Recognizing the increasing need for performance-based pay systems in the 21st century, a lot of companies have already introduced “performance pay systems” in Japan. Quite a number of companies are really interested in using a performance pay system, but they are still continuing a process of trial and error in introducing the system. In Korea there seems to be the same situation as in Japan. Therefore, I would like to focus on the actual conditions of the annual salary system that is the most popular type of performance pay system by making a comparative study of Japanese and Korean systems. Through this study, I would like to clarify the characteristics of the annual salary system in Japan. Trying to compare Japan and Korea in terms of the annual salary system, I will show some similarities between the two countries as follows: ① a series of reviews and streamlining of the seniority pay system have lead to the introduction of the annual salary system, ② economic crises in the two countries were good chances to start introducing the annual salary system, ③ the annual salary system has caused some problems because of poor execution of performance evaluation systems. Thus, a lot of similarities between the two countries can be indicated, while it is difficult to point out any remarkable points of difference. Though, since the Asian economic crisis, there has been a strong tendency in Korea to focus on personnel management techniques coming from the U.S.A., I recognize in this comparative study that the annual salary system of Korea is quite similar to that of Japan. I think that the wage systems of the two countries will become more similar with each other in the future.
