Department of Defense Pay Practices for Japanese Nationals Should Be Changed

FPCD-78-47: Published: May 31, 1978. Publicly Released: May 31, 1978.

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As of January 1978, U.S. forces in Japan (USFJ) employed about 22,360 Japanese nationals; approximately 19,650 were paid from appropriated funds. Appropriated and nonappropriated fund payroll costs totaled about $243 million and $27 million, respectively, in fiscal year 1977. Costs per employee have increased in recent years, and wage costs can be expected to increase further because of the comparative decline in the value of the dollar against the Japanese yen.

Because of Japan's reluctance to share costs or allow revisions of benefits, Japanese employees are paid well above prevailing local rates. Factors contributing to high payroll costs are the continued use of USFJ differential (a special payment for Japanese employees), language allowances, the computation formula for premium pay, and wage schedules, based on a 44-hour workweek. Severance allowances are also more generous than those in prevailing practice. Hiring Americans locally could be less costly, but constraints to such hiring are staffing ceilings, a pending decision on hiring of dependents, and certain advantages of Japanese personnel. Increasing wages and declining dollar value could lead to further reductions in force and a reduced capability to meet U.S. and Japanese mutual defense objectives.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretaries of State and Defense should urge the Government of Japan to eliminate or pay excess compensation costs. The Secretary of Defense should explore ways of hiring more Americans in Japan.

    Agency Affected:


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