Does an increase in summer bonuses mean a healthier economy?
It’s that time of year again, the season when employers, both public and private, hand out their summer bonuses. In recent years the recession has kept the amounts down despite the fact that regular employees tend to consider them as an integral part of their annual salaries. In fact, society in general thinks that, as proven by the practice of incorporating bonuses into repayment schedules for home loans. Technically, however, bonuses are literally bonuses: Employers are not obliged to pay them, and actually use them as a kind of safety valve to adjust personnel expenditures twice a year.
This summer the news sounds good. Bonuses are, on average, higher than they were last year, by about 8.8 percent, according to a survey of 74 companies carried out by Keidanren, Japan’s biggest business lobby. The average bonus for a 35-year-old regular worker will be ¥1.5 million, while that for a manager in his 40s or 50s is above ¥3 million. It’s the highest year-on-year increase on record.
According to Josei Jishin magazine, the biggest bonuses are being given out by trading companies, which makes sense. Trading companies, who do all their business overseas, enjoyed a huge windfall after the government’s monetary easing policy forced down the value of the yen.
Export-oriented manufacturers also did well for the same reason. Toyota’s average summer bonus for a 35-year-old employee is ¥1.23 million, though that sounds sort of stingy considering that the company saw a 73 percent rise in profits. Securities companies, which also benefited from Abenomics, were high on the list (Daiwa Shoken ¥1.35 million), but their employees’ compensations tend to be based more on personal accomplishments rather than corporate achievement, which is the classic definition of a bonus.
In 13th place on the Josei Jishin list is NTT DoCoMo, at ¥935,000, the highest company to record a drop in average bonus pay compared to last year. In fact, only two companies on the list of 55 companies announced a decrease.
What’s notable about the list is that all the companies are big. Smaller firms, it should be noted, aren’t doing as well in the recovery, and while average bonuses have gone up, the actual number of bonuses given out has gone down, from 38.6 million in 2013 to a projected 37.4 million this year.
Economist Hiroko Ogiwara pointed out to the magazine that while automobile makers did really well, their suppliers barely kept up and so didn’t give out much in the way of bonuses. NTT didn’t do as well as last year because it has no export-related business. And domestic companies that rely on imports, like processed food manufacturers, have suffered due to higher costs for ingredients. Moreover, the labor shortage in the retail and service industries pushed up personnel costs. Sukiya, the largest gyudon (beef bowl) chain in Japan, could only afford an average ¥350,000 to its regular employees (meaning not to restaurant staff). Power companies also were cheap with bonuses because of their continuing reliance on imported fuel. Kyushu Power’s average was only ¥300,000.
According to Dai-Ichi Life Insurance’s research center, civil servant bonuses increased by 12 percent, the first boost since 2011 when the Great East Japan Earthquake put a lid on public pay due to reconstruction efforts. In the usual scheme of things, public workers receive their bonuses first, at the end of June, and then private sector employees get theirs in July.
The real question now is: How much of these bonuses will their recipients spend? According to the tenets of Abenomics, this special pay should trickle down, but people still seem nervous about the economy and may simply sock it away. Just as significant is how many workers will quit after receiving their bonuses. Summer is peak time for resignations.
On the one hand some new recruits reach the realization that they don’t like working for the company they chose — or which chose them. On the other hand, people who have been dissatisfied with their jobs for some time usually wait until after they receive their summer bonuses before giving notice, because if they did so beforehand the bonus might not be as much. In fact, in a survey for the job magazine Doda, more than 50 percent of workers questioned said their decision as to whether or not to quit was based on the size of their bonus. The portion of respondents who say they do decide based on their bonus seems to go up every year.