A Promotion to Kacho in Japan Adds 26% in Monthly Pay

In Japan, the promotion into management adds a fifth to a quarter to monthly pay. Most people, and most head offices setting pay for a Japan subsidiary, assume the step is much bigger. A 2025 government survey of private-sector pay shows an administrative subsection chief (kakaricho) who becomes a section chief (kacho) gaining ¥131,000 a month, or 26%, once overtime is counted. For engineers the gain is 18%.

What the survey measures

It measures the regular monthly pay companies paid for April 2025, by job title. Overtime pay and commuting allowance are included. Bonuses are not.

The source is the National Personnel Authority's 2025 Survey of Private-Sector Pay by Job Type (職種別民間給与実態調査). It covers private workplaces with 50 or more employees at companies with 50 or more employees. The authority sampled 11,865 workplaces and completed 82.4% of them. The published tables are for companies with 100 or more employees, so everything below describes companies of that size. Smaller companies are not in the tables, and I would guess many foreign subsidiaries in Japan are smaller.

The titles are defined. A kacho is the head of a section with two or more subsections or ten or more members. A bucho, or department head, runs a department with two or more sections or twenty or more members. Specialists graded at the same level are counted with them. Bonuses, retirement pay and equity are outside the number, so it answers one question: how much more per month. I could not get verifiable bonus figures by title this time, so I make no claim about the gap in annual pay.

The labor ministry's wage survey also reports pay by position. It excludes overtime, which makes the multiples look larger. I used those figures in Manager and Specialist Tracks in Japan Need One Grade Scale. Here I use the National Personnel Authority's table because it lists overtime in its own column, and that column is where the explanation is.

How much does each step add?

On the administrative side, monthly pay is ¥382,000 for staff with no title, ¥443,000 for a senior staff member (shunin), ¥502,000 for a kakaricho, ¥633,000 for a kacho and ¥763,000 for a bucho. A kacho earns 1.66 times what untitled staff earn. A bucho earns 2.00 times.

Put the ages next to that. Untitled staff average 38.2, kakaricho 44.9, kacho 49.0, bucho 52.7. The kacho makes two thirds more than untitled staff and is almost eleven years older. The survey can't separate how much of the multiple comes from being a manager and how much from eleven more years of service.

The engineering ladder is flatter: ¥404,000 for untitled staff, ¥543,000 for a kakaricho, ¥641,000 for a kacho, ¥752,000 for a bucho. That is 1.59 times at kacho and 1.86 times at bucho.

Why is the step into management so small?

Because overtime pay mostly disappears at the same moment.

An administrative kakaricho's ¥502,000 includes ¥60,000 of overtime. A kacho's ¥633,000 includes ¥12,000. Strip overtime out and the comparison is ¥442,000 against ¥621,000, a difference of ¥179,000, or 40%. Then overtime falls by ¥47,000. The actual monthly gain is ¥131,000, or 26%.

It is sharper for engineers. A kakaricho averages ¥80,000 of overtime a month and a kacho ¥17,000. Without overtime the kacho is ¥162,000 ahead, up 35%. After losing ¥63,000 of overtime the real gain is ¥99,000, or 18%.

From kakaricho to kacho, pay rises about 40% before overtime and 26% (admin) or 18% (engineering) after it

How much a section chief's monthly pay exceeds a subsection chief's (%). Companies with 100+ employees, regular monthly pay for April 2025. Calculated from Table 5 of the National Personnel Authority's 2025 Survey of Private-Sector Pay by Job Type

Administrative　kakaricho → kacho

• Excluding overtime¥442,000 → ¥621,000
  +40.4%
• Including overtime¥502,000 → ¥633,000
  +26.2%

Engineering　kakaricho → kacho

• Excluding overtime¥462,000 → ¥624,000
  +35.0%
• Including overtime¥543,000 → ¥641,000
  +18.2%

Before overtime the step to kacho is about 40%. Count overtime and it shrinks to roughly 20%.

Why do section chiefs get so little overtime? The common practice is to treat kacho and above as "managers and supervisors" under the Labor Standards Act, who are not paid overtime premiums. Whether that treatment holds depends on the person's actual duties, authority and pay. The title on the card does not settle it. I gave that a section in Grades Are Not Titles. For this article one fact is enough: in the statistics, a kacho's overtime pay is a fifth of a kakaricho's.

Is the gap growing or shrinking?

Shrinking. For this I use the labor ministry's Basic Survey on Wage Structure: scheduled monthly pay each June, excluding overtime, at private workplaces with ten or more employees, for full-time workers on open-ended contracts. The 2020 table was published for men and women separately, so I compare men.

From 2020 to 2025, pay for men with no title rose 11.3%. It rose 8.5% for kacho level, 7.6% for kakaricho level and 6.8% for bucho level. With untitled men at 100, the bucho index fell from 201.7 to 193.4, kacho from 167.3 to 163.0 and kakaricho from 128.0 to 123.7.

My reading is that Japan's recent pay raises went to starting salaries and younger staff first, and the management layer moved less. That part is interpretation. The survey only shows the result.

What goes wrong when head office applies its own multiples

Suppose head office is used to managers earning about twice the fixed pay of a solid senior contributor. Bring that to Japan and it breaks in two places.

First, you overpay managers without knowing by how much. At Japanese companies with 100 or more employees a kacho earns 1.26 times a kakaricho and 1.66 times untitled staff, overtime included. If you pay double, you are well above the market. That can be a deliberate choice. Paying a premium is one way to hire. But the premium should be a number you calculated. If it was copied from the home-country pay table, every later kacho you appoint will benchmark against the first one.

The second error is harder to see. You start from the manager's budget and divide down, and the people who don't manage anyone end up underpaid. Set the kacho's pay first, apply the home-country ratio in reverse, and your senior engineers and senior salespeople land below the Japanese market. Pay in Japan follows tenure and grade. The title adds a thin layer on top. A senior person with no reports and a kacho were never that far apart.

This is why I argue for setting pay on separate tracks. Grade sets base pay and belongs to the person. Managing people earns a fixed allowance that belongs to the post. Results are paid through the bonus. The method is in Three-track pay.

The person being promoted will do one more calculation, so the employer should do it first. If the kacho title ends overtime pay and the allowance doesn't cover what overtime used to bring in, monthly pay barely moves while responsibility goes up a level. Japan's flat ladder is usually described as a cultural fact. I think it is mostly arithmetic, and the arithmetic is sitting in a public table.

---