Average Salary in Japan: What You Need to Know

The Land of the Rising Sun uniquely blends culture, tradition, and modern innovation. In fact, it has become one of the world's financial hubs and the world's third-largest economy.

To give you a headstart and a complete understanding of the average salary in Japan, we've created this guide.

Our guide explores everything, from the government numbers to the realities of living on an average salary in Japan.

Let’s begin!

Key Takeaways

• Learn about the average salary in Japan as of May 2024.
• Understand the difference between mean and median salary in Japan.
• Explore the factors affecting the average monthly salary in Japan.
• Learn about regional disparity and sectors' roles in determining the average annual salary.
• Familiarize yourself with the additional bonuses, benefits, taxes, and average salaries.
• Learn how Japanese live on their average salary.
• Examine the factors influencing the work and life balance in the Japanese job market.
• Explore 6 tips to make the most of your average salary.

Government Numbers: A Starting Point

First, let's review some government numbers related to Japan's actual maximum salary and minimum hourly wage.

Japan’s National Tax Agency and the Ministry of Health, Labor, and Welfare publish a yearly report on wages nationwide.

By 2024, Japan's forecasted highest average annual cash compensation for full-time workers and employees is expected to be around 4.58 million yen (¥), equal to USD 29,589. But this average salary increment doesn't tell the whole story.

While this compensation number only tells part of the story, it’s important to understand the pay gaps.

Mean Salary vs Median Salary: What’s the Difference?

Calculating the average salary, or mean, involves dividing all individual wages by the total number of employees. However, a few high earners can skew this average. 

Because of the possibility of skewing averages, let’s look at the median instead which is the midpoint in the salary range, to better understand what most people earn.

It's important to know that in Japan, the median wage is lower than the highest average salary, effectively demonstrating the income gap between the influence salaries of the top runners and overtime pay for the general workforce.

The median salary as of May 2024 is around ¥3.6 million, equal to $23,268.

5 Factors Affecting Average Salary in Japan

There are several factors that influence average salaries, minimum wage, and increments in Japan.

Here are the most important ones:

1. Age

Salaries typically increase with experience in Japan. So the highest average salary would mean a higher experience too.

This is why most younger employees start with minimum salary ranges and lower wages and grow to receive increases with advanced expertise, eventually climbing the highly demanded professional ladder.

This is also one of the reasons why they should avoid the lowest-paying professions and choose to specialize in some field.

2. Gender

In Japan, women have been reported to have received 75% less pay than men despite having similar experience and education levels.

This isn't just related to the lowest-paying professions but applies to all female job seekers.

This is a significant gender pay difference due to the social norms and the "mommy track," which encourages women to put their families before their careers.

3. Educational Background

In Japan, higher education typically results in higher salaries. 

People with postgraduate degrees, such as Master's and Ph. D.s, earn significantly higher competitive salaries than those with just a high school diploma or undergraduate degree. 

4. Economic Context and Labor Market Trends

Japan's economic stagnation in the 1990s and early 2000s, known as the "Lost Decade," impacted the average wage, salary increases, and growth in some sectors.

This period of slow economic activity still influences business growth and wages in specific industries.

5. Aging Population and Shrinking Workforce

Japan's rapidly increasing elderly population and shrinking administrative workforce lead to a significant potential labor shortage and skill gaps in several industries. 

Subsequently, this demographic trend has prompted wage increases in targeted sectors to retain the necessary talent. 

Difference in Average Salary in Japan Based on Job Type

Your salary can be significantly affected by the sector you work in: 

High-Income Bracket:

Fields such as science and technology, healthcare (especially doctors and specialists), finance (investment bankers and CEOs), and real estate typically offer high salaries.

Moreover, specialist skills such as robotics engineering or patent law are lucrative. 

Low-Income Brackets:

Retail, customer service, hospitals, and administrative jobs often offer lower salaries. Entry-level positions also tend to have lower starting salaries.

Location Matters: Regional Disparities in Pay

Major cities such as Tokyo, Osaka, and Yokohama offer notably higher salaries than the ruler areas. This disparity is attributed to the higher living costs in urban centers and the concentration of well-paying industries and corporate offices. 

