push too high, it really depends on the company. Paul’s answer is great but also how is your japanese? The single biggest thing people can do for their profile is speak fluent japanese and that makes you much more marketable.
I would suggest you Google some of the Japan salary surveys that recruiting firms have published. It will give you an idea of what’s market. Robert Walters and Hays both have really in-depth cross-industry salary reports though you need to register to access them.
That said, if your current salary outside Japan is the equivalent of 6 to 7 million (i.e. $45k) I think it’s exceedingly unlikely that you’ll break 10 million in Japan. Japan currently has very low salaries by global standards and you’d be extremely lucky if they even match a US salary these days.
Keep in mind that recruiters work for employers, so they tell you what the employers want you to hear. If they work for cheap employers, they will tell you that you are low value.
It doesnÔÇÖt matter what people make in other countries.
I have been in Japan for 7+ years. Please take into account that if you accept this offer then this salary will act as a base point for your future recruiters in case you change jobs. It would become extremely hard to expect more than 15-20% raise then, so I would recommend either negotiate this offer or find another since you seem quite experienced.
I come from a similar industry, DM if you want to discuss potential recruiters.
There are obviously many factors to go into play here. However as others have mentioned, national average is 4-4.5m, which means you’ll be at 3x plus, easily putting you in top 3-4% in Japan already and that metric is as a household, not individually.
Aa a comparison, if it’s a Japanese company, 15M is a tough sell, even in top Japanese tech firms the pay is just significantly less. Non-board member executive officers (heads of divisions) can top out around 15-20M ish (sometimes less), of course this is entirely dependent on the company, but that gives you a basic measuring stick. Whereas a top foreign company based in Japan will need to pay out at least 10M~15M to secure experienced multilingual staff level employees. The gap is massive.
PPP just gives you an indication of how much money will give you the same standard of living. But it does not mean you will get PPP adjusted income in every country because it does not take into account any of the other factors.
1. If in a country there are very few doctors and the demand for doctors is very high then the salary of the doctors will be disproportionately high in that country.
2. If there are less tech companies in a country then there is less competition among the companies to attract the talent so the salaries don’t inflate.
In conclusion, salaries are offered based on giving a standard of living but based on market conditions. In every country different professions get different standards of living.
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Japanese companies will generally pay you based on how they pay their Japanese employees. They may not consider you special because they are competing internationally. They usually don’t have to worry about losing talent because the person could go somewhere else. People that want to work in Japan tend to really want to work here.
A common rule of thumb for expat tech workers who moved from SF/Bay Area was a drop of 30% total comp (they heavily discounted equity elements). I moved prior to the drop in the Yen exchange which hit another 40% so it has hurt (can also share more over DM).
I see comps here ranging from ¥7-8M (local hires) to ¥10-15M (expats) and ¥20-40M + expat FANGs).
As with most things, go where the moneyÔÇÖs at.
Unless youÔÇÖre an expat, PPP wonÔÇÖt factor into the compensation calculations. You can get a better idea of local salaries here by checking a few websites. All of the larger recruiting firms have salary information for various industries and roles, broken down by years of experience. Some ask for your personal info before allowing access to their salary guides. The figures are somewhat inflated but it useful data as general benchmarks. Check Michael Page, Hays, Robert Walters, Robert Half, etc. Additionally, check job sites like Daijob, CareerCross and the aggregator site, Indeed.com
I canÔÇÖt speak to PPP being considered, but the general response from recruiters and employers when I tell them my previous or current offshore salary is one of surprise and ÔÇ£weÔÇÖre not going to be able to meet that hereÔÇØ. It was between ┬Ñ15-20m.
It became such an issue I stopped sharing it as recruiters would basically hang up on me despite the fact I told them I wasnÔÇÖt expecting it to be matched and understand the market.
That said I had wildly different packages tabled while hunting, ranging from ┬Ñ5m-┬Ñ13m for very similar roles. There seems to be some really poorly run businesses around that are bleeding money by repeatedly hiring the wrong people and as a result either stretching out or flatly failing to deliver meaningful change to their orgs because of salary banding. After being on the hunt for 6 months you see the companies that are churning through staff but always seem to be hiring for the same projects. You also see it when you interview with hiring managers that donÔÇÖt fill you with confidence.
In the end secured a remote contract with a NZ company and maintained my previous banding.
You grabbed the wrong metric man. Why would a company consider standard of living?
They just look at market rates and what type of person with what background they can get for what price.
For 15M I can get a bilingual Japanese and English engineer who graduated a top 200 University (or masters) with 5+ years of experience at a company with 500+ employees.
7m is low in present year and they’re going to struggle to attract decent foreign talent with that offer.
Doing a comparison by salary is not optimal at all. You should do a comparison by skill. I am sure there are more talented people than you in Vietnam or India getting paid a fifth of your current salary, it’s just the location and economics of each place. You can work for a foreign company remotely in Japan, or talk to a company to give you a higher salary just to compensate, but they will not be able to match the same or these type of calculations. .
Without knowing the industry or position 6M-7M sounds about right. Depending on your age, 7M salary is actually desired.
Sharing personal experience to help relate! I went from working remote in Japan for Silicon Valley startup to a local market (still leadership position/head of dept). When searching for roles here in Japan I was told max I could get would be a range of 9-12M jpy but IÔÇÖd need N1 or N2 lvl Japanese. Without N2+ I was looking at a 5-7M range which recruiters, friends, and my wife said is a common local salary for my age (just hit 30).
From what I could tell, Experience and background doesnÔÇÖt matter as much. ItÔÇÖs more of – can you do the job, follow the company culture/social norms, and require the least pay for the most work done.
Good luck hunting!
There are higher salaries available in finance if you manage to work in a foreign company based in Japan. But do they need you ?
Japan is cheaper than US and EU.
If directly currency converting your salary results in 6-7M yen that would mean your current salary is like roughly 40k-50k USD or Euro based on current conversion rates? Or am I misunderstanding what you are saying?
Whatever calculation resulted in you needing 3 times more money in Japan than wherever you are coming from makes no sense as money should go farther in Japan than in the West. If anything you would likely need less money, not more. Unless this calculator is factoring in like a US equivalent 2000sq ft house with yard in the middle of Tokyo.
7 million is low for finance / IT, and really really low for a job that combines both.
That’s why most don’t actually live IN Tokyo. They commute there for work. CoL is much less in surrounding prefectures.
I don’t know if you’re an executive or professional baseball player, but 15M would put you in the top 1%. Such an offer is pretty rare in the market. Most companies won’t consider PPP.
6M-7M yen, ThatÔÇÖs actually really good even after taxes. Comes out to 412k ish a month of my math is right. Japan is extremely safe compared to most places. Very cheap in most areas. If you can work remote and theyÔÇÖll pay for your commute via Shinkansen when in person meetings and such are necessary, you can literally build a really nice house based on that salary.
15m yen salary is easily in the top 10% of salaries in Japan. While there are a few here that claim to make that much, donÔÇÖt expect anywhere close to that.
However, cost of living in Japan is really affordable which offsets the lower income. Coming from the US, our monthly expenses are about 40% lower living in Japan and we have a higher quality of life.
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Its not an attempt to lowball you, a quick search on google and you’ll find numerous headlines about how real wages in Japan have remained stagnant for decades despite the rise in cost of living. Of course there may be some companies out there that actually adjust compensation with regards to cost of living and all that, but that is definitely not the trend in Japan