Japanese City Yubari to End 20-Year Public Sector Pay Cuts After Bankruptcy

A city in Japan, Yubari in Hokkaido Prefecture, was declared bankrupt 20 years ago, forcing its civil servants to face salary cuts. However, positive news arrived at the end of last week, as Mayor Tsukasa Atsuya announced that the pay cuts for municipal government employees will be abolished by the end of the current fiscal year. The mayor stated that city employees’ salaries will return to their original levels starting next April, with the city expected to complete the repayment of special fiscal rehabilitation bonds by the end of the 2026 fiscal year. The announcement was made during a meeting with Internal Affairs Minister Yoshimasa Hayashi and Hokkaido Governor Naomichi Suzuki, coinciding with the 20th anniversary of the city’s declaration of financial collapse. Hayashi said he ‘respected’ the city’s decision. Yubari was originally a thriving mining town rich in coal, but it experienced a series of mine closures due to changes in the country’s energy policy. The city subsequently ran up a deficit of 35.3 billion yen in the 2006 fiscal year due to excessive investment in tourism facilities and improper accounting. On 20 June of that year, the mayor announced the city would enter ‘fiscal reconstruction entity’ status, directing it towards repaying accumulated debt under central government supervision. At the start of the reconstruction process, municipal employees’ monthly salaries were reduced by an average of about 30%, a rate that has been gradually reduced to the current 5%.