Salary differences exist within cities as well. The specific city and prefecture influence these income gaps.

Plus, major economic centers with significant business activity tend to offer better salaries than smaller towns.

Beyond the Average Salaries: What Else Is Offered with Average Salary?

Now that you know the basics about average annual salary and figures, let's explore other factors that impact your take-home pay:

Bonus:

Bonuses, also known as Kaki Shoyo in Japan, form a significant compensation component in Japan and are usually distributed twice a year.

These bonuses can be worth several months' base salaries and depend upon the performance of the company, your, and industry standards. 

Benefits:

Employees in Japan are often provided with several benefits, including housing allowances, transportation subsidies (such as public transport passes or fuel allowances), company-funded pension plans, and health insurance. 

Taxes and deductions:

It's important to remember that a portion of your salary is allocated to taxes and social security contributions, which can vary depending on your income and residential property.

Companies usually handle these deductions. Employers provide a net salary after deducting all the necessary amounts from wages. 

Living on an Average Japanese Salary

Living on an average Japanese salary requires smart budgeting. Here's a breakdown of typical expenses:

1. Housing:

Housing is often the biggest expense, especially in major cities.

Renting a modest flat in Tokyo can consume much of one's wages, and other costs like water and electricity might need to be taken into consideration.

2. Meals and Entertainment:

Japan has reasonably priced groceries. Japanese largely focus on fresh food in season. However, eating out frequently can put a dent in your wallet.

Events like movies, shows, or vacations can be costly. Japanese people value social activities more than solitary pursuits, which might help alleviate expenses.

3. Transportation:

Owning a car is unnecessary in Japan because public transit is so well-developed. However, the expense of commuting can still increase, especially for suburban residents.

4. Savings and Investments:

In Japan, saving is a way of life. Elevated savings rates are put toward future costs such as college, retirement, or house ownership.

Work-Life Balance: Can You Have Both?

While living on an average salary is manageable in Japan, long working hours can impact your quality of life. 

Many Japanese companies expect long work hours and "presenteeism" (being physically present), leading to employee burnout and limited time for leisure activities.

The demands of working for long hours often lead to anxiety and mental health issues. Balancing their careers and personal responsibilities for Japanese professionals continues to be a difficult struggle. 

4 Tips for Making the Most of Your Salary in Japan

Here are some tips to help you thrive in Japan, even on a moderate income:

1. Rent Small Apartments with Big Advantages

Japan is known for its efficient living spaces.

To save significantly on rent, especially in major cities, you can opt for a smaller apartment, a cozy studio, or a shared living arrangement (sharehouse).

2. Make Smart Furniture Choices

Purchase multipurpose furniture that makes the most of your available space, such as a Murphy bed that folds into the wall or a futon that can be used as both a sofa and a bed.

Declutter your belongings regularly to avoid mess and maximize your limited space.

3. Use Public Transport or Cycle

Japan has one of the best public transportation networks in the world. To travel about, use trains, subways, and buses. If you travel often, you should get a monthly pass.

Many Japanese cities are pedestrian-friendly. Walking or cycling for short commutes or errands is a healthy and budget-conscious option.

4. Do Free and Low-Cost Activities

There are many inexpensive or free activities to do in Japan. Take part in traditional festivities, visit temples and shrines, or stroll through lovely parks. Many museums have free entrance days, too!

Despite all the considerations above, Japan boasts a high standard of living and economic conditions because of:

• Japan is known for its safety because it has a low crime rate and a strong sense of community. 
• Cleanliness is deeply ingrained in Japanese culture, so Japan maintains pristine public spaces and facilities.  
• Japan is known for its highly efficient infrastructure. The country provides reliable public transport and convenient amenities. 

Final Word

Achieving financial stability and a comfortable lifestyle with an average salary in Japan requires strategic financial planning and adopting a specific lifestyle.

It is important to investigate the disparity and gap in living expenses among various urban areas and provinces. Research additional insight into workplace customs, such as expected working hours and communication protocols, to create a seamless adaptation into the workforce. 

Looking to hire local talent in Japan? At Knit People, we're committed to addressing all of the intricacies regarding pay in Japan. Connect with us to acquire the guidance and support you need to thrive in the Japanese market